Investing.com -- Crude futures fell slightly from 2016-yearly highs on Thursday, amid heightened skepticism from investors that a coordinated production freeze at this weekend's meeting in Qatar will have a tangible effect at reducing the excessive supply glut on global markets.
On the New York Mercantile Exchange, WTI crude for May delivery traded in a broad range between $40.84 and $42.16 a barrel, before settling at $41.45, down 0.31 or 0.74% on the session. U.S. crude futures appeared for their fifth straight winning session, until turning negative in the final minutes of trading. Despite the slight losses, the front month contract for WTI crude still settled near its highest closing level since late-November.
On the Intercontinental Exchange (ICE), brent crude for June delivery wavered between $43.30 and $44.62 a barrel, before closing at $43.74, down 0.43 or 0.97% on the trading day. The mild gains marked a rare departure from a period rife with sharp, upward movements for North Sea brent. Before Thursday's session, brent futures spiked by more than 2% in four of its last six trading days, including two daily gains of at least $1.50 a barrel. Much like its U.S. counterpart, brent futures have soared more than 16% over the last week and a half.
Since tumbling to 13-year lows at $26.05 a barrel on February 11, WTI crude has surged more than 50%. Over the same period, brent crude has jumped approximately 43% from multi-year lows.
Even if Saudi Arabia, Russia and two other producers agree on a deal to cap output level at Sunday's highly-anticipated summit in Doha, energy traders and analysts remain unsure on whether such a pact could help propel oil back above $50 a barrel. Earlier on Thursday, the Paris-based International Energy Agency (IEA), expressed similar doubts that a deal could help boost persistently low oil prices. Any agreement between OPEC and Non-OPEC to freeze production near current levels will have "limited impact" on global supply, as markets are unlikely to "rebalance before 2017," the IEA said on Thursday.
At the same time, the IEA predicted in its April Oil Market Report that a wide imbalance between global supply and demand will narrow to 200,000 barrels per day from its current level near 1.5 million bpd, amid expectations for the largest annual decline in Non-OPEC production in more than two decades. On Wednesday, the U.S. Energy Information Administration (EIA) said weekly crude production fell by 31,000 bpd to 8.977 million bpd last week, representing the fifth straight week of declines. With the sharp reductions, U.S. output dipped below 9.0 million bpd for the first time since October, 2014.
By comparison, weekly crude production in the U.S. hovered around 9.6 million bpd last June, its highest level in more than 40 years. The IEA anticipates notable decelerations in U.S. output, as shale producers continue to be forced offline due to the prohibitive high costs of drilling. In spite of the recent upswing, crude futures are still down more than 40% from their level in November, 2014, when OPEC roiled global energy markets with a strategic decision to maintain its production ceiling above 30 million barrels per day.
After surging by nearly 4% on Tuesday, crude has stabilized in each of the last two session as comments from top officials have dampened optimism that oil prices can return to pre-meeting levels from two years ago. Responding to reports that Russia and Saudi Arabia had reached a potential consensus, Russian energy minister Alexander Novak emphasized that any output freeze will be "loosely framed," with few constraints on the participating countries. Meanwhile, Saudi oil minister Ali Al-Naimi rejected any notion that the kingdom could slash production at the meeting, after brushing off questions from pan-Arab newspaper Al-Hayat. Both nations continue to pump oil at near-record highs.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, surged to near two-week highs at 95.21 before sliding back under 95 in U.S. afternoon trading. On Monday, the index dipped below 94 to hit an eight-month low.
Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.