Oil price powers higher on hopes OPEC has had enough cheap crude

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Oil rates strengthened Monday with the main international contract moving out of reach of $40 US for the first time since December on predictions that OPEC command set a new floor for oil prices.

Brent oil, the international contract traded in London, was traffic at $40.66 US a barrel at midday, an increase of more than 5 per cent. West Texas Intermediary, the main North American contract was up 4.7 per cent at $37.62 US a barrel.

Extravagant oil prices helped push Toronto stocks higher, with the TSX up 218 point ups at 13,431 at midday.

The TSX has moving higher for more than a week as the intensity sector and gold recovers.

The Canadian dollar was also stronger at 75.22 cents US.

Gary Ross, a influential oil price prognosticator at New York-based consultancy PIRA, has told Reuters he thinks oil prices will rise to the $50 level by the end of the year.

Ross is mid a number of analysts who believe that oil prices bottomed out in January, when they registered below $30 a barrel.

He has hopes for a planned meeting sometime after Walk 20 between members of the Organization of Petroleum Exporting Countries and Russia.

He believes OPEC would mould to set a $50 US a barrel floor for oil, as its members are suffering economically from low cost outs. That could mean some production cutbacks as the year cracks on.

“They want $50 oil, this is going to become the new anchor for wide-ranging oil prices,” he said.

“While it may not be an official target price, you’ll hark to them saying it. They’re trying to give the market an anchor.”

Even if oil has been rising steadily in price for three weeks, there is silence a record amount of oil in storage around the world.

That means multitudinous analysts are much less optimistic about a continued rise in prices.

Still, the Baker Hughes rig count released Friday shows the number of U.S. oil and gas rigs knock by 13 to 489, with more than 700 rigs idled in the since year as prices tanked. The number of Canadian rigs was down 46 to 129, with 171 rigs turn down in the st year.

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