Oil prices rally to 2016 highs

AA Ireland warns the increase could hit the pumps...

US oil looks set to post gains for a fifth straight week as new highs for 2016 were announced Friday morning.

The rally was based on positive expectations that major producers will strike a deal to freeze output.

US crude oil was up 3 cents at $40.23 barrel at 0653 GMT, after rising to as much as $40.55 – higher than the previous peak of $40.36 reached on Thursday.

The benchmark had surged 4.5% to close at $40.20 in the prior session.

Avtar Sandu, senior commodities manager at Phillip Futures in Singapore, said:

"The market is trying to price in the moves by the big producers. Otherwise, $40 oil is actually pretty expensive given the oversupply in the market".

While the market will welcome the news, AA Ireland has warned that these increases will inevitably filter down to drivers.

Decreasing oil prices internationally have largely been good for consumers, with motorists paying €48 a month less, on average, for petrol than they did in March 2014.