US oil prices jumped almost 6 percent on Wednesday, erasing losses of the past two days, after major producers firmed up plans to meet in Qatar to discuss an output freeze and US crude stockpiles grew less than expected.
The market also rallied on a less hawkish US monetary outlook, after the US Federal Reserve held interest rates steady and indicated two rate hikes this year instead of the four expected.
"Easy money is always good for commodities and the Fed gave oil bulls yet another excuse to push crude prices higher," said John Kilduff, partner at New York energy hedge fund Again Capital.
US crude settled up $2.12, or 5.8 percent, at $38.46 a barrel. It had fallen 5 percent in the past two sessions.
Brent crude finished up $1.59, or 4 percent, at $40.33 a barrel.
Crude prices got a heady start after Qatari oil minister Mohammed Bin Saleh Al-Sada said producers from within and outside the Organisation of the Petroleum Exporting Countries will meet in Doha on April 17 to discuss output freeze plans.
Around 15 Opec and non-Opec producers, accounting for about 73 percent of global oil output, support the initiative, the minister said.
Since the freeze was first proposed last month, prices have recovered about 50 percent from decade-low levels but been volatile without a firm meeting date.
Oil gained further on Wednesday on data from the Energy Information Administration (EIA) that showed US crude inventories last week climbed to its fifth straight week of record highs but by just 1.3 million barrels, a much smaller build than forecast.
The EIA also reported that US gasoline demand over the past four weeks was up 6.4 percent from a year ago.
Societe Generale, however, lowered its crude price forecasts citing persistent oversupply, reasoning that recent price gains are weak and based on temporary supply disruptions.
"Markets remain well supplied, with oil and demand growth remaining modest, leading us to believe oil prices will remain relatively low for some time," said Rob Haworth, senior investment strategist at US Bank Wealth Management, who helps manage $125 billion.
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