SINGAPORE: Oil prices jumped on Friday supported by fresh investment and a strong yuan, which makes fuel cheaper for Chinese importers, but analysts warned that any price rally was pre-mature as a global glut remained in place. US crude futures were trading at $38.66 a barrel at 0409 GMT, up 82 cents and over 2 percent from their last close. Brent crude futures were at $40.73 a barrel, up 68 cents. Traders said that the price support came from the Chinese yuan hitting its highest level in 2016 on Friday at 6.4877 per dollar, reflecting a global weakening of the dollar against leading currencies. The greenback declined following easing measures announced by the European Central Bank on Thursday. China's demand exerts a strong influence on the oil markets as its government is taking advantage of low prices to build strategic reserves and gasoline consumption is soaring because of rising car sales in the world's second-biggest oil user. A weaker dollar is supportive for oil prices as it makes dollar-traded oil cheaper for countries using other currencies, potentially spurring fuel demand. Traders said prices also received support from fund money flowing into oil markets. 'The funds have turned bullish and the market seems determined to stay at or around $40,' said Pete Donovan, broker at Liquidity Energy in New York. Friday's stronger prices came following losses the previous day after a meeting between major producers to coordinate a freeze in output looked unlikely to even take place since Iran would not commit to attending. Freed from international sanctions that more than halved its output to little more than 1 million barrels per day (bpd), Iran said it would not participate in a proposed agreement between top producers Saudi Arabia and Russia to freeze production at January levels, when both pumped over 10 million bpd. A global glut in supply means that over 1 million bpd of crude is produced in excess of demand and that has left storage tanks around the world brimming with unsold oil. Analysts say that a fundamental reduction in supplies, for instance through a production cuts, must happen before prices can move higher. HSBC economist Fred Neumann said 'the problem... lies with all the extra supply (e.g. Iran) that has poured onto markets. That means that even a (demand) pick-up in China, in any event likely to be marginal, may not be enough to sustain the latest rally.' To reduce the supply overhang, Neumann said 'more supply destruction is needed. And that, amid record low interest rates, will take some time.'