* OPEC says it may cut oil production further
* U.S. crude stocks seen up in EIA data due on Wednesday
(Updates prices)
By Christopher Johnson
LONDON, Feb 4 (Reuters) - Oil rose to over $41 a barrel on
Wednesday despite expectations that weekly U.S. data would show
a build in crude stockpiles as demand for energy in the world's
biggest oil consumer declines.
The move was supported by signals from the Organization of
the Petroleum Exporting Countries that it may cut oil production
further in an attempt to bolster the market.
U.S. light crude for March delivery <CLc1> jumped more than
a dollar at one point, trading at a high of $41.79, up $1.01,
before slipping back to trade around $41.45 at 1113 GMT.
Brent crude <LCOc1> was 72 cents up at $44.80 a barrel.
Despite the rally, the market is still down more than 50
percent from a year ago. Oil has plummeted by more than $100
since hitting a record near $150 a barrel in July last year as
the global downturn has weighed on demand for fuel.
OPEC is deeply worried by the impact the global economic
downturn is having on oil demand and has promised to reduce oil
production by a total of 4.2 million barrels per day (bpd) from
levels seen in September.
OPEC President Jose Botelho de Vasconcelos, who is also
Angola's oil minister, told Reuters on Tuesday the 12-member
group could remove more oil from the market if needed to boost
prices. []
OPEC in January met only two thirds of its pledge to lower
oil output as several members of the producer group continued to
pump above target levels, a Reuters survey showed. []
There is little sign of an improvement in oil demand.
SEVERE, SYNCHRONISED RECESSION
On Tuesday, weak retail sales in the United States and
Germany, as well as a jump in Spanish unemployment, provided the
latest evidence of a severe, synchronised global recession.
"The economic context remains very weak and the market is
waiting for U.S. oil data later today," said Harry
Tchilinguirian, oil analyst at BNP Paribas in London.
"Surprise builds in product inventories will only validate
assessments of underlying weak oil demand."
The U.S. Energy Information Administration will release its
oil data at 10:30 a.m. EST (1530 GMT).
A Reuters poll of analysts forecast the report would show
that U.S. inventories of crude oil rose for the sixth straight
time last week as refinery utilisation was curbed by seasonal
maintenance, rising imports and falling demand. []
Crude supplies were projected to have risen 2.8 million
barrels in the week to Jan. 30. The poll forecast a
1.3-million-barrel drawdown in distillate stocks, which include
heating oil and diesel, and a 600,000-barrel increase in
gasoline inventories.
On Tuesday, the American Petroleum Institute (API) said U.S.
crude oil stocks jumped 8.1 million barrels last week. Oil
traders and analysts generally consider the API report to be
less credible than EIA data. []
"The unexpectedly big build in crude in the API stats is the
driver at the moment and I expect today's data to show another
big build in crude stocks," said Christopher Bellew, broker at
Bache Commodities in London.
News that about 30,000 unionised workers at U.S. refineries,
chemical plants and pipelines reached a deal with industry on a
new basic contract on Tuesday, averting a nationwide strike,
failed to pressure prices [].
The oil market has been in contango, with oil for delivery
next March a third pricier than for the March this year,
creating a chance for traders to profit from storing crude for
later use.
(Additional reporting by Annika Breidthardt in Singapore;
editing by Keiron Henderson)
