LONDON (Reuters) - Oil rose above $43 a barrel on Monday, as a rebound in global equity markets and further evidence of supply cuts by top exporter Saudi Arabia helped the market break a six-session losing streak.
The market had fallen 25 percent last week, its biggest weekly fall in nearly 18 years, depressed by the grim outlook for the world economy.
U.S. crude for January delivery was up $2.77 to $43.58 a barrel by 1511 GMT. It fell more than 6 percent on Friday to close at $40.81, its lowest since December 2004.
London Brent crude rose $2.95 to $42.69 a barrel.
"Prices are higher on account of a short-covering bounce from extremely oversold conditions," Edward Meir, of futures broker MF Global, said.
"OPEC's meeting is nine days away, meaning that we could see some strengthening leading into the meeting," he said.
Oil has plunged more than $100 a barrel from a record peak above $147 in July, as the credit crisis has started to hurt the wider economy and shrink demand for fuel.
But efforts by governments around the world to halt the slide seemed to reassure investors.
Monday's rally spanned the commodities complex, with gold and copper rebounding strongly. European shares were firmer after strong gains in Asia and U.S. shares opened sharply higher.
Global markets have taken heart from efforts by Washington to finalize a rescue for the struggling U.S. auto industry, plus more government measures to boost economic activity.
OPEC CUT
Oil could also find support from predictions of a cold winter in the United States, with December set to be the coldest since 2000 on average.
"Many investors who were underweighted in commodities in recent months are now asking themselves whether it makes sense to get back into the game," said fund manager Tiberius in a research note.
"Intuitively speaking, a crude oil price of below $50 per barrel seems to be quite cheap."
Members of the Organization of the Petroleum Exporting Countries have called for more supply cuts when the producer group meets on December 17 in Algeria.
OPEC has already agreed to cut about 2 million barrels per day (bpd) of production. Top exporter Saudi Arabia has just provided further evidence of its intent to keep the taps tight.
The kingdom told at least two oil refiners in Asia on Monday it would deepen oil supply cuts to as much as 10 percent of normal contracted volumes in January versus a 5 percent cut in December supplies. It also reduced January supplies to some European refiners.
But OPEC may need to make an additional cut of as much as 2 million bpd to bolster prices in a market where demand is falling.
"The current downturn in prices has already priced in at least a 1.5 million bpd cut," Tetsu Emori, a commodities fund manager at Japan's Astmax Co. Ltd, said.
(Additional reporting by Osamu Tsukimori in Tokyo and Jonathan Leff in Singapore; editing by James Jukwey)
