RTRS: Oil steadies below $44 after 7 percent rally overnight
By Jennifer Tan
SINGAPORE (Reuters) - Oil was steady below $44 on Tuesday, after breaking six straight session of losses with a 7 percent rally on Monday, fueled by a jump in equity markets and signs of deepening cuts from key supplier Saudi Arabia.
The market is also looking ahead to a December 17 OPEC meeting that is expected to agree more output cuts to help keep oil away from the four-year low it hit last week.
U.S. crude for January delivery was up 16 cents at $43.87 a barrel at 9:59 pm EST, after surging $2.90 to settle at $43.71 a barrel overnight -- a rebound from a 25 percent drop last week that was the biggest weekly fall in 18 years.
London Brent crude rose 12 cents to $43.54 a barrel.
"There's some buying interest on the positive news flow coming out of the U.S. -- it's a relief rally," said Mark Pervan, senior commodities strategist at ANZ Bank.
"But it could prove to be short-lived -- we're going to see more negative economic data that will probably push prices lower."
Washington's efforts to finalize a bailout plan for the stricken U.S. automotive industry overnight helped cheer investors and boosted global equity and commodity markets.
The rescue plan for the "Big Three" auto makers could offer some relief to investors stunned by the loss of half a million jobs in November, which heightened fears that the U.S. economic downturn was deepening.
Japan's Nikkei average was up 0.5 percent in early Tuesday trade, as Wall Street's overnight rebound buoyed exporters such as Honda Motor (7267.T: Quote, Profile, Research, Stock Buzz).
Oil also got a boost from prospects for a fresh OPEC agreement to cut output when the producer cartel meets on December 17.
OPEC, facing a slide in oil prices since July of over $100 a barrel, has already agreed to cut about 2 million barrels per day (bpd) of production to support prices, and members are leaning toward more supply cuts at the meeting in Algeria.
OPEC kingpin Saudi Arabia, which has cited $75 a barrel as a "fair price" for oil, will make bigger supply cuts to some of its Asian and European customers next month, as it steps up efforts to halt the steep slide in prices.
"What might hold prices up over the short term is the OPEC decision next Wednesday," Pervan added.
"We could see some mild buying interest ahead of the meeting."
The producer cartel will fight hard to keep oil prices from falling below $40 a barrel, although near-term forecasts are for lower prices, an official with U.S. fund manager BlackRock said on Monday.
