MW: Oil trades flat near $44 a barrel after Monday's rally
By Polya Lesova, MarketWatch
NEW YORK (MarketWatch) -- Oil futures traded little changed near $44 a barrel early Tuesday after surging 7% in the previous session, as traders considered a possible production cut by the OPEC oil cartel at its upcoming meeting.
Crude oil for January delivery gained 21 cents to $43.92 a barrel in electronic trading on Globex.
On Monday, oil prices surged $2.90, or 7.1%, to end at $43.71 a barrel on the New York Mercantile Exchange.
"It remains to be seen whether Monday's rally in crude has any legs to it," said Edward Meir, an analyst at MF Global, in a research note.
"For our money, we would like to see a string of gains in heavier volume before we can conclude that Monday's rally is the start of something more sustainable," Meir said.
Monday's gains were propelled by U.S. President-elect Barack Obama's pledge of massive new infrastructure investment to revive the economy as well as by expectations that the OPEC oil cartel may deliver a substantial cut in production at its Dec. 17 meeting.
In October, OPEC announced a production cut of 1.5 million barrels a day, while the cartel kept production unchanged at its November meeting. OPEC's President, Chakib Khelil, said over the weekend that the cartel may decide on a "severe" production cut at its upcoming meeting.
"Nothing over the last few days has changed the bearish fundamentals of the oil market, so we expect markets to remain fragile until we either see demand start rising -- which we do not expect any time soon given the current economic condition -- or large cuts by OPEC next Wednesday," said Nimit Khamar, an analyst at Sucden Financial Research, in a note.
Also on the Globex Tuesday, January reformulated gasoline was flat at 96 cents a gallon and January heating oil gained 1 cent to $1.50 a gallon.
January natural gas futures fell 2 cents to $5.55 per million British thermal units.
