RTRS: Oil settles 6 percent higher as OPEC output drops
Oil prices rose more than 6 percent on Friday as mounting evidence that OPEC is complying with the bulk of its record output cuts countered gloomy economic data that further dimmed the outlook for global energy demand.
U.S. crude settled up $2.80 at $46.47 a barrel, while London Brent rose $2.98, to $48.37 a barrel.
The gains came after oil consultant Petrologistics estimated OPEC production would fall by 1.55 million barrels per day in January as part of the cartel's efforts to meet a 2.2 million bpd reduction agreed in December.
"I think this represents anticipation that the OPEC production cuts are really happening after the Petrologistics estimates on January OPEC production," said Tim Evans, energy analyst for Citi Futures Perspective.
Members of the Organization of Petroleum Exporting Countries are cutting output in reaction to a slide of more than $100 in oil prices since July as global economic weakness slams energy demand.
Further support came from forecasts for another cold snap in the U.S. Midwest and the Northeast -- the world's biggest heating oil market. Heating oil, which is the primary heating fuel of the Northeast, was the percentage leader on Friday, with February front-month heating oil settling more than percent higher.
"It looked like the strength of heating oil was what was carrying us higher, I presume because of the cold weather coming into the northern Plains and into the East Coast this weekend," said Tom Knight, a trader at Truman Arnold in Texarkana, Texas.
Oil's gains came as the Reuters-Jefferies CRB index, a global commodities benchmark, jumped over 2 percent to hit a near two-week high on Friday.
"It seems that some of the strength (in oil prices) has come as part of a wider commodities rally," said Peter Beutel, president of Cameron Hanover in New Canaan, Connecticut.
U.S. gold futures ended more than 4 percent higher on Friday, breaking above the $900-an-ounce level on a combination of safe-haven buying due to currency market volatility and strong investment demand.
DIM ECONOMIC OUTLOOK
Oil climbed despite more dismal economic data signaling the deepening of the global economic downturn.
British data released on Friday confirmed the UK economy had gone into recession for the first time since 1991, while Spanish unemployment surged to a nine-year high.
The news added to the crush of bleak economic data coming out of the United States, the world's biggest oil consumer.
"We continue to believe that weak economic growth is likely to have a much greater impact on oil demand than is currently factored into consensus supply and demand forecasts," Deutsche Bank analyst Adam Sieminski said in a research note.
