* Saudi Arabia to pump below OPEC target, ready to cut more
* U.S. crude inventories expected to rise by 2.2 million
bbls
By Fayen Wong
PERTH, Jan 14 (Reuters) - Oil rose over 3 percent to around
$39 a barrel on Wednesday, as OPEC kept up its talk of
production cuts and a cold snap in the United States boosted
heating oil demand.
Top exporter Saudi Arabia on Tuesday said it was prepared
to go even further than cuts it had made since December if the
market warranted it, while OPEC's secretary general said the
cartel may reduce oil output again at its meeting in March.
But analysts said downside risks remain high. A U.S.
government report due later in the day is expected to show
crude oil stocks rising for the third consecutive week, by over
2 million barrels.
U.S. light crude for February delivery <CLc1> rose $1.21 to
$38.99 a barrel by 0234 GMT, after closing 19 cents higher at
$37.78 on Tuesday. London Brent crude <LCOc1> gained 30 cents
to $45.13.
"Oil was boosted by U.S. weather and Saudi Arabia's
comments in the previous session but the trend is still down,
with lower energy demand in focus," said Michelle Kwek, an
analyst at Informa Global Markets in Singapore.
"The EIA data due later is also expected to show a build-up
in stocks and that will again reflect waning demand in the
United States."
U.S. crude oil stocks have swelled as demand in the top oil
consumer wilts, pushing U.S. crude futures into a deep discount
compared with Brent crude.
A Reuters poll ahead of Wednesday's U.S. inventory report
saw a 2.2 million barrel build in crude stockpiles in the week
to Jan. 9, and distillate and gasoline supplies rising by 1.1
million and 1.6 million barrels respectively. []
The global financial crisis, the worst since the 1930s, has
pushed much of the industrialised world into recession, causing
oil demand to slump and crude prices to tumble by more than
$100 from its record peak of above $147 a barrel last July.
Saudi Arabian Oil Minister Ali al-Naimi said on Tuesday the
world's biggest exporter would pump below its OPEC production
target of 8.05 million barrels per day (bpd) in February and is
prepared to go even further to halt the drop in prices.
"If there is a need to do more, we will do so because our
purpose is to bring things in balance," Naimi told reporters in
New Delhi, adding that Saudi Arabia alone has already cut
supplies by 1.7 million bpd. []
OPEC's secretary general also said the cartel may cut oil
output further at its meeting in March if the market remains
oversupplied a month from now. []
The grouping of oil producers had agreed in December to its
largest ever production cut of 2.2 million barrels per day,
bringing cuts since September to 4.2 million barrels, or around
5 percent of world supply.
Oil's gain on Wednesday was also buoyed by a cold snap in
the U.S. Northeast, the world's biggest heating oil market,
with temperatures forecast to be well below normal in the next
week. []
The winter chill is expected to cause heating oil demand to
be 13.7 percent above normal this week, the National Weather
Service said. []
(Reporting by Fayen Wong; Editing by Michael Urquhart)
