* Saudi's Jan supply cut to majors boosts sentiment
* Expectations of deeper supply cut at next week's OPEC
meet
* IEA monthly report due later likely to signal weak
demand
(Updates prices, adds quote)
By Jennifer Tan
SINGAPORE, Dec 11 (Reuters) - Oil extended gains to trade
above $44 a barrel on Thursday, after rising more than 3
percent overnight on signs that top oil exporter Saudi Arabia
has slashed January supplies ahead of next week's OPEC meeting.
The producer cartel is expected to agree more output cuts
to keep oil away from four-year lows hit last week, as it
battles falling demand likely to be underlined in a monthly
report from the International Energy Agency due later on
Thursday.
Indicators on the health of the U.S. economy, such as
weekly jobless claims due later in the day, could make grim
reading for Wall Street and imply a further weakening in demand
from the world's top oil consumer.
U.S. crude for January delivery <CLc1> was up 82 cents at
$44.34 a barrel by 0625 GMT, after surging $1.45 to settle at
$43.52 a barrel on Wednesday.
London Brent crude <LCOc1> was up 42 cents at $42.82.
"The huge price swings overnight -- you rarely see moves of
this magnitude -- prove how volatile the whole energy complex
is at the moment," said Peter McGuire, managing director of
Commodity Warrants Australia.
"This will go on until OPEC collaborates and works
cohesively together -- the grouping is very fractured at the
moment."
Saudi Arabia told some of its biggest customers it was
reducing supplies substantially next month in a move that could
bring the kingdom's output below its implied OPEC target of
8.47 million barrels per day. []
The cuts imply that the OPEC kingpin expects the cartel,
which has already agreed to cut about 2 million bpd of
production since September, to agree a further reduction in
supplies at its Dec. 17 meeting.
Russia, which will attend the OPEC meeting as an observer
amid calls from some members for Moscow to join in output
curbs, said on Wednesday it would present its own proposal at
the OPEC meeting. []
"These are linked to measures to protect our national
interests and to provide, in our view, fairer and more stable
rules on the oil market," Energy Minister Sergei Shmatko said.
A U.S. Energy Information Administration report this week
forecasting the first contraction in world oil demand
year-to-year since 1983 added to expectations that OPEC would
deepen cuts as it reacts to the more than $100 a barrel fall in
prices since July. []
Rising stockpiles in the world's largest energy consumer
also reinforced the dismal outlook, with the U.S. Energy
Information Administration saying it sees U.S. gasoline demand
falling faster this year and next than in any two-year period
since 1979-1980. []
The U.S. Labor Department will release first-time claims
for jobless benefits for the week ended Dec. 6 later on
Thursday. Economists in a Reuters poll forecast a total of
525,000 new filings compared with 509,000 in the prior week.
Any signs of a deepening recession in the world's largest
economy could send U.S. stocks into a tailspin.
"Oil will continue to take cues from Wall Street, and
there're always problems on Wall Street," McGuire said.
Meanwhile, U.S. President-elect Barack Obama will nominate
Steven Chu, a Nobel physics laureate and advocate of
alternative energy research, as his energy secretary.
Chu was an early advocate for finding scientific solutions
to climate change and had expertise in the development of
carbon-neutral sources of energy. []
This could possibly trim longer term assumptions for U.S.
crude prices, said ANZ senior commodities strategist Mark
Pervan.
"Also, the long-term outlook for oil prices is not so much
about U.S. demand, but more about China and India demand," he
added.
(Editing by Sambit Mohanty)
(jennifer.tan@thomsonreuters.com; +65-6417 4679; Reuters
Messaging: jennifer.tan.reuters.com@reuters.net)
