* Rises 4 pct from 4-year low, late Wall St rally helps
* Prices fell 25 pct last week, biggest drop in nearly 18
yrs
* As economy gloom deepens, OPEC may need bigger surprise
(Adds details)
TOKYO/SINGAPORE, Dec 8 (Reuters) - Oil jumped 4 percent to
above $42 on Monday, clawing back a share of the near-record
decline last week when negative economic data heightened fears
about the impact of a global recession on fuel demand.
With few signs of immediate economic improvement, traders
said the best chances for a rebound in oil prices more than
$100 off their peaks rested with a U.S. auto sector bailout and
next week's OPEC meeting in Algeria.
U.S. crude for January delivery <CLc1> rose $1.59 to $42.40
a barrel by 0202 GMT after closing on Friday at $40.81, the
lowest settlement since Dec. 10, 2004. Oil shed a quarter of
its value last week, the sharpest weekly fall since January
1991.
London Brent crude <LCOc1> rose $1.71 to $41.45 a barrel.
Friday's steep losses came after a U.S. report showed the
heaviest job losses in 34 years in the world's top energy
consumer, adding to concerns that we have not yet seen the full
extent of the damage being wrought on the economy.
[]
But battered U.S. equity markets managed to squeeze out 3-4
percent gains by Friday's close thanks to a late rally, aided
in part by low oil prices. That positive feedback loop came
full circle to boost sentiment in crude on Monday, traders
said.
"People are now buying back short positions after the
rebound in U.S. equities last Friday," said Tetsu Emori, a
commodities fund manager at Japan's Astmax Co. Ltd.
In the week to Dec. 2, just as prices had begun the latest
leg down, crude oil market speculators pared their tiny net
long positions marginally, data showed on Friday.
[]
"We are also looking at the relief plan for the auto
makers, that will be quite important," said Emori.
White House and congressional negotiators worked on Sunday
to iron our remaining differences over an emergency rescue for
the struggling auto industry in a move that Emori said should
provide a sentiment boost for financial markets.
[]
DEMAND AILS
Just five months after oil hit a high of over $147,
analysts are now slashing their price and demand forecasts.
Merrill Lynch <MER.N> said oil could drop to $25 a barrel
if the global recession extends to China, while the
International Energy Agency cut its forecast for average annual
oil demand growth to 2013 to 1.2 percent from 1.6 percent.
[]
The rapid, steep retracement of oil prices has prompted
many OPEC members to call for increasingly strong action when
the cartel meets on Dec. 17 in Algeria. []
OPEC has already agreed to cut about 2 million barrels per
day (bpd) of production, although not all members appear to be
contributing their share of the cut-backs.
Iran is producing over 4 million bpd, the head of the state
oil firm was quoted as saying on Saturday, roughly 250,000 bpd
more than an estimate provided by the country's OPEC governor
and far in excess of its OPEC quota. []
OPEC may need to make a cut of as much as 2 million bpd --
which would be its biggest one-time reduction in over a decade
-- in order to get a rise from a market focused on demand.
"The current downturn in prices has already priced in at
least a 1.5 mln bpd cut," said Emori.
(Reporting by Osamu Tsukimori and Jonathan Leff; Editing by
Michael Urquhart)
