* Jumps 6 pct after tumbling last week to 4-year low near
$40
* Saudi deepens some supply curbs in Jan ahead of OPEC meet
* Asia equity market bounce aids sentiment across
commodities
* Prices fell 25 pct last week, biggest drop in nearly 18
yrs
(Updates prices, adds Saudi para 13)
TOKYO/SINGAPORE, Dec 8 (Reuters) - Oil leapt 6 percent to
over $43 on Monday, reversing a share of last week's
near-record decline as Asian stock markets rose and Saudi
Arabia cut January oil supplies a bit more deeply for a few
Asian refiners.
News of the world's biggest exporter tightening supplies
even ahead of OPEC's meeting next week helped oil end a
six-session losing streak, but failed to fully counter the
growing sense of economic gloom and demand despair that led to
a one-quarter fall in prices last week, the biggest weekly drop
in nearly 18 years.
U.S. crude for January delivery <CLc1> rose $2.55 to $43.36
a barrel by 0634 GMT after dropping on Friday by over 6 percent
to close at a two-year low of $40.81.
London Brent crude <LCOc1> rose $2.51 to $42.25 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 as Asian
markets also rallied, with the Nikkei <.T> ending up 5 percent.
"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.
[]
Monday's rally spanned the commodities complex after the
Reuters-Jefferies CRB <.CRB> index of 19 commodities plunged 14
percent last week, its biggest ever weekly decline.
DEMAND AILS
Just five months after oil hit a high of over $147,
analysts are now slashing their price and demand forecasts for
fear that a spreading recession will trigger a deep drop in
consumption.
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, and although not all members appear to
be contributing their share of the cut-backs kingpin Saudi
Arabia signalled its intent to keep the taps tight.
The world's top exporter told at least two oil refiners in
Asia on Monday that it would deepen oil supply cuts to as much
as 10 percent of normal contracted volumes in January versus a
5 percent cut in December supplies. []
But at least three other refiners in Japan and South Korea
said their shipments would remain steady from this month at 5
percent below the norm, industry sources said.
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 bolster prices in a market focused on demand.
"The current downturn in prices has already priced in at
least a 1.5 million bpd cut," said Emori.
(Reporting by Osamu Tsukimori and Jonathan Leff; Editing by
Michael Urquhart)
