* Friday's U.S. Dec jobs data likely to reinforce gloom
* Hopes over Obama stimulus package may offer price support
By Jennifer Tan
SINGAPORE, Jan 9 (Reuters) - Oil rebounded above $42 on
Friday on light bargain-hunting, after sinking 2 percent
overnight on deepening economic gloom in the United States,
which signalled weakening demand from the world's top energy
consumer.
The market will scrutinise the Labor Department's December
non-farm payroll and unemployment data due later on Friday,
which will likely be dismal, for further clues on future
demand.
U.S. crude for February delivery <CLc1> was up 72 cents at
$42.42 a barrel by 0220 GMT, after sinking 2.2 percent to
settle at $41.70 overnight. The decline followed Wednesday's 12
percent drop, the biggest daily percentage decline in the price
of crude oil in more than seven years.
London Brent crude <LCOc1> was up 63 cents at $45.30.
"At the $40-$42 level, oil is seen as undervalued, so
people are now buying back," said Tetsu Emori, a fund manager
with Astmax Co Ltd in Tokyo.
"In the short term, weak demand in the U.S. has already
been priced in. A lot of people have already sold their long
positions, and are looking to buy on dips."
Overnight, weaker-than-expected sales from retail giant
Wal-Mart and a surge in weekly U.S. jobless benefit rolls to a
26-year high reignited fears of flagging demand, offsetting
earlier support from escalating tensions in the Middle East and
widening supply disruptions from the Russia-Ukraine gas row.
U.S. jobs data due at 1330 GMT on Friday is likely to show
the economy probably lost more than half a million workers last
month, pushing the unemployment rate up to a 15-year high of
7.0 percent. []
Economists polled by Reuters expect non-farm payrolls to
register a drop of 550,000 jobs for December, which would make
it the worst single month of job losses in 34 years.
Oil has fallen more than $100 from a record peak of over
$147 a barrel in July, as the global economic downturn hits
demand for fuel. It settled at $33.87 a barrel on Dec. 19, the
lowest level since Feb. 10, 2004.
President-elect Barack Obama, who takes office on Jan. 20,
has urged U.S. lawmakers to work day and night to pass a
massive proposed stimulus package of tax cuts and public-works
spending likely to cost $800 billion or more. []
"People are hoping to see some recovery from the Obama
stimulus package, and those hopes are supporting the market to
some extent," Emori added.
Also underpinning oil prices is mounting evidence that OPEC
members are implementing the group's biggest-ever output cuts.
Earlier this week, Kuwait and Iran told customers of bigger
supply curbs this month in a bid to prop up prices.
[]
The producer cartel has cut output three times since
September, in a bid to halt the market's slide.
Meanwhile, Russia has agreed on the deployment of monitors
to oversee gas supplies to the European Union via Ukraine,
clearing the way for the resumption of gas supplies, the Czech
EU presidency said in a statement on Thursday. []
The U.N. Security Council passed a resolution on Thursday
calling for an immediate ceasefire in Gaza and Israel's full
withdrawal after a 13-day offensive. but the United States
abstained in the vote.
The vote followed days of intense haggling at the U.N.,
with foreign ministers from Arab nations pressing France,
Britain and the United States to go along with a resolution
rather than a more diluted president's statement.
While the conflict does not directly threaten any oil
supplies, Middle East unrest can bolster prices because
countries in the region pump about a third of the world's oil.
(Editing by Kim Coghill)
(jennifer.tan@thomsonreuters.com; +65-6417 4679; Reuters
Messaging: jennifer.tan.reuters.com@reuters.net)
