* Saudi to deepen output cuts in Feb to Asian buyers
* Signs of imminent resolution to Russia-Ukraine gas spat
* Friday's U.S. Dec jobs data likely to reinforce gloom
(Updates prices)
By Jennifer Tan
SINGAPORE, Jan 9 (Reuters) - Oil rebounded above $42 on
Friday on signs that Saudi Arabia would further cut supplies
next month, but gains were capped by an impending resolution to
the Russia-Ukraine gas spat that could allow supplies to
resume.
Also weighing on prices is the worry that Friday's U.S.
December non-farm payrolls number could be even worse than the
half a million job losses predicted in a Reuters poll, which
would be the highest monthly job losses in 34 years.
[]
U.S. crude for February delivery <CLc1> was up 30 cents at
$42.00 a barrel by 0800 GMT, after climbing $1.00 to $42.70.
London Brent crude <LCOc1> was 45 cents higher at $45.12.
Crude had fallen 2.2 percent to settle at $41.70 overnight,
after a 12 percent slump on Wednesday, the biggest daily
percentage drop in more than seven years.
"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."
Top crude exporter Saudi Arabia was the latest member of
OPEC to show that it is implementing the latest output cut
agreement.
It will deepen its supply cuts in February from January to
at least three Asian crude buyers, industry sources said on
Friday. []
Earlier this week, Kuwait and Iran also told customers of
bigger supply curbs this month, after the cartel agreed its
biggest ever production cut in December in a bid to bolster
prices. []
One prop of the recent rally that had lifted oil prices
since the start of the year looked likely to be removed, after
Russia reached an agreement to deploy European Union monitors
to ensure the smooth flow of gas via Ukraine. []
The threat of widening supply disruptions in Europe from
the Russia-Ukraine gas row, as well as Israel's invasion of
Gaza, had boosted oil to a one-month high of $50.47 on Tuesday.
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. []
Jonathan Kornafel, director of Hudson Capital Energy Asia,
said that barring new developments on the geopolitical front,
crude was likely to head lower in the near term.
"Any package Obama puts together will not affect consumer
energy demand for several months at least, and this may result
in a further steepening of the contango," he said.
In the Middle East, Israel pushed ahead with its offensive
in Gaza on Friday, ignoring a U.N. Security Council resolution
calling for an immediate ceasefire to the 14-day-old conflict.
[]
While the conflict does not directly threaten oil supplies,
Middle East unrest can bolster prices because countries in the
region pump about a third of the world's oil.
(Editing by Michael Urquhart)
(jennifer.tan@thomsonreuters.com; +65-6417 4679; Reuters
Messaging: jennifer.tan.reuters.com@reuters.net)
