* Most-traded U.S. oil contract and Brent stronger
* Front US futures contract hits 4-1/2-year low, then rises
* Saudi Arabia pledges output cut from January
(Recasts)
By Christopher Johnson
LONDON, Dec 19 (Reuters) - Oil ticked up on Friday,
recovering from an early sell-off as hopes of declining
production by the world's major oil exporters outweighed fears
of global economic slowdown and its impact on oil demand.
U.S. light crude for February rose $0.16 a barrel to $41.83
at 1559 GMT. The contract for January delivery <CLc1>, which was
due to expire later on Friday, fell to $33.44, its lowest since
April 2004, before recovering a little to $34.90 by 1559 GMT.
London Brent crude <LCOc1> was trading $0.20 up at $43.56.
Oil prices have fallen more than $100 from their peak above
$147 in July and looked set for one of their biggest weekly
declines for years.
Oil dropped this week despite pledges by the Organisation of
the Petroleum Exporting Countries (OPEC) to remove 2.2 million
barrels per day (bpd) from its supply, the largest ever
reduction by the producer group.
But many traders doubt OPEC, whose third production cut
since September has brought its total reduction to more than 4
million bpd or 5 percent of world supply, will fully implement
the agreed cuts, further weighing on prices.
"We believe that full implementation of the cuts is
unlikely," Goldman Sachs analysts said in a note to clients.
OPEC kingpin Saudi Arabia's Oil Minister Ali al-Naimi,
speaking in London, said on Friday the kingdom would be pumping
less oil in January and would be at its new output target in
line with the group's latest cut.
"BITE THE BULLET"
That reassurance appeared to be having some impact on the
market in late European trade on Friday.
"From a credibility standpoint, OPEC has no choice but to
bite the bullet for the next few months," said Jonathan
Kornafel, Asia Director of Hudson Capital Energy, but added:
"Until traders see a sustained drop-off in the rate of
demand destruction, the market will have a hard time
establishing a floor."
OPEC President Chakib Khelil said on Friday he believed oil
prices had found a floor around current levels.
"I don't believe there is any reason for it to fall any
further. I don't see it going lower," he told Reuters in London.
Gene McGillian, analyst at Tradition Energy in Stamford,
Connecticut, said the market was beginning to reflect the latest
move by OPEC oil exporters, at least on the February futures
contract.
"The market is signalling that it is taking a look at the
OPEC cut and recognising that is more likely to be evident in
February," he said.
But nearby U.S. futures came under severe pressure ahead of
its expiry later on Friday. U.S. traders said the January
futures contract was under unusually strong pressure.
"It seems to be all about the expiration today," said Peter
Beutel, president, Cameron Hanover, New Canaan, Connecticut. "It
seems that a lot of the trading we're seeing today is selling
January and buying a back month like February or March."
(Reporting by Christopher Johnson; editing by Sue Thomas)
