CNBC Oil Above $44, Eyes China Recovery, OPEC Cuts

By: Reuters | 04 Mar 2009 | 09:07 AM ET
U.S. crude oil futures jumped more than $2 above $44 per barrel on Wednesday, supported by better economic news from China and expectations by some traders that OPEC oil producers may further cut output.The main gauge of China's manufacturing sector, its purchasing managers' index (PMI), rose in February, suggesting the country could be on the brink of economic recovery.

US light, sweet crude [US@CL.1 43.42 1.77 (+4.25%)] for April delivery rose.

London Brent crude [GB@IB.1 45.44 1.74 (+3.98%)] rose.

China's PMI index rose for the third month in a row last month as factories restocked in anticipation of an early revival in the economy despite deepening global gloom elsewhere.

The figures were in stark contrast to data from the United States, which have suggested the economy of the world's biggest oil consumer is still contracting.

OPEC meets in Vienna on March 15 and needs to decide if it will further cut production or wait to see the impact of reductions in output that it has already implemented. The 12-member producer group has already promised to reduce oil output by 4.2 million barrels per day (bpd) from production levels in September and a Reuters survey suggests OPEC members have already met at least 81 percent of their promised cuts.

U.S. crude oil stockpiles dipped 463,000 barrels last week amid lower import levels and higher demand from refiners, the industry group American Petroleum Institute said on Tuesday.

The EIA will release its inventory report for last week later on Wednesday, and crude oil supplies are forecast to have risen 1.2 million barrels, according to a Reuters poll. more...