Oil extends rebound toward $ 57 on OPEC meeting

Sydney, Jan 8: Oil prices firmed above on Monday, extending a rebound after a steep dive last week, as some OPEC members raised the prospect of deeper supply cuts by suggesting the group could meet as soon as next month.

U.S. crude was trading 28 cents higher at .59 by 0205 GMT, having fallen by nearly 8 percent last week. London Brent crude rose 29 cents to .93.

Oil prices climbed 1.3 percent on Friday, recovering from a near three-dollar decline on each of the previous two days.

''Prices have fallen quite dramatically and OPEC have reacted to that saying they might hold an unscheduled meeting, so that might have spooked the market a bit and helped prices to move up,'' said Andrew Harrington, a resource analyst at ANZ Bank.

Oil prices were also lifted by supportive U.S. jobs data, which eased fears of a sharp economic slowdown in the world's top consumer, analysts said. The U.S. Labour Dept. said a better than expected 167,000 jobs were created last month.

Top Libyan oil official, Shokri Ghanem, said on Friday that oil output cuts agreed last month by the Organization of the Petroleum Exporting Countries (OPEC) have not corrected a market imbalance and the oil cartel may need to meet again soon.

''There are still some increases in storages. We will see if a balance actually continues, in which case it is OK. If not, we will even call for a meeting in February or March,'' Ghanem said.

OPEC members agreed last month to cut 500,000 barrels of oil per day (bpd) in output starting from February, but crude prices have continued to fall on growing U.S. fuel inventories and unusually mild weather in the world's top oil consumer.

Heating demand in the U.S. Northeast was forecast to average much below normal for the next five days, with the six-to-10-day forecast for temperatures to average above normal, according to private forecaster DTN Meteorlogix.

Oil prices have fallen nearly 30 percent from the .40 peak seen in July last year and some analysts say it may be difficult for prices to bounce back quickly.

''I don't think prices above in the near term are going to be reasonable given the strong fuel inventories and weather outlook.

Even with the OPEC cuts kicking in, prices are likely to stay in the mid-50s range,'' said Harrington.

Goldman Sachs, among the most bullish investment banks on oil, has cut its 2007 forecast for the second time in almost as many weeks due to mild weather, but still expects U.S. crude to recover from current weakness to average this year.

Geopolitical factors, such as an escalation of violence in the Middle East or a fallout between Iran and the West over Iran's nuclear ambitions, could yet trigger gains, analysts say.

A Reuters survey showed on Friday that OPEC has made little further progress in December in lowering supply to bolster prices, as higher output from some members offset continuing cutbacks by Saudi Arabia and others. O] Supply from the 10 countries bound by output targets was 26.96 million barrels per day, up 60,000 bpd from November, the survey found on Friday. December supply was 680,000 bpd less than in October, just over half the cut OPEC pledged from Nov. 1.

Reuters