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Thu 22 Jan 2009 09:33 AM

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Oil rises near $44 on wintry North, OPEC curbs

UPDATE 3: Oil rises ahead of US data that may further reveal rising crude and gasoline stocks.

Oil rose almost a dollar to above $44 a barrel on Thursday, supported by wintry weather in the northern hemisphere, Organization of the Petroleum Exporting Countries (OPEC) supply curbs and a rally in European equities.

The rally comes before US data due out at 19.30 UAE time are expected to show a further rise in crude inventories, the fourth consecutive weekly increase, and higher stockpiles of gasoline.

Tony Machacek, broker at Bache Commodities in London, said the market was being supported by factors including stronger demand for heating fuel and a rally on European and U.S. stock markets.

"Stock markets look less shaky than at the beginning of the week," he said.

US crude rose 88 cents to $43.68 at 16.50 UAE time.

On Wednesday the contract jumped $2.71 to its highest closing price since Jan. 6. London Brent was 30 cents at $45.32.

Traders are paying close attention to crude supply by members of the Organization of the Petroleum Exporting Countries, which have pledged to cut output in an attempt to bolster global markets.

OPEC President and Angolan oil minister Botelho de Vasconcelos told Reuters this week the 12-member group was fully enforcing its deepest ever oil supply curbs and this should be enough to boost prices.

But, analysts say, the 4.2 million barrels per day (bpd) of cuts OPEC has promised since September may not be enough to turn the tide on a market that has plunged from a record high above $147 a barrel in July.

The economic crisis has eroded oil demand and the outlook remains grim. The International Monetary Fund is set to sharply cut growth forecasts this month, Managing Director Dominique Strauss-Kahn said on Wednesday.

The decline in demand is particularly evident in the United States, where the government said U.S. motorists drove 5.3 percent fewer miles in November than they did a year ago, a record decline for the month.

US crude oil stocks are expected to have risen by 1.4 million barrels and gasoline by 1.9 million barrels in weekly data due later on Thursday.

Traders were looking for news of the oil storage levels at the Cushing, Oklahoma, delivery point for Nymex crude, which have been a drag on the nearby contract for US crude futures. (Reuters)

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