Oil steadies below 44 after 7 rally

Oil was steady below 44 after breaking six straight sessions of losses with a 7 rally.

Oil was steady below 44 on Tuesday, after breaking six straight sessions of losses with a 7 per cent rally on Monday, fuelled by a jump in equity markets and signs of deepening cuts from key supplier Saudi Arabia.

The market is also looking ahead to a Dec. 17 OPEC meeting that is expected to agree more output cuts to help keep oil away from the four-year low it hit last week.

US crude for January delivery was up 16 cents at 43.87 a barrel at 0259 GMT, after surging 2.90 to settle at 43.71 a barrel overnight 8212; a rebound from a 25 per cent drop last week that was the biggest weekly fall in 18 years.

London Brent crude rose 12 cents to 43.54 a barrel.

8220;There8217;s some buying interest on the positive news flow coming out of the US 8211; it8217;s a relief rally,8221; said Mark Pervan, senior commodities strategist at ANZ Bank.

8220;But it could prove to be short-lived 8211; we8217;re going to see more negative economic data that will probably push prices lower.8221;

Washington8217;s efforts to finalise a bailout plan for the stricken US automotive industry overnight helped cheer investors and boosted global equity and commodity markets.

The rescue plan for the 8220;Big Three8221; auto makers could offer some relief to investors stunned by the loss of half a million jobs in November, which heightened fears that the US economic downturn was deepening.

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Japan8217;s Nikkei average was up 0.5 per cent in early Tuesday trade, as Wall Street8217;s overnight rebound buoyed exporters such as Honda Motor.

Oil also got a boost from prospects for a fresh OPEC agreement to cut output when the producer cartel meets on Dec 17.

OPEC, facing a slide in oil prices since July of over 100 a barrel, has already agreed to cut about 2 million barrels per day bpd of production to support prices, and members are leaning toward more supply cuts at the meeting in Algeria.

OPEC kingpin Saudi Arabia, which has cited 75 a barrel as a 8220;fair price8221; for oil, will make bigger supply cuts to some of its Asian and European customers next month, as it steps up efforts to halt the steep slide in prices.

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8220;What might hold prices up over the short term is the OPEC decision next Wednesday,8221; Pervan added.

8220;We could see some mild buying interest ahead of the meeting.8221;

The producer cartel will fight hard to keep oil prices from falling below 40 a barrel, although near-term forecasts are for lower prices, an official with US fund manager BlackRock said on Monday.