Nymex crude settles @56.97

NEW YORK (AFX) - Oil prices settled just below $57 a barrel Tuesday -- a gain of almost $3 -- and natural gas soared more than 11 percent on expectations of more Arctic weather in the U.S.Renewed concerns about OPEC production cuts also bolstered oil prices.Light, sweet crude for March delivery jumped $2.96 to settle at $56.97 a barrel on the New York Mercantile Exchange. Prices reached as high as $57.05 during trading before falling back.March Brent crude at London's ICE Futures exchange settled at $56.39 a barrel, up $2.71.Meanwhile, natural gas soared more than 80 cents, or 11.6 percent, to settle at $7.740 per 1,000 cubic feet on the Nymex."People were digging their spurs into it. This is just a lot of people running to get out of the way of the rally," said Tim Evans, energy analyst at Citigroup Global Markets "There wasn't a lot of foresight, not a lot of calculation to it. It's just a reaction to the cold weather."Seven-day forecasts on Tuesday predicted temperatures to dip below zero in the Midwest, the heart of the natural gas market, said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago."That's just driving the natural gas market up dramatically," Flynn said. "And it's leading the way up."Colder-than-normal temperatures are also expected through mid-February in the Northeast, which is responsible for 80 percent of the country's heating oil consumption. Heating oil rose nearly 9 cents to settle at $1.6380 a gallon.Crude oil also received a boost Tuesday from a Wall Street Journal report that said Saudi Arabia has told its customers it will cut supply by a further 158,000 barrels a day, effective Feb. 1."After these cuts, our oil production will have declined by about 1 million barrels a day since last summer," a senior official said, according to the newspaper."It seems a cartel has a right to change its mind," Flynn said. "Yesterday, Saudi Arabia says it's happy with $50-a-barrel oil, then today there's a report on the Saudi's cut in production. It's a day of contradictions."On Monday, prices fell by more than $1 to settle at $54.01 barrel after a Saudi official reiterated that they don't favor further production cuts and are comfortable with prices at current levels, according to a Dow Jones newswire report. The Saudi Arabia ambassador to the U.S., Turki al Faisal Saudi, was speaking at a National U.S.-Arab Chamber of Commerce event.The Organization of Petroleum Exporting Countries said it would begin cutting production by 1.2 million barrels a day in November but some traders have speculated that a few cartel members were not complying. The group said late last year it planned to cut production an additional 500,000 barrels a day starting Feb. 1. Saudi Arabia is OPEC's biggest producer.The markets are also looking ahead to the weekly report on U.S. inventories on Wednesday.U.S. crude imports are expected to have risen by 1.2 million barrels in the week ended Jan. 26, according to a survey of analysts by Dow Jones Newswires. Gasoline stockpiles are expected to gain 1.6 million barrels, while distillate stockpiles, which include heating oil and diesel, are seen falling by 2.6 million barrels.In other Nymex trading, gasoline futures rose 8 cents to settle at $1.5213 a gallon.