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.

Saudi..

Energy: From FTN: "Saudi Arabia will cut crude output by an additional 158k barrels per day starting February 1. After these cuts, Saudi output will be down by about 1 million barrels per day since last summer. Still, crude oil inventories are close to a nine-year high. Some of the increase in supply is the result of warm weather, but some reflects slower economic growth. After all, inventories bottomed in 2004, and the warm streak only goes back to November of this year. Because demand is falling due to slower economic growth, supply reductions will boost the price of oil but will also result in still slower economic growth. In a way, the Saudis have tightened economic conditions for everyone."Provided by: Market News International

OPEC

OPEC: Reported comments from Algerian oil minister Chakib Khelil-- OPEC unlikely to cut production again in March-- Oil prices will stabalise at around $50.00. (Bbg).Provided by: Market News International

Mid morning news from ADVFN

In London, Kazakhmys led blue chips lowers, down 18 pence at 1,032, with weaker metal prices offsettng fourth quarter production numbers, which Credit Suisse said were the company's best so far.
Earlier, Kazakhmys said copper in concentrates rose 9 pct to 433,500 tonnes, while copper cathodes grew 3 pct to 407,000 tonnes.

In reaction, Credit Suisse said despite the strong production figures, it is cutting its price target to 1,300 pence from 1,500p to reflect the recent fall in copper prices.
Sector peers fell in sympathy, further hit by declines in commodity prices overnight, with copper losing 4 pct and weak numbers from US peer Phelps Dodge yesterday.
Xstrata lost 29 pence at 2,295, BHP fell 12 pence to 928, Vedanta was down 13 pence at 1,117, Anglo American eased 24 pence at 2,341 and Rio Tinto was down 22 pence at 2,658.
Oil majors also weighed as crude prices failed to make much headway following steep falls yesterday, with investors waiting tomorrow's US stockpile data.
Earlier this morning, the New York Mercantile Exchange's main oil futures contract, light sweet crude for delivery in March, was up 0.09 usd at 54.10 usd.
Sentiment was further knocked as Morgan Stanley cut its price target on BP to 610 pence from 685 and on Royal Dutch Shell to 1,825 pence from 2,030.
BP shed 3 pence to 535-1/2, Royal Dutch Shell was down 11 pence at 1,704, and BG was off 2 pence at 663-1/2.

Saudi Arabia to cut oil output to raise prices - report

LONDON (AFX) - Saudi Arabia, which already has aggressively shaved its oil output in a battle to shore up prices, will reduce production by another 158,000 barrels per day from Thursday and more cuts are on the way, the Wall Street Journal reported, citing an unnamed senior Saudi official.The latest cut means Saudi Arabia will have reduced production by about 1 mln barrels per day in the past six months, the report said.The Saudi official couldn't be precise about the country's output after the reduction this week but said that it would be "around 8.5 million barrels a day."The reductions, part of a broader OPEC campaign, are intended to shrink inventories of oil that had ballooned last year as demand growth for petroleum faltered, The Journal said. The Saudi cut is seen as an aggressive move to keep the price of the US benchmark crude above 55 usd a barrel, the report said, citing Roger Diwan, an analyst at PFC Energy, a Washington industry consultancy.Word of the Saudi move to further trim output comes as traders are trying to learn if OPEC is going to cut its production in line with its announced plans, the Journal said, noting OPEC's members often produce more than they have pledged.Saudi Arabia's reduction is nearly double the total cuts it agreed to make under two output accords hammered out at OPEC at meetings in October and December, the WSJ said. The 10 OPEC members that committed to the cuts were producing about 27.5 mln barrels a day in September, the Journal said, and if the agreed-upon cuts are fully implemented, output would drop to 25.8 mln barrels a day in a global oil market of about 85 mln barrels a day.

Credit Suisse's Bhutani Switches From Metals to Oil in Top Fund

http://www.bloomberg.com/apps/news?pid=20601085&sid=af9OuXxKJLAg&refer=europe

BP

BP's joint venture in Russia has been found guilty of breaking the terms of its licence to exploit one of the world's biggest natural gas fields, endangering its stake in the flagship project. Rosprirodnadzor, Russia's environmental watchdog, is reported to have officially concluded that the Anglo-Russian joint venture TNK-BP has under-exploited the giant $2bn Kovykta gas field in Siberia, writes the Independent.