Oil up above $41 after OPEC hints of cuts

Oil rose to over $41 a barrel on Wednesday despite expectations that weekly U.S. data would show a build in crude stockpiles as demand for energy in the world's biggest oil consumer declines.

The move was supported by signals from the Organization of the Petroleum Exporting Countries that it may cut oil production further in an attempt to bolster the market.

U.S. light crude for March delivery jumped more than a dollar at one point, trading at a high of $41.79, up $1.01, before slipping back to trade around $41.45 at 1113 GMT.

Brent crude was 72 cents up at $44.80 a barrel.

Despite the rally, the market is still down more than 50 percent from a year ago. Oil has plummeted by more than $100 since hitting a record near $150 a barrel in July last year as the global downturn has weighed on demand for fuel.

OPEC is deeply worried by the impact the global economic downturn is having on oil demand and has promised to reduce oil production by a total of 4.2 million barrels per day (bpd) from levels seen in September.

OPEC President Jose Botelho de Vasconcelos, who is also Angola's oil minister, told Reuters on Tuesday the 12-member group could remove more oil from the market if needed to boost prices.

OPEC in January met only two thirds of its pledge to lower oil output as several members of the producer group continued to pump above target levels, a Reuters survey showed.

There is little sign of an improvement in oil demand.

SEVERE, SYNCHRONISED RECESSION

On Tuesday, weak retail sales in the United States and Germany, as well as a jump in Spanish unemployment, provided the latest evidence of a severe, synchronized global recession.

"The economic context remains very weak and the market is waiting for U.S. oil data later today," said Harry Tchilinguirian, oil analyst at BNP Paribas in London.

"Surprise builds in product inventories will only validate assessments of underlying weak oil demand."

The U.S. Energy Information Administration will release its oil data at 10:30 a.m. EST (1530 GMT).

A Reuters poll of analysts forecast the report would show that U.S. inventories of crude oil rose for the sixth straight time last week as refinery utilization was curbed by seasonal maintenance, rising imports and falling demand.