Oil above $37 on UAE supply cut, thin trade

Oil climbed in thin post-holiday trade on Friday after the United Arab Emirates said they will deepen supply cuts in line with Opec's biggest-ever output cut announced last week. US crude settled at $37.71 a barrel, up $2.36. London Brent rose $1.84 to $38.45 by 2:47 pm EST (1947 GMT). "The only positive news (for the market) ... came from the UAE," Olivier Jakob of Petromatrix wrote in a report.
"For now at least, Saudi Arabia and the UAE seem to be fully complying with the cuts." Abu Dhabi National Oil Co (Adnoc), the main producer in the UAE, the world's fifth-largest oil exporter, said it would cut February supplies of Murban and Upper Zakum by 15 percent and Lower Zakum and Umm Shaif by 10 percent each.
A source with an Asian refiner said the Adnoc cuts were more than expected. "Adnoc had already allocated January volumes, but they reversed the decision, so that messes up our schedule," the source said. "For February, the reduction volumes are very large, so we may need to adjust our ship loadings."
The allocations follow a decision last week by the Organisation of the Petroleum Exporting Countries to reduce supplies by 2.2 million barrels per day. Top exporter Saudi Arabia informed its customers even before the Opec meeting they would be receiving less oil.
The Opec reduction is its deepest ever as the producer group battles a market slump that has sliced more than $110 off the price since a July peak above $147 a barrel. Oil prices were also supported by thin trading volume on Friday after oil markets were closed Thursday for Christmas.
On Wednesday, US crude settled more than $3 lower after government data showed jobless claims in the United States, the world's biggest oil burner, had risen to a 26-year high and that consumers had cut spending for the fifth consecutive month in November.
Asian economies, once seen as a guarantee of high oil demand even if the United States faltered, have not escaped. Deepening recession is expected to cut oil demand in Japan, the world's third biggest oil consumer after the United States and China, by almost 5 percent in the year starting April. Consumption was also seen sliding by 5.7 percent in the fiscal year ending next March, the Institute of Energy Economics, Japan, said this week.