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Oil prices recover after previous day's tumble as market volatility continues

Oil prices recover after previous day's tumble as market volatility continues

Oil prices rebounded Friday after tumbling a day earlier because of doubts that OPEC members are making the production cuts they promised last year.
Light, sweet crude for March delivery rose 27 cents to US$54.50 a barrel in electronic trading on the New York Mercantile Exchange by midday in Europe. Crude prices had risen as high as US$55.90 a barrel Thursday before settling at US$54.23.
Brent crude rose 32 cents to US$54.44 a barrel on the ICE Futures exchange in London.
"The drop yesterday was primarily a result of profit-taking after a rather strong price gain," said Victor Shum, energy analyst with Purvin & Gertz in Singapore.
The Organization of Petroleum Exporting Countries said it would begin cutting production by 1.2 million barrels a day in November, but some traders speculate members are not complying. The cartel said late last year it planned to cut production another 500,000 barrels a day starting Feb. 1.
Earlier this month, crude fell to US$50 a barrel, but it rose about 10 percent over the past week as cold weather returned to the heating oil-consuming Northeastern United States.
Tanker tracker Oil Movements reported that it expects exports from OPEC to rise in mid-February.
"If you look at trading this week, the market has found some support above the US$50-a-barrel price mark. It appears to have found a floor due to a number of factors," Shum said, citing continued cold weather in the U.S. and the announcement Tuesday by the U.S. government to double the size of its Strategic Petroleum Reserve.
Analysts expect crude-oil futures to stay in narrow range of US$54 to US$55 a barrel as "traders are likely to adjust positions ahead of the weekend," says Ken Hasegawa, a broker at Himawari CX in Tokyo.
In other Nymex trading, February heating oil futures gained half a cent to US$1.5536 a gallon, while natural gas rose 4.5 cents to US$6.950 per 1,000 cubic feet.