Crude oil rose more than 6 percent after the United Arab Emirates said it would reduce production to comply with OPEC's supply curbs, Bloomberg reported.
Abu Dhabi National Oil Co., the biggest producer in the U.A.E., will reduce oil supply to Asia in January and February, according to a statement sent to Asian buyers. OPEC agreed to a record production cut on Dec. 17 in response to collapsing demand because of the economic slowdown. Oil also advanced because the dollar dropped against the euro.
"There are signs that the U.A.E. and Saudi Arabia are abiding by their OPEC targets," said Tom Bentz, senior energy analyst at BNP Paribas in New York. "The dollar is weaker, which is probably also giving the market some support."
Crude oil for February delivery rose 95 cents, or 2.7 percent, to $36.30 a barrel at 2:10 p.m. on the New York Mercantile Exchange. Futures increased as much as 6.5 percent to $37.64 a barrel today. Prices, which are down 14 percent this week, have declined 75 percent from a record $147.27 on July 11.
Brent crude oil for February settlement increased $1.68, or 4.6 percent, to $38.29 a barrel on London's ICE Futures Europe exchange.
Both Nymex and ICE were closed yesterday because of the Christmas holiday.
A decline in crude oil to $25 "is in the cards," Gulf Oil LP's Chief Executive Officer Joe Petrowski said today in a CNBC interview. Gulf, a Newton, Massachusetts-based wholesaler, distributes motor fuel to 1,800 branded filling stations in the Northeast. "The downside is well in gear," he said.