Oil jumps 7 pct as Saudi Arabia deepens cuts

By Richard Valdmanis

NEW YORK (Reuters) - Oil rose 7 percent on Monday as a rebound in global equity markets and signs of deepening cuts from top world supplier Saudi Arabia helped the market break a six-session losing streak.

U.S. crude for January delivery gained $2.90 to settle at $43.71 a barrel, bouncing back from a 25 percent drop last week -- its deepest weekly rout in 18 years. London Brent crude rose $3.68 to $43.42 a barrel.

The rebound came alongside gains in other global commodity and equity markets as investors took heart from efforts by Washington to finalise a rescue for the struggling U.S. auto industry.

"Global investors have apparently taken a significant degree of solace from Congress' apparent move towards a bailout of the auto industry and President-elect Obama's commitment to economic stimulus," John Kilduff, senior vice president at MF Global, wrote in a research note.

Oil also got a boost from prospects for a fresh OPEC agreement to trim output when the cartel meets December 17.

"OPEC's meeting is nine days away, meaning that we could see some strengthening leading into the meeting," said Edward Meir of futures broker MF Global.

OPEC kingpin Saudi Arabia, which has said it is seeking a $75 price for a barrel of oil, told oil refiners in Asia it would deepen supply cuts to as much as 10 percent of contracted volumes in January versus a 5 percent cut in December. It also reduced supplies to European refiners.

OPEC, facing a slide in oil prices since July of over $100 a barrel, has already agreed to cut about 2 million barrels per day (bpd) of production to support prices and members are leaning towards more supply cuts at the December 17 meeting in Algeria.