Oil settles above $37 on Saudi cuts and cold weather

By Rebekah Kebede

NEW YORK (Reuters) - Oil prices settled higher on Tuesday, bolstered by cold weather in the United States and comments by OPEC member Saudi Arabia that it had made deep production cuts.

The news offset a report by the U.S. Energy Information Administration further revising down its forecast for 2009 global oil demand.

U.S. crude settled at $37.78 a barrel, up 19 cents, off a session high of $39.50. February Brent settled at $44.83, up $1.92.

"This is a product-led rally, with heating rallying on cold weather and gasoline up with the crack spread up dramatically. News that the Saudis have cut production a lot is also supportive," said Andrew Lebow, broker at MF Global.

Saudi Arabian Oil Minister Ali al-Naimi said the world's biggest exporter would pump below its OPEC production target of 8.05 million bpd in February.

"If there is a need to do more, we will do so because our purpose is to bring things in balance," Naimi told reporters in New Delhi. "We will look and see whether we need to take more. If we need to, if inventories keep rising, we will reduce."

"We have taken -- Saudi Arabia alone -- 1.7 million (bpd)" (off the market), he said.

OPEC's secretary general said the cartel may cut oil output further at its meeting in March if the market remains oversupplied a month from now.