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(Corrects to read 2% (not 1%), paragraph 1)
* OPEC output increase smaller than expected - poll
* UBS sees Brent at $63 mid-year, Goldman at $65
* BP cites declining product demand, retail sales
* U.S. blizzard offers hope for product demand
By Noah Browning
LONDON, Feb 2 (Reuters) - Oil prices rose more than 2% on
Tuesday after major crude producers showed they were reining in
output roughly in line with their commitments, extending gains
in a market thrown out of kilter by weak demand during the
coronavirus pandemic.
Brent crude was up $1.30, or 2.3%, at $57.65 a
barrel by 1150 GMT, its third straight day of gains. U.S. oil
gained $1.25, also 2.3%, to $54.80. Both contracts rose
more than 2% in the previous session.
OPEC crude production rose for a seventh month in January
but the increase was smaller than expected, a Reuters survey
found.
Also, voluntary cuts of 1 million bpd by OPEC's de facto
leader, Saudi Arabia, are set to be implemented from the
beginning of February though March.
"With OPEC and its allies (OPEC+) endeavouring to keep
global oil production below demand, we expect petroleum
inventories to keep falling," UBS said in a note.
"With inventories starting to drop in 2H20, the structure of
the futures curve has shifted to become downward sloped. This is
attracting investors."
The investment bank forecast Brent would reach $63 a barrel
by the second half of this year and $65 by the first quarter of
2022. Goldman Sacks said it expected the benchmark to reach $65
a barrel by July.
Russian output increased in January but in line with the
agreement on reducing production, while in Kazakhstan oil volume
fell for the month.
However, energy giant BP flagged a difficult start to
2021 amid declining product demand, noting that January retail
volumes were down by around 20% year on year, compared with a
decline of 11% in the fourth quarter.
Oil demand is nevertheless expected to recover in 2021, BP
said, with global inventories expected to return to their
five-year average by the middle of the year.
Helping to support prices, a severe blizzard hitting a large
area of the northeastern United States is pushing up demand for
heating fuel.
(Reporting by Noah Browning and Aaron Sheldrick; editing by
David Evans)
