NEW YORK (Reuters) - U.S. oil jumped nearly 10 percent on Friday on hopes the U.S. economic stimulus package could help pull the economy out of a 14-month recession.
A majority of the U.S. House of Representatives voted to pass the $787 billion U.S. economic stimulus package that would unleash large spending and also some tax cuts.
"It looks like a bounce on stimulus hopes," said Tom Bentz, analyst at BNP Paribas Commodity Futures.
U.S. crude for March delivery rose $3.30 to $37.28 a barrel by 2:22 p.m. EST. London Brent crude for April traded down $1.47 to $44.56 a barrel.
Further support came as traders booked profits by selling the spread between front and second month futures contracts, analysts said. U.S. crude for April delivery eased 16 cents to $42.01 a barrel.
"Those that were short March and long April are reversing that, taking profits and getting out of that spread play before the long weekend. And (March) options are expiring on Tuesday after the holiday," said Phil Flynn, analyst at Alaron Trading in Chicago.
Oil prices have tumbled from their peak over $147 a barrel last year as the economic downturn has spread to all regions of the world, cutting energy consumption.
Producer group OPEC on Friday cut its forecast for world oil demand, adding to a wave of demand cuts made by other forecasters this year.
Making a possible case for further supply cuts, OPEC said in its monthly report that global demand would fall by 580,000 barrels per day (bpd) in 2009 to average 85.13 million bpd.
The cartel agreed to a series of deep production cuts in the second half of 2008 to combat the slide in prices and demand. OPEC is next scheduled to meet in March, with some members calling for another reduction in supplies.
The International Energy Agency on Friday said that global markets are already tightening, and that any move by OPEC to further restrict supplies could send oil prices higher.
(Reporting by Matthew Robinson, Robert Gibbons, and Gene Ramos in New York; Christopher Johnson and David Sheppard in London and Fayen Wong in Perth; Editing by Christian Wiessner)
