Oil bounces back above $37
Prices end higher after 9 consecutive declines as United Arab Emirates lends substance to OPEC production cut.
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NEW YORK (CNNMoney.com) -- Oil prices rose back above $37 a barrel Friday after OPEC member United Arab Emirates detailed how it would cut production as part of the trade group's pledge to reduce output by 2.2 million barrels a day in January.
U.S. crude for February delivery settled up $2.36 to $37.71 a barrel at the end of an abbreviated trading week due to the Christmas holiday. Trading ended early Wednesday, and the market was closed Thursday.
The Abu Dhabi National Oil Co., the UAE's primary oil company, on Friday disclosed its strategy for reducing production at specific oil fields around the country. A source with an Asian refiner said the specified cuts were more than expected, according to Reuters.
"The question is, is everybody else going to cut back like they are," said Mark Waggoner, president of trading firm Excel Futures in Huntington Beach, Calif.
OPEC pledge: The Organization of Petroleum Exporting Countries, an international trade group whose members produce about 40% of the world's oil, said last week it would cut production in an attempt to bolster oil prices.
However, many investors have been worried that the group's members would not be able to meet their plan - announced last week - to take 2.2 million barrels a day off the market, the largest single cut the group has ever offered.
The announcement failed to keep oil from falling to a recent low of $33.87 as investors were skeptical that OPEC members would be able to meet their quotas.
OPEC had previously announced production cuts of 1.5 million barrels a day in October, but had only managed to reduce production by about 950,000 barrels a day by November, according to research firm Platts.
This time, however, "I don't think they have a choice," said Waggoner.
The rapid decline of oil prices over the past several months has hammered the economies of many countries, such as Iran and Venezuela, that depend on oil profits to sustain their economies.
Oil prices have fallen about $110 a barrel since hitting a record high of $147.27 in July. Investors are worried that the weakening global economy has seriously impacted demand for crude oil.
Consumption in the United States, the world's largest oil consumer, has plummeted as cash-strapped consumers and businesses cut back on the use of petroleum-based fuels.
Crude prices have fallen for the past 9 consecutive sessions as worries about demand overshadowed OPEC's pledge.
Oil below $40 a barrel makes a lot of exploration and production unprofitable. But now, because of reduced capacity, another large spike in crude prices is "inevitable," said Waggoner.
If the economy recovers, and consumer confidence improves, prices could reach between $85 and $100 again by June or July, he said. 
