Oil prices step above $41
Prices rise as investors weigh the possibility of both an economic turnaround and another OPEC cut.
NEW YORK (CNNMoney.com) -- Oil settled nearly a dollar higher Thursday after investors digested several economic reports and weighed the possibility of another OPEC production cut announcement in March.
U.S. crude for March delivery ended the day up 85 cents to $41.17 a barrel.
Prices had touched a low of $39.46 a barrel earlier in the day following the release of a report showing a spike in unemployment claims last week, but by the middle of the session, investors were split over what it means for the state of the economy, according to Phil Flynn, senior market analyst with brokerage Alaron Trading in Chicago.
The Labor Department said that the number of Americans newly filing for unemployment benefits last week rose to the highest level since 1982.
"Some people think it's going to get worse, some people think it's going to get better," said Flynn.
Some economists, such as Robert Brusca at Fact and Opinion Economics assert that the 626,000 new jobless claims reported Thursday represent a peak, and could indicate the end of the recession is near.
However, companies continue to announce job cuts and other indicators remain negative as well. Last week alone, private companies announced more than 100,000 job cuts.
Another gauge of the nation's economy from the government showed that factory orders fell 3.9% in December.
As the economic crisis unfolds, concern about falling demand for oil has sent prices down more than $100 a barrel from a record high of $147.27 last summer. But since the beginning of February, prices have maintained an uneasy equilibrium around $40 a barrel.
OPEC cuts: The Organization of Petroleum Exporting Countries pledged at the end of last year to cut production by 2.2 million barrels a day in January on top of a previously announced cut of 2 million barrels per day last year.
According to a recent Reuters survey, the group met about 67% of the total cut. OPEC, whose members produce about 40% of the world's crude, is well-known for exceeding production cut goals.
Yet, there were signs that the group may actually be planning another production cut, according to Flynn.
Saudi Arabia, a lead OPEC member and the world's largest producer, raised it's base price for March crude oil, something it sometimes does ahead of a production cut, according to Flynn.
Analyst Stephen Schork of the Schork Group, who plans to attend OPEC's next meeting in March, was less convinced.
"At this point, I think it's about a 50/50 proposition," he said. Since oil prices appear to have found a bottom near $40 a barrel, there may be less incentive for OPEC to cut again, he added.
Schork's assertion echoed that of Chakib Khelil, Algeria's oil minister, who said Tuesday that there was a 50% chance the group could cut production again when it meets on March 15, according to Reuters.