Oil above $47 on production cut talk

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NEW YORK (CNNMoney.com) -- Oil prices rose above $47 a barrel Monday on talk of an OPEC production cut, but they fell off the day's high after comments from Saudi Arabia put a damper on the speculation.

U.S. crude for April delivery ended the day up $1.55 to $47.07 a barrel in New York, its highest settle since Jan. 6, when prices finished at $48.58. Crude hit a high of $48.83 during Monday's session.

At an energy conference in Qatar, Abdullah al-Badri, secretary general for the Organization of Petroleum Exporting Countries, told reporters that the slowing global economy could cause demand to fall by one million barrels a day more than the group had predicted a month ago.

Investors initially interpreted al-Badri's comments as a sign that the group might announce another production cut when it meets Sunday in Vienna.

But Saudi Arabia, the world's largest oil producer and one of OPEC's most influential members, said it was against another production cut, according to state-owned media.

Saudi Arabia will be pushing for increased compliance with existing production cuts, rather than a new one, according to the al-Hayat newspaper, citing a confidential source.

OPEC, an international trade group that produces about 40% of the world's oil, has already taken millions of barrels of oil per day off the market since last September. So far, it has made 81% of its pledged 4.2 million barrel-per-day reduction, according to a Reuters survey.

Hopes of another OPEC cut are "overblown," according to Win Thin, senior analyst with financial firm Brown Brothers Harriman & Co, who expressed concern that the group wouldn't be able to keep up with the decline in consumption.

Should OPEC announce another cut, it will probably be somewhere near 500,000 barrels a day, according to Tom Orr, head of research for trading firm Weeden & Co. Orr believes a production cut is likely.

"I don't think they could go for much more than that," he said.

Crude prices have plummeted from a record high of $147.27 a barrel last summer and have not settled above $50 a barrel since November.

Economy: The labor market declined sharply in February, according to a report Monday from the business research group The Conference Board.

It was the latest indication of weakness in the economy of the United States, the world's largest oil consumer, echoing Friday's government report that showed the unemployment rate at 8.1% last month, the highest monthly rate in a quarter century.

Meanwhile, the World Bank said Sunday that the global economy could shrink this year for the first time since World War II, and that by mid-year, industrial production will have declined by up to 15% since 2008.

"If anything, since January, the global economic news has gotten worse, not better," said Thin.

Gasoline: The price of gasoline at the pump retreated 0.2 cent Monday to a nationwide average of $1.945 a gallon for regular unleaded, according to a daily survey from motorist group AAA. Prices were up from $1.916 a month prior, but down from the $3.215 average recorded a year ago.

Prices have held in a $1.90 to $2 range over the past few weeks, after a drop from the high of $4.114 a gallon last summer.