Crude oil prices jumped more than 5 percent on Tuesday at the New York Mercantile Exchange, the biggest rise in 16 months, as OPEC is to cut supply and cold weather in the U.S. Northeast boosts fuel consumption.

Crude oil for March delivery rose 2.96 U.S. dollars, or 5.48 percent, to 56.97 dollars a barrel at New York market, the biggest rise in one day since Sept. 2005.

Brent crude oil for March increased 2.71 dollars to 56.39 dollars a barrel in London.

OPEC CUT

OPEC producers were set to reduce supply to world markets by 500,000 barrels per day from Feb. 1, following a 1.2 million-barrel-cut from Nov. 1 last year.

After giving a conflicting signal on Monday, Saudi Arabia, the world's largest oil producer and leader of OPEC, said it was to tighten its spigots this week.

A senior Saudi oil official said the kingdom had advised its customers of the impending 158,000 barrel-a-day cut, which takes effect Feb. 1, according to the Wall Street Journal.

"After these cuts, our oil production will have declined by about one million barrels a day since last summer," the senior Saudi oil official was quoted as saying by the Journal.

The report said that Saudi Arabia's one-million-barrel reduction is nearly double the total cuts it agreed to make under two output reductions hammered out by OPEC at meetings in Doha, Qatar, in October and in Abuja, Nigeria, in December.

OPEC's December crude oil production was 28.62 million barrels a day, a decline of 1.3 million barrels, or 4.3 percent, since July, according to a Bloomberg News Survey.

HEATING DEMAND

According to the National Weather Service, the cold weather will continue to dominate the U.S. Northeast for the next two weeks.

As the biggest consumer of fuel, the U.S. Northeast is using some 80 percent of the nation's heating oil.

Crude prices rebounded above 55 dollars a barrel last week as cold weather hit the Northeast and the latest weather forecast boosted the energy prices.

The price of natural gas for March delivery rose 75.5 cents, or 11 percent, to 7.692 dollars per million British thermal units.

Heating oil for February delivery rose 8.86 cents, or 5.7 percent to 1.6375 dollars a gallon in New York.

Tuesday's surge was also fueled by a rush of buying by funds ahead of a fresh OPEC output cut, said analysts.

Editor: Donald