Oil advanced in New York and London after OPEC said that a slump in prices will start to erode U.S. supply growth this year.

West Texas Intermediate futures gained 1.7 percent in New York, erasing an earlier decline of 2.7 percent. The rate of U.S. supply growth will be slower than previously forecast, OPEC said, as companies curb drilling activity and cut spending plans. U.S. output surged to 9.19 million barrels a day last week, the fastest pace in weekly records dating back to January 1983, the Energy Information Administration reported yesterday.

Crude slid almost 50 percent last year, the most since the 2008 financial crisis, as the Organization of Petroleum Exporting Countries resisted calls to cut its output ceiling amid the U.S. shale boom, exacerbating a surplus estimated by Kuwait at 1.8 million barrels a day. Demand for OPEC crude will average 28.8 million barrels daily this year, the group said today in a report.

West Texas Intermediate for February delivery gained 80 cents to $49.28 a barrel in electronic trading on the New York Mercantile Exchange at 1:06 p.m. London time. The contract advanced 5.6 percent to $48.48 yesterday, the most since June 2012. The volume of all futures traded was more than double the 100-day average for the time of day.

Brent for February settlement, which expires today, climbed 71 cents, or 1.5 percent, to $49.40 a barrel on the London-based ICE Futures Europe exchange. The more-active March future added 78 cents to $50.64.

Source : Bloomberg