Oil rises more than 3 percent on weather and OPEC

NEW YORK (Reuters) - Oil jumped more than 3 percent on Tuesday as winter weather blasted the United States amid signs OPEC has tightened supplies.

Further support came as the U.S. February crude contract headed for expiry at the end of the trading session.

U.S. February crude rose $1.25 to $37.76 a barrel by 12:52 p.m. EST, while March crude fell 76 cents to $41.81 a barrel. London Brent gained 34 cents to trade at $44.84 a barrel.

"There's a short-squeeze play going on ahead of February crude's expiration, as there are still some traders heavy with shorts on this last trading day for the contract," said Phil Flynn, analyst, Alaron Trading, Chicago.

"The market is also filling the gap between the February and March contract, one activity which we saw in the last two contract expirations and so we are seeing a narrowing of the Feb/March contract."

Slumping demand in the United States and Europe has helped send crude prices down from record highs over $147 a barrel struck in July, prompting producer group OPEC to agree to a series of output cuts aimed at balancing the market and supporting prices.

Kuwait has informed all customers of cuts in oil supply in line with OPEC's December decision to reduce supply, state oil company Kuwait Petroleum Corporation said.

New OPEC President, Botelho de Vasconcelos, told Reuters the group was fully enforcing its deepest ever oil supply curbs, adding OPEC was unlikely to meet before its next scheduled meeting in Vienna in March.

"The OPEC cuts are stabilizing the markets, even if they are not making it go up very much," said Christopher Bellew, broker at Bache Commodities in London.

Further support came as cold weather hit the U.S. Northeast, the world's largest heating oil market.

China, one engine in the six year commodity price rally that started 2002, was expected to release fourth-quarter GDP data this week that economists say will show a 7.0 percent growth, the slowest pace of expansion in nearly a decade for the world's third-biggest economy.

Russian gas reached Europe via Ukraine for the first time in two weeks after Moscow and Kiev ended a contract row that cut supplies to about 20 European countries.

(Reporting by Matthew Robinson, Robert Gibbons, and Gene Ramos in New York; Christopher Johnson and Joe Brock in London)