Oil rises from four-year low to $79 on OPEC cut hopes

By Alex Lawler

LONDON (Reuters) - Oil rose to $79 a barrel on Friday having earlier hit a four-year low, supported by speculation that the prospect of even lower prices may nudge OPEC producers towards cutting output at a meeting in two weeks.

The International Energy Agency, which usually refrains from predicting oil prices, said in its monthly report that prices could fall further in 2015 and pressure was building on OPEC to cut supply.

"It is increasingly clear that we have begun a new chapter in the history of the oil markets," said the IEA, which advises the United States and other industrialised countries.

"Barring any new supply disruption, downward price pressures could build further in the first half of 2015."

Brent hit an intra-day low of $76.76 earlier in the session, the lowest since September 2010, before climbing back up to $79.10 as of 1417 GMT. U.S. crude was up 58 cents at $74.79.

Global benchmark Brent is down from $115 in June and has dropped for eight weeks in a row, its longest weekly losing streak since records began in 1988, based on Reuters data.

Oil supply and demand balances of the IEA and other forecasters point to a rising supply surplus in 2015 because of increasing production from the United States and other countries outside OPEC.

The Organization of the Petroleum Exporting Countries meets on Nov. 27 to discuss its response to falling prices.

While top OPEC producer Saudi Arabia has yet to say if it backs a supply cut, more smaller producers are supporting the need for action. Algeria and Venezuela will join forces to defend prices, Venezuela's Foreign Minister was quoted on Thursday as saying.

"I think Algeria and Venezuela are saying that they are willing to commit if the rest of OPEC is willing," Bjarne Schieldrop, chief commodity analyst at SEB in Oslo, told the Reuters Global Oil Forum.

"Hopefully we will have enough pain ahead of the OPEC meeting in order for OPEC to become OPEC again."

Supply disruptions still have the potential to support prices. In Libya the Hariga oil port reopened after a protest ended but the El Sharara oilfield remains shut.

(Reporting by Alex Lawler and Keith Wallis; editing by William Hardy, Greg Mahlich and David Evans)