LONDON Oil prices drifted higher in lackluster trade late on Friday as traders struggled to gauge market direction amid some bearish short-term fundamentals before OPEC production cuts hit supply. At the close, benchmark Brent crude oil for March delivery settled at $26.98, up 52 cents a barrel. U.S. light crude Futures were brought within a hair of $30 a barrel, but ultimately last trading up 42 cents at $29.78 a barrel. The market got some support on a forecast of frigid temperatures throughout Europe over the next two weeks which should boost heating fuel demand. Brent ended the week within 10 cents of where it began, partly supported by the Organization of the Petroleum Exporting Countries' (OPEC) agreement last week to slash output by 1.5 million barrels per day from February to bolster prices during the sluggish second quarter demand period. Traders said the OPEC move had kept a floor under prices but growing fuel stocks in the United States and depressed refining margins had dented buying interest. A warning about the state of the U.S. economy from influential U.S. Fed Chairman Alan Greenspan on Thursday was also seen by some market players as bearish for oil demand. Greenspan talked of a "very dramatic slowing" in the economy of the world's largest fuel consumer. He said the country was "very close to zero (growth) at this particular moment". "The comments by Greenspan have shocked the market and have led some to rethink demand forecasts," said Peter Gignoux, head of the London Energy Desk at Schroder Salomon Smith Barney. Signs of weakening demand for crude oil have already been felt in the European market this week when some refiners scaled back production because of depressed profit margins. The cutbacks were the first since last summer. European refineries have been running at full throttle since last summer after reaping some of their strongest profit margins ever in 2000. But analysts said on Friday they expected margins to fall almost to half of last year's levels. "We don't see any reason why margins should remain way above historical levels. The fundamentals will reassert themselves," said John Waterlow of Consultancy Wood MacKenzie. However, a report from meteorologists at investment bank Salomon Smith Barney predicting an arctic blast in Europe and the former Soviet Union through early February sparked some buying interest in heating oil futures. In a weekly report released on Thursday, weathermen Mark Russo and Jon Davis said the cold blast would result in "significantly higher" heating fuel demand across the entire region. (Reuter)