UPDATE 7-Oil rises on economic optimism, tightening supplies

* Brent hits highest price since February 2020
* Dollar hits two-month highs vs euro, yen
* OPEC+ expects oil market deficit despite weaker demand
* U.S. crude stockpiles fall to lowest since March, EIA says

(New throughout; updates prices, market activity and comments
to settlement)
By Laila Kearney
NEW YORK, Feb 4 (Reuters) - Oil ticked up on Thursday on
strong U.S. economic data, falling inventories and the OPEC+
decision to stick to its output cuts, but a stronger U.S. dollar
limited the gains.
Brent crude LCOc1 settled at $58.84 a barrel, up 38 cents,
having earlier hit its highest level since Feb. 21 at $59.04.
U.S. West Texas Intermediate (WTI) crude CLc1 settled at
$54 a barrel, rising 54 cents after reaching its highest
settlement level in a year on Wednesday at $55.69.
Strong U.S. factory data and improving unemployment numbers
helped boost oil prices, said John Kilduff, partner at Again
Capital in New York.
"That helped, and given the broader situation with OPEC+, I
would expect for this market to tighten up further," Kilduff
said.
The U.S. Commerce Department said factory orders increased
1.1% after surging 1.3% in November, beating economists'
expectations, while Labor Department data showed a drop in
Americans filing new applications for unemployment benefits in
the latest week. Investors were also expecting positive data
from the government's comprehensive monthly employment report
due on Friday. The market was further bolstered by news that Democrats in
the U.S. Congress took the first steps toward advancing
President Joe Biden's proposed $1.9 trillion coronavirus aid
plan. A rallying U.S. dollar, which typically moves inversely with
oil prices, took some of the steam out of oil's momentum. The
dollar .DXY hit more than a two-month high against a basket of
other currencies. On Wednesday, the Organization of the Petroleum Exporting
Countries (OPEC) and allies - known as OPEC+ - extended its oil
supply pact at existing levels, suggesting that producers are
happy the cuts are draining inventories while uncertainty
remains over the outlook for a recovery in demand as the
COVID-19 pandemic lingers.
A document seen by Reuters on Tuesday showed that OPEC
expects output cuts to keep the market in deficit throughout
2021, even though the group reduced its demand forecast.
Also on Wednesday, government data showed that U.S. crude
oil stockpiles last week unexpectedly fell to 475.7 million
barrels, their lowest level since March.