By Laura Sanicola

NEW YORK (Reuters) - Oil prices settled more than 2% higher on Monday, buoyed by falling U.S. crude inventories and rising winter fuel demand due to one of the worst snowstorms to hit the U.S. Northeast in years.

Brent crude settled up $1.31 cents, or 2.4%, at $56.35 a barrel. U.S. crude gained $1.35 cents, or 2.6%, to settle at $53.55. Both benchmarks gained nearly 8% in January.

U.S. government data last week showed a drawdown of 2.3 million barrels in stocks at the Cushing, Oklahoma, delivery hub for crude futures. Another 2.3 million-barrel weekly decline is expected, analysts and traders said citing a Wood Mackenzie report.

"Crude is being supported by many small factors this week - expected drawdowns in Cushing, a sudden rise in winter fuel demand amid colder weather, and further talks on Capitol Hill about stimulus checks," said John Kilduff, partner at Again Capital LLC in New York.

The U.S. Northeast has been hit by a powerful winter snow storm, pummeling a vast swath stretching from Pennsylvania through New England and causing widespread disruption in New York City and other major urban centers in the region.

Goldman Sachs said oil prices could rise to $65 by July, forecasting an oil market deficit of 900,000 barrels per day (bpd) in the first half of 2021, a higher level than its previous prediction of 500,000 bpd.

OPEC oil output rose for a seventh month in January, a Reuters survey found, after the group and its allies agreed to ease supply curbs further, although the production growth was smaller than expected.

"It looks like OPEC compliance is really pushing the complex higher, as well as the expectation that we will see U.S. inventories tighten over the next few weeks," said Phil Flynn, an analyst at Price Futures Group in Chicago.

Russian oil and gas condensate production also increased in January, two sources told Reuters on Monday, but the increase was in line with expectations, following Moscow's deal with OPEC on output cuts.

U.S. oil and gas drillers are gearing up for a pick-up in demand. As higher prices make new wells profitable again, they added rigs for a sixth month in a row in January. [RIG/U]

U.S. production data from the Energy Information Administration showed output rose above 11 million bpd in November, the first time it has exceeded that figure since April.

(Graphic: OPEC and U.S. oil production: https://fingfx.thomsonreuters.com/gfx/mkt/jbyprndxype/OPEC%20vs%20US%20oil%20Chart%20(002).png )

(Additional reporting by Bozorgmehr Sharafedin in London, additional reporting by Aaron Sheldrick in Tokyo, Editing by Marguerita Choy, Emelia Sithole-Matarise and Paul Simao)