Oil inched towards $53 on Thursday, as investors fretted over falling oil demand after another set of bearish US stocks and oil demand data, erasing some of the 7 percent gains on an equities rally a day earlier. The Dow Jones industrial average has risen 15.6 percent in the last four days, the largest four-day percentage gain since 1932, after Europe plotted a $200 billion stimulus plan, and China cut interest rates by the biggest margin in 11 years.
But oil fundamentals remained weak, with US crude stocks rising sharply last week and US September demand falling to its to its lowest level for any month in more than a decade. US light crude for January delivery fell $1.04 to $53.40 a barrel by 0559 GMT, off an earlier low of $53.14, erasing some of the $3.67 gains made on Wednesday.
London Brent crude fell $1.10 to $52.82. "The global economic meltdown will continue to have a negative impact on demand, eventually pushing oil into the $40s before the year-end," said Jonathan Kornafel, Asia director of Hudson Capital Energy.
Oil has fallen by almost $100 a barrel since hitting a record peak above $147 a barrel in July as the global credit crunch dented demand in large consumer nations. US weekly crude stocks rose by a hefty 7.3 million barrels in the week ended November 21, well above forecasts for an 800,000-barrel increase, the US Energy Information Administration (EIA) said on Wednesday.
Total US product demand over the past four weeks was down 6.6 percent from year-ago levels, while September oil demand fell by 12.8 percent versus a year ago to its lowest in 12 years, the EIA also said. Global demand is expected to decline by 20,000 barrels per day each in 2008 and 2009, the first drop in a generation, that would leave it at 86.01 millions bpd then, a poll of analysts found on Wednesday.
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