Oil rebounds to above $51 after 7% slump

LATEST PRICE: Oil rebounded above $51 after a seven percent fall. (Getty Images)

Oil rose to above $51 a barrel on Wednesday, after a near seven percent fall the previous day, when data showed the US economy last shrank at its fastest pace in seven years.

A new $800 billion Federal Reserve rescue package helped US stock markers Dow and S&P 500 achieve their first three-day run since the summer on Tuesday after oil settled, but failed so far to lift oil prices.

US light crude for January delivery rose 31 cents to $51.08 a barrel by 5.48am UAE time, having settled down $3.73 at $50.77 on Tuesday after two-day gains of nearly 10 percent.

Oil prices have failed to post three consecutive days of gains since September.

London Brent crude rose 34 cents to $50.69.

"Concerns about weakening oil consumption remain a key negative for the oil price," said David Moore, commodity strategist from the Commonwealth Bank of Australia, in a daily note.

Revised US Commerce Department data showed on Tuesday third-quarter US gross domestic product dropped 0.5 percent against a year earlier, the sharpest fall since the third quarter of 2001.

Consumers spending, which accounts for two-thirds of economic activity in the US, fell to a 28-year low.

Slowing demand and recession concerns have knocked oil from its peak above $147 a barrel in July, prompting members of the Organisation of Petroleum Exporting Countries to call for further supply reductions to support prices.

OPEC ministers next gather in Cairo on Nov. 29 for a consultative session, with the organisation's next policy-setting meeting in Algeria on Dec.17.

Price hawk Iran on Tuesday said non-OPEC states should cooperate with OPEC in stabilizing the oil market because, if the group acts alone, prices will continue to fall.

OPEC members Iran and Venezuela have called on the cartel to cut production by at least another 1 million barrels per day, after last month's 1.5 million bpd cut failed to lift prices.

Another cut, which may be decided only at OPEC's meeting in December, could fail to raise prices.

"With prices still comfortably above the top end of the cost curve, and the focus clearly on demand conditions, tightening supply will unlikely create much price support," said ANZ Bank in its weekly commodities report. (Reuters)

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