Oil edges above $51 ahead of US fuel data

Oil rose above $51 a barrel on Wednesday from a near 7 percent decline in the previous session, ahead of weekly U.S. oil stocks data that will help investors gauge the strength of demand in the world's top energy consumer.

U.S. light crude for January delivery rose 78 cents to $51.55 a barrel by 1000 GMT, having settled down $3.73 at $50.77 on Tuesday after two-day gains of nearly 10 percent. London Brent crude rose 96 cents to $51.31 a barrel.

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

Weaker than expected U.S. GDP data knocked down prices on Tuesday, after a government revision showed third-quarter gross domestic product shrank by 0.5 percent rather than the 0.3 percent reported last month.

China's decision to cut interest rates by 1.08 percent on Wednesday has boosted hopes that a prolonged slowdown in the world's fastest growing oil consumer can be avoided, providing some support for prices. "Any positive news for China could be good for oil demand," said Sucden analyst Michael Davies. "It's quite clear the Chinese economy has issues but they appear to be taking action to help avoid a hard landing."

The slowing global economy has hit oil demand hard, with many analysts predicting demand growth next year could be flat or even fall for the first time since the early 1980s. Prices have plummeted by almost $100 a barrel since hitting a peak above $147 a barrel back in July.

EVENLY BALANCED

Ministers from the Organization of Petroleum Exporting Countries (OPEC) meet in Cairo on Friday for a consultative session amid calls for further production cuts from members to help balance the oil market. OPEC members Iran and Venezuela have called on the group 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.

OPEC's next official production-setting meeting is in Algeria on Dec. 17. OPEC pumps 40 percent of the world's oil. "The bullish and bearish influences are pretty evenly balanced at the moment with speculation of a further OPEC production cut largely offset by the ongoing concerns over falling demand," said Bank of Ireland analyst Paul Harris. "After the volatility we've seen in the market over the last two sessions it will probably quieten down about ahead of the U.S. inventory data later today."

U.S. fuel stock data due for release at 1535 GMT is expected to show another rise in U.S. crude and gasoline stocks, providing further evidence of slowing demand. Analysts polled by Reuters project a rise of 800,000 barrels in crude supplies, a 400,000 barrel increase in gasoline stocks and an 800,000 barrel fall in distillate inventories including heating oil, as cold weather hits the U.S. Northeast market.