Oil falls to around $53 as demand worries weigh

Venezuela's oil minister, Rafael Ramirez, said on Wednesday the Organization of the Petroleum Exporting Countries might agree to cut production at its special informal meeting on Saturday in Cairo.

Both Venezuela and Libya, which are leading advocates in OPEC of earlier action to support prices, have pushed for the producer group to decide quickly on an output cut of at least 1 million barrels per day.

Analysts say an output cut is coming, although probably at a December meeting in Algeria rather than in Egypt this weekend. "Prices have held steady this week, so there's no rush to go in and do it," said Mike Wittner, global head of oil research at Societe Generale.

U.S. weekly crude stocks rose by a hefty 7.3 million barrels last week, well above forecasts of an 800,000 barrel increase, the U.S. Energy Information Administration (EIA) said on Wednesday. Total U.S. 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 point in 12 years, the EIA said.

The NYMEX trading floor is closed on Thursday for the Thanksgiving Day holiday, though Globex trading continues. On Friday the NYMEX session in New York will close at 1:30 p.m. EST (1839 GMT), an hour earlier than usual.

The holiday is traditionally one of the busiest periods of travel and shopping in the United States, though this year, on the back of glum economic data, analysts say driving and spending will be much lower.

Global demand is expected to decline by 20,000 barrels per day (bpd) each in 2008 and 2009, the first drop in a generation, that would leave it at 86.01 million bpd then, a poll of analysts found on Wednesday.

Analysts said a sharp move upwards on Wednesday, when oil jumped more than 7 percent, was largely due to a rally in U.S. equities, which are acting as a barometer of consumer sentiment.

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 proposed a $200 billion stimulus, and China cut interest rates by the biggest margin in 11 years.