UPDATE 5-Oil slips towards $44 on demand fall expectations

                                
 * Weak European equities weigh on oil prices
                                
 * Euro zone GDP down by record 1.5 percent
                                
 * Surprise drop in U.S. weekly crude stocks supports
                                
 * Mixed signals from OPEC on supply cut at next meeting
                                
 
 (Updates prices, recasts)
                                
 By David Sheppard
                                
 LONDON, March 5 (Reuters) - Oil fell more than a dollar
towards $44 on Thursday as the deteriorating economic outlook
heightened expectations that fuel consumption would shrink
further.
                                
 Oil prices had surged nearly 9 percent in the previous
session due to a surprise drop in U.S. crude stocks, which may
indicate a recovery in demand in the top energy consumer.
                                
 But data showing euro zone gross domestic product (GDP) fell
at a record pace in the last quarter of 2008, and U.S. factory
orders slumped for the sixth straight month in January, forced
traders to refocus on falling global consumption. [ID:nL5880710]
[ID:nN04394770]
                                
 "The economic outlook is still pretty grim and I don't think
these bits of bullish data are enough to counteract this in the
short-term," Christopher Bellew at Bache Commodities said.
                                
  U.S. crude <CLc1> slipped $1.24 to $44.14 a barrel by
1613 GMT, after earlier hitting a month high of $45.70, while
London Brent crude <LCOc1> fell $1.29 to $44.83.
                                
 Oil prices gained some support from remarks by China's
Premier Wen Jiabao on Thursday that the No. 2 oil consumer would
achieve 8 percent growth this year -- a level considered key to
maintain employment growth -- despite the global recession.
                                
China's gauge of the health of its manufacturing sector, the
purchasing managers' index (PMI), gained for the third month in a
row in February, suggesting the domestic economy, and oil demand,
could be recovering. [ID:nPEK16693]
                                
 The U.S. Energy Information Administration said crude stocks
declined by 700,000 barrels last week, while gasoline demand
rose 2.2 percent from a year ago, as lower prices boosted
consumption. [EIA/S]
                                
 
                                
 TO CUT OR NOT TO CUT?
                                
 Oil prices have traded in a narrow band near $40 since
mid-December, caught between slumping demand and the possibilty
of further OPEC output cuts when the group meets on March 15.
                                
 "The market is still rangebound as any bullish news has been
kept in check by the global economic meltdown," Bank of Ireland
analyst Paul Harris said.
                                
 "But the next OPEC meeting is coming into focus, and they
will probably have to act to convince the market they are really
serious about continuing to restrict production."
                                
 OPEC planned to lower oil output by 4.2 million barrels per
day from production levels in September, in a bid to boost
falling prices, and a Reuters survey found OPEC members had
already met at least 81 percent of their target.
                                
 Angola, which currently holds the presidency of the 12-member
group, will not advocate further production cuts when the group
meets on March 15 in Vienna, OPEC sources said on Wednesday.
[ID:nL496607]
                                
 But Venezuela, Algeria and Libya have raised the possibility
of a further cut. [ID:nL4373694]
 (Reporting by David Sheppard; Editing by Anthony Barker)