* Oil rebounds after Australia cuts interest rates
* U.S. Federal Reserve to enter commercial paper market
* U.S. cuts world oil demand growth forecast
* OPEC members worried by oil price fall
(Adds details on U.S. stock market, updates prices)
NEW YORK, Oct 7 (Reuters) - Oil prices rose on Tuesday on
investor optimism after a big interest rate cut in Australia
and the U.S. Federal Reserve's announcement that it would begin
buying commercial paper.
The Federal Reserve's move was aimed at easing the widening
U.S. financial crisis and analysts said it may help thaw frozen
credit markets. []
Australia's rate cut raised hopes that other countries
would follow suit to bolster economic growth, which would
support demand for oil. []
U.S. crude <CLc1> rose $2.07 to $89.88 a barrel at 1:15
p.m. (1715 GMT), after hitting an eight-month low on Monday as
part of a four-day decline.
London Brent <LCOc1> gained $1.14 to $84.82 a barrel.
Oil has plummeted from a record high of $147.27 a barrel in
July as high fuel prices and the growing financial crisis slow
oil demand in the United States, the world's top consumer, and
other industrial nations.
The spread of the credit crisis has intensified gloom about
the global economic outlook and weakened prospects for oil
demand and prices, and has led some investors to sell off
commodities for safer havens.
"Crude and products futures are rebounding sharply on
strong volume overnight, as global equity markets firmed after
the Reserve Bank of Australia surprised the markets when it
slashed interest rates by 100 basis points," Addison Armstrong,
analyst at Tradition Energy, wrote in a note.
"The move raised hopes that a coordinated effort by other
major central banks to stabilize the financial markets may be
in the offing."
Meanwhile, U.S. stocks slid on Tuesday after the Federal
Reserve's backstopping of the commercial paper market failed to
stem fears about the fallout from the credit crisis.
[]
The U.S. Energy Information Administration on Tuesday
revised downward its forecast for world oil demand growth in
2009 versus 2008. The agency cut its forecast by 140,000
barrels per day from its estimate published last month.
Analysts also are watching oil demand from China -- which
helped drive oil's rally from $20 a barrel in early 2002 -- for
signs the crisis is hitting consumption in the world's
second-largest consumer.
Oil's price drop has caused worry for some members of the
Organization of the Petroleum Exporting Countries.
"If this volatility continues, OPEC will have to do
something," Shokri Ghanem, chairman of Libya's National Oil
Corp, told Reuters by telephone. []
"We may sit down together before December," he said. OPEC's
next meeting is in December in Algeria.
Tropical Storm Marco rolled over Mexico's Gulf coast on
Tuesday, but all three of the country's main oil exporting
ports remained open.
On Monday the storm prompted state oil company Pemex to
shut down four offshore production platforms and close six
wells at a natural gas field. []
Earlier Tuesday, the oil market spiked briefly after a
report that a U.S. warplane violated Iran's territory and was
forced to land in Iran, but Iranian state television station
later said the plane was Hungarian, with no U.S. military
officials aboard.
(Reporting by Rebekah Kebede in New York, Alex Lawler and Jane
Merriman in London; Annika Breidthardt in Singapore; Editing by
Walter Bagley)
