* Oil falls below $64, tracks equities
* U.S. shares give up early gains
* U.S. crude stocks seen up, evidence awaited of OPEC cut
(Recasts, updates prices)
By Joe Brock
LONDON, Oct 28 (Reuters) - Oil retreated from session highs
on Tuesday, tracking U.S. stock markets where an early rally ran
out of steam despite gains in European and Asian shares.
Oil had drawn support from evidence OPEC would act upon last
week's decision to cut output as the United Arab Emirates state
oil company reduced volumes to term customers.
OPEC ministers said they were ready to take further action.
U.S. light crude for December delivery <CLc1> was down 15
cents to $63.07 by 1526 GMT. It touched a session high of
$65.20.
London Brent crude <LCOc1> was down 41 cents to $61.00.
"It was a bit of a false rally this morning based on
equities recovering a bit and the chance of a deeper OPEC
production cut," said Christopher Bellew of Bache Commodities.
European equities rose early on Tuesday, helped by a late
surge in Asia and a jump in shares of heavyweight oil group BP
<BP.L> after its third-quarter earnings beat forecasts.
[]
U.S. stock markets rose initially too, heartened by the
rebound in energy company shares, including Exxon Mobil <XOM.N>.
But they then came off session highs, after some bank shares
fell sharply. []
The credit crisis, which began with failing U.S. mortgages,
has widened into a worldwide rout as investors have dumped
stocks and commodities, shunned higher-risk emerging markets and
sought out the safest government bonds and currencies.
Global economic turmoil has already had a major impact on
fuel consumption and some analysts have predicted $50 a barrel
-- widely seen as the cash cost of production for many newer oil
projects -- is possible in the short term.
U.S. crude has already dropped by nearly 60 percent from a
record above $147 a barrel in July to a low of $61.30 on Monday,
its weakest for 17 months.
OPEC's announcement last week it would cut output by 1.5
million barrels per day initially did little to stem oil's fall
as the market was sceptical the group would really reduce
supplies.
On Tuesday the United Arab Emirates Abu Dhabi National Oil
Co (ADNOC) notified its customers it was cutting contracted
volumes for some crude by 5 percent, in line with last week's
OPEC deal.
For some of its oil, the cut was 15 percent for December
supplies.
The group's secretary general said that if prices continued
to fall, OPEC could decide to hold another meeting before its
next scheduled talks in December.
For the next indication of the balance of supply and demand,
traders were looking ahead to U.S. fuel stocks data to be
released on Wednesday.
Crude inventories were expected to have risen for the fifth
week in a row last week following higher imports, a preliminary
Reuters poll of eight industry analysts showed. []
(Additional reporting by Barbara Lewis; editing by James
Jukwey)
