* Oil rallies after nearly a $100 drop from July
* Oil firms to store crude on tankers as demand slumps
* OPEC may cut supply in Cairo, says Libya
(Updates throughout, previous SINGAPORE)
By Joe Brock
LONDON, Nov 21 (Reuters) - Oil rose towards $50 a barrel on
Friday, rebounding from a three and half year low and buoyed by
rallies in Europe and Asian equities on talk that China may cut
interest rates later in the day.
Oil has fallen by 11 percent this week taking it close to a
$100 drop from its July record high and setting it on course for
the steepest weekly decline since the week of Oct. 6.
U.S. light crude for January delivery <CLc1> rose 35 cents
to $49.77 a barrel at 0920 GMT, its first increase after five
straight sessions of losses. Earlier it fell to $48.25, the
lowest in three and a half years.
London Brent crude <LCOc1> gained 58 cents to $48.66 a
barrel.
Asian stock markets bounced from a five-year low touched
earlier on Friday as a variety of talk such as China cutting
interest rates later in the day prompted investors to cover
short positions before the weekend.
The buying continued in Europe as mining stocks gained on
higher precious metals prices and banks rallied after sharp fall
in previous sessions. []
"The move through $50 on January U.S. crude yesterday may
have been the final push to the downside and if equities can
improve a bit we could see that all the considerable amount of
bearish news is finally priced in," said Christopher Bellew at
Bache Commodities.
STORING OIL
Oil has lost two thirds of its value in just under four
months since peaking above $147 in July as the financial crisis
grips economies around the globe and limits demand for fuel.
Reflecting the sharp reversal in oil's fortunes, Goldman
Sachs, which in May had been talking of a $200 a barrel
superspike, on Thursday again cut its 2009 forecast for U.S.
crude oil to $80 a barrel from $86. []
As demand tumbles, oil companies plan to store millions of
barrels of crude in the hope economics will improve.
Shipping brokers said U.S. oil trader Koch and Royal Dutch
Shell <RDSa.L> had booked supertankers capable of storing 10
million barrels of crude, more than top exporter Saudi Arabia
produces in a day. []
The steep fall in oil prices has brought more Organization
of the Petroleum Exporting Countries members out in support of
further output cuts.
Libya's top oil official said the producer group may decide
to reduce supply further at its informal meeting in Cairo next
week if it finds members have implemented a previous decision to
lower output. []
The comments followed remarks from other OPEC members,
including Kuwait, Iran and Venezuela, raising the possibility of
a further cut in supply to prop up oil prices.
OPEC agreed in October to cut output by 1.5 million barrels
per day, about 5 percent, from Nov. 1, but the move has failed
to stem the decline in oil prices.
(Additional reporting by Annika Breidthardt in Singapore;
editing by James Jukwey)
