Crude oil rebounded to above US$54 a barrel on Wednesday as a rate cut by China and speculation of a production cut by Russia outweighed the larger-than-expected buildup in US crude supplies.

Light, sweet crude for January delivery rallied US$3.67 to settle at US$54.44 a barrel after a volatile trading session on the New York Mercantile Exchange (NYMEX). Prices rose to as high as US$54.84 a barrel and fell to as low as US$50.15 a barrel.

The oil gained a strong support as China's biggest interest rate cut in 11 years brightened up investors' outlook for future energy demand. It is the fourth time in three months for the world's second-largest energy consumption country to cut the interest rate.

Also pushing up oil prices Wednesday was the news that one of the world's biggest crude exporters Russia might join OPEC in output cut. The President of OPEC Chakib Khelil told press on Wednesday that the cartel would consider production cuts in the unofficial meeting in Cairo this week, according to Bloomberg report.

NYMEX futures initially withdrew after the US Energy Department reported a jump of 7.3 million barrels in the crude inventory during the week ended on Friday, which is far more than the market had predicted. US gasoline demand over the four weeks ended on Friday averaged about 9 millions barrels a day, which was 2.8 percent down from one year earlier.

Prices were also affected by a series of mixed economic readings. The number of initial requests for unemployment benefits fell to 529,000 after seasonally adjustment, but still remain at recession levels. Meanwhile, both orders to US factories for big-ticket manufactured goods and consumer spending plunged more than the market had expected in October.

In London, Brent crude for January delivery rose US$3.57 to settle at US$53.92 a barrel.

(Xinhua News Agency November 27, 2008)