U.S. crude oil for August delivery fell 49 cents to $61.05 a barrel by 1745 GMT after hitting a low of $60.29 a barrel. London Brent crude slipped 43 cents to $62.66 ahead of the August contract’s expiry later on Thursday.

The losses come amid lingering worries about global energy demand, contracting for the first time in a quarter century under the weight of the economic recession.

The global slowdown has cut world oil demand by as much as 2.5 million barrels per day, according to the International Energy Agency.

Jim Ritterbusch, president at Ritterbusch & Associates in Galena, Illinois, added that recent government data showing increases in U.S. refined fuel supplies added to bearish sentiment in the oil market.

The U.S. Energy Information Administration said on Wednesday that gasoline and distillate supplies rose last week despite increased domestic refining activity, while crude inventories dipped more than expected.

Oil’s losses were limited by news that China, the world’s second largest energy consumer, saw surprisingly strong growth of 7.9 percent in the second quarter, fuelled by state spending and bank lending.

In the United States, data showed new jobless claims fell to their lowest level since January, but the Labor Department was keen to emphasise an unusual pattern in automotive layoffs had amplified the drop.

JPMorgan and Chase & Co reported a 36 percent rise in quarterly profit, topping Wall Street forecasts. But the bank warned that credit quality in consumer mortgages and credit cards was deteriorating faster than expected.

Also highlighting the ongoing problems facing the world economy is the looming bankruptcy of CIT Group Inc , a lender to hundreds of thousands of small and mid-sized U.S. businesses, after bailout talks with the U.S. government fell apart.

LONDON, July 16 (Reuters)

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 by a record 1.5 percent in the last quarter of 2008, as exports and household demand collapsed, forced traders to refocus on falling global consumption.

“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 slipped $1.51 to $43.87 a barrel by 1224 GMT, after earlier hitting a month high of $45.70, while London Brent crude fell $1.63 to $44.49.

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 deepening 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.

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.

Traders were also eyeing the release of a raft of economic data in the U.S., including jobless benefit claims and January factory orders, for clues on the health of the world’s largest economy.

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.

But Venezuela, Algeria and Libya have raised the possibility of a further cut.

March 5 (Reuters)

Trading is expected to be muted ahead of the interest rate announcement of the European Central Bank on Thursday, traders said. The ECB is widely expected to cut rates by 50 basis points.

Spot gold was at $812.00/814.00 an ounce at 1523 GMT, down from $821.05 in New York late on Tuesday. It touched a high of $828.65 earlier in the session, but slipped as the euro retreated and European equities and base metals turned negative.

U.S. gold futures for February delivery on the COMEX division of the New York Mercantile Exchange fell $8.10 to $812.60 an ounce.

“Gold has fallen as the dollar has increased on a flight to safety after very bad retail sales numbers,” said Calyon metals analyst Robin Bhar.

“People were calling for a pretty bad retail sales number as it stood, but this was even worse than most people had feared,” he said.

December retail sales numbers released earlier on Wednesday showed total sales down 2.7 percent last month, against expectations for a 1.2 percent fall.

The U.S. currency extended gains against the euro as investors spooked by the outlook for the global economy bought into the dollar as a haven from risk.

While in the longer run risk aversion is also likely to benefit gold, in the short term currency moves will have more of an impact on the precious metal, analysts said.

The single currency also came under pressure after Standard and Poor’s cut its credit ratings on Greece’s sovereign debt.

Bullion is often bought as an alternative investment to the dollar and tends to move in the opposite direction to it.

All eyes are now on the interest rates decision of the ECB on Thursday, which will have a significant impact on the foreign exchange markets, and consequently on gold.

“Everyone is in wait-and-see mode for the ECB,” said Simon Weeks, director of precious metals at the Bank of Nova Scotia.

Data released on Wednesday showed the German economy contracted sharply in the final quarter of 2008 and euro zone industrial production plunged for the seventh month running in November.

The data suggested the recession is worsening and strengthens views the ECB will cut rates deeply on Thursday.

CRUDE SLIPS

Oil prices also slipped, giving up earlier gains, on the spate of poor economic data.

Gold typically moves in line with crude prices, both because it is bought as a hedge against oil-led inflation, and as crude can indicate interest in commodities as an asset class.

In Asia, jewellers are buying up gold bars ahead of the Lunar New Year on Jan 26, dealers said. Premiums for gold bars were steady at between 10 and 20 U.S. cents to spot London prices in Hong Kong.

“With Chinese New Year approaching it will be very interesting to hear how sales have gone and whether the strong purchases continue after the New Year holidays,” UBS strategist John Reade said in a note.

Jewellery demand in the world’s largest bullion market, India, has however been lacklustre in recent weeks, as buyers await lower prices.

Interest in investment products backed by physical gold, such as ETFs, is also healthy. Bullion holdings of the world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust , remain near record levels.

Among other precious metals, spot platinum edged down to $930/940 an ounce from $941, while palladium was quoted at $178/183 an ounce against $182.

Spot silver was at $10.41/10.49 against $10.72.

LONDON, Jan 14 (Reuters)