Oil steady after slide to 7-week low on U.S. demand

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Prices have now fallen more than $23 a barrel from their all-time peak above $147 on July 11, marking the biggest decline in dollar terms in the market's history. In percentage terms, the 15 percent tumble is the steepest pull-back since early 2007.

U.S. light crude for September delivery gained 16 cents to $124.60 a barrel by 7:55 a.m. British time, after hitting a seven-week low of $123.89. Prices had tumbled by more than $4 a barrel on Wednesday, its sixth day of losses over the past seven sessions.

London Brent crude rose 20 cents to $125.49 a barrel.

The decline came after data late on Wednesday showed a larger-than-expected increase in U.S. gasoline stocks last week, together with weak implied demand. U.S. crude stocks dropped after a sharp decline in imports.

"We do not see any factors to push up prices at all at the moment," said Tetsu Emori, a fund manager at Astmax Co Ltd in Tokyo, adding he expected oil to move towards $117 or $118 a barrel this week.

"In the long run, demand in emerging markets should outweigh slower demand in the U.S. and other countries but for (now) the market is focusing on the short term only," Emori added.

Surging demand from emerging economies such as China and India has fuelled a sixfold rise in oil prices since 2002, but concerns over flagging demand in top consumers, such as the United States, Japan and South Korea, have dampened the rally as of late.

Investment bank Lehman Brothers on Wednesday slashed its forecast for 2008 world oil demand growth due to a steeper-than-expected slowdown in energy consumption in the United States and other OECD countries.

The market's rout appeared to spur some traders to unwind short-dollar/long-oil positions built up earlier this year, helping lift the U.S. currency to a one-month high against the yen and in turn driving down other commodity prices.

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