* February U.S. crude futures hit contract low of $35.05
* OPEC cuts 2009 world oil demand forecast
* European Central Bank cuts rates
* U.S. distillate demand falls to five-year low
(Updates prices, adds detail)
By Chris Baldwin
LONDON, Jan 15 (Reuters) - Oil fell more than $2 a barrel on
Thursday after gloom over deepening recession and its impact on
fuel consumption put a cap on earlier modest gains.
The uncertain global economic outlook prompted OPEC to
forecast a fall of 180,000 barrels per day in world oil demand
this year, 30,000 bpd more than its previous forecast.
U.S. crude was down $2.02 at $35.26 a barrel by 1520 GMT,
after falling to a new contract low of $35.05 earlier.
Record stocks at Cushing, Oklahoma, the delivery point for
U.S. crude futures, have helped drive U.S. crude prices down
relative to North Sea Brent crude.
U.S. crude for February reached a record discount to Brent
of more than $10 a barrel at one point on Thursday.
London Brent crude for February <LCOc1> was down 13 cents at
$44.95, ahead of the contract's expiry later in the session.
"You had an oil market that got a boost at the beginning of
the year, partially on holiday consumption, partially on cold
weather ... but now it's back on continuing dismal economic
data," said Harry Tchilinguirian at BNP Paribas.
Oil was at $147 a barrel in July but has tumbled as the
economic crisis had reduced global oil demand.
LOWER RATES
Another bout of bearish economic data appeared on Thursday
with news that the number of U.S. workers filing new claims for
unemployment benefits rose last week, suggesting the U.S.
recession is deepening.
The European Central Bank cut interest rates by 50 basis
points to 2 percent, citing clear further evidence of a
significant slowing in the economy.
The slowdown is particularly marked in the United States,
the world's largest oil consumer.
The U.S. Energy Information Administration this week
forecast a world consumption drop of more than 800,000 barrels
per day (bpd) this year. []
The American Petroleum Institute said on Thursday U.S.
demand for crude oil and petroleum products slid 5.9 percent in
December from a year earlier, with demand in 2008 dropping at
the fastest rate in almost three decades due to high energy
prices and the slumping economy.
U.S. crude stocks rose for the third consecutive week, by
1.2 million barrels to 326.6 million barrels, according to the
EIA. Stocks at Cushing, Oklahoma, were up 800,000 barrels at 33
million barrels, a record storage level at the site.
The Organization of the Petroleum Exporting Countries has
also cut its forecast for 2009 world oil demand. []
"The considerable uncertainty about the course of the
recovery implies the potential for further deterioration in
world oil demand growth this year," OPEC said in its Monthly Oil
Market Report.
This could build a case for the producer group to cut output
again. OPEC has already reduced supply by about 4 million bpd
since September to try to halt the oil price slide.
(Additional reporting by Christopher Johnson and Jane Merriman;
editing by XXX )
