Oil falls towards $35

Oil fell more than $2 a barrel today 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 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.