Oil fell more than $2 to below $53 a barrel today, unravelling a near-10 percent rally the previous session as optimism over the latest government bank bail-out dispersed.

Oil prices ended more than $4 higher on Monday after Washington agreed to pump $20 billion into struggling Citigroup , the second-largest U.S. bank.

U.S. light crude for January delivery was $2.35 lower at $52.15 a barrel by 1043 GMT, up from a three and half year low of $48.25 on Friday. London Brent crude was $2.13 lower at $51.80.

Monday's strong gains, following a small rise on Friday, marked the first time since mid-September the oil market has risen for two days in a row. Oil has dropped by almost $100 from the record high above $147 hit in July.

"The effect of these financial packages tends to fade quite quickly," said Michael Lewis of Deutsche Bank of the brief impact of government intervention.

He predicted prices had further to fall, possibly to as low as $30-$35 a barrel by the end of next year, and said any OPEC cuts would take time to take effect.

"Normally, it takes them about a year of cutting production, then the price starts to stabilise," he said.