Oil retreats towards $54 after brief bounce

LONDON (Reuters) - Oil fell back towards $54 a barrel on Tuesday, setting a new near 22-month low as the gloomy outlook for the world economy helped extinguish a brief rally.

U.S. light crude oil for December delivery was 55 cents lower at $54.40 a barrel by 1029 GMT. It touched a new 22-month low of $54.13, its lowest since January 2007.

London Brent crude fell 55 cents to $51.76 a barrel.

"There was a short-lived rally," said Christopher Bellew, of Bache Commodities Ltd, "But what's always driving it downwards is the weak fundamentals."

The capture of a Saudi oil tanker by pirates off east Africa had helped spur the market's brief rebound, he said.

Oil has fallen more than 60 percent from its July record above $147 a barrel as the credit crisis has hit the real economy and dampened fuel demand in the United States, the world's biggest energy consumer and other industrial countries.

"Oil is still driven by concern about the weak outlook for oil consumption," said David Moore, commodity strategist at Commonwealth Bank of Australia. "Equity markets are not helping."

European shares .FTEU3 fell more than 2 percent following on from losses in Japan .N225 and the United States.

Evidence of the severity of the global economic situation emerges daily.