Oil rises towards $124

By Fayen Wong

PERTH (Reuters) - Oil rose towards $124 a barrel on Monday, rebounding from a seven-week low, in what analysts said was technical buying and short-covering after recent declines left the market oversold.

But analysts said worries of slowing fuel demand, which have dragged crude prices down from their record peak of over $147 a barrel on July 11, continued to loom over the market.

U.S. light crude for September delivery rose 46 cents to $123.72 a barrel by 0228 GMT. The contract fell $2.23 on Friday to settle at $123.26, after falling to as low as $122.50, the lowest since June 5.

London Brent crude rose 18 cents to $124.70.

"I think it's just a technical bounce. The decline in prices has probably triggered some stop-loss orders so that has lifted prices slightly," said Gerard Burg, an analyst at the National Australian Bank in Melbourne.

Oil has fallen over $23, or about 16 percent, in the past two weeks on concerns that high fuel prices were battering demand, after recent reports showed fuel consumption in the United States and other industrialised nations had begun to slide.

Data from the Commodity Futures Trading Commission released on Friday also showed that speculative funds were shifting to a net short position for the first time in 17 months.

Mark Pervan, a senior commodities analyst at the Australian & New Zealand (ANZ) Bank, said expectations that OPEC's oil output would rise this month, amid slowing demand, were weighing on sentiment.