Oil jumps 7 percent on Wall Street gains

By Edward McAllister

NEW YORK (Reuters) - Oil jumped by more than 7 percent to over $54 per barrel on Wednesday as the U.S. stock markets rallied and giant energy consumer China cut interest rates.

The gain came despite bearish U.S. government inventory data which showed an unexpectedly large rise in crude stocks last week as demand fell again.

U.S. crude rose $3.67 to end at $54.44 a barrel and London Brent crude rose $3.57 to settle at $53.92.

Oil has fallen by almost $100 a barrel since hitting a peak above $147 a barrel in July as the global credit crunch dented demand in large consumer nations.

U.S. stocks rose on Wednesday as investors sought down-trodden shares in the technology sector and hopes were renewed for a possible bailout of General Motors, with the Nasdaq gaining over 3 percent in afternoon trade.

"The stock market is trading higher, which is giving the few people who are in on this holiday week reason to push the (oil) market up," said Mark Waggoner, president of Excel Futures in California.

The United States was met with another carriage of gloomy economic data on Wednesday, with the latest Commerce Department report showing that U.S. consumers cut spending during October at the steepest rate in more than seven years.

U.S. government data showed crude oil inventories rose 7.3 million barrels last week, compared with analysts' forecast of an 800,000-barrel increase as demand continued to slow. EIA/S]