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Oil turns lower on weak demand outlook

U.S crude fell 50 cents to $80.69 a barrel by 1452 GMT, as concerns over the impact of the financial crisis on oil demand increased.

London Brent crude fell 61 cents to $76.85.

"We've come off highs as there has been a bit of consolidation. Clearly the demand outlook isn't as bad as some thought but it's still pretty dire," said Helen Henton, head of commodities research at Standard Chartered.

U.S. crude earlier rose as high as $84.83, rallying along with other commodities and global stock markets after government moves to rescue banks gave investors a brief respite.

Federal Reserve Chairman Ben Bernanke said in an editorial in the Wall Street Journal that new U.S. measures to aid the financial system would help restore normality to markets, without giving details of the plan, to be announced later on Tuesday.

Commodities bull Goldman Sachs on Monday cut its year-end U.S. crude oil target to $70 a barrel, down from a previous forecast of $115, slashed its average 2009 forecast by a third to $86, and warned that prices could hit $50 if the current financial crisis worsened.

Analysts say a looming global recession could make even aggressive members of the Organization of the Petroleum Exporting Countries (OPEC) more tolerant of cheaper oil, but it still needs to cut output by early next year to control swelling stocks and insure against a price collapse.

Iraq's Oil Minister Hussain al-Shahristani said on Monday that OPEC would consider reducing output if the world does not need its oil.

As global markets cheered the government bailouts, oil traders will also look at the weekly U.S. petroleum inventory data to be released on Thursday.

Preliminary analyst forecasts have called for a 2.4 million barrel build in crude stocks, a 3.2 million barrel increase in gasoline supplies and a 0.8 million barrel rise in distillates.