By Grant Smith Oct. 8 (Bloomberg) -- Crude oil rebounded from a 10-month low after central banks in the U.S., Europe and China reduced interest rates to thaw credit markets. The Federal Reserve, European Central Bank, Bank of England, Bank of Canada and Sweden's Riksbank each cut their benchmark rates by half a percentage point. Crude had earlier dropped on concern that bail-out plans already announced will fail to avert a worldwide recession. ``The coordinated rate cuts may slow the decline and perhaps even stabilize prices as some market participants view the move as positive for economic and oil demand growth,'' said Mike Wittner, London-based head of oil market research at Societe Generale SA. Crude oil for November delivery traded at $88.84 a barrel, $1.22 lower, on the New York Mercantile Exchange at 1:30 p.m. in London. Prices gained as much as 93 cents immediately after the rate reductions were announced. Earlier, crude fell as much as 4.5 percent, to $86.05, the lowest since Dec. 6, 2007. ``We're entering a steep cyclical downturn across almost all commodities and the demand picture will look increasingly worrisome for the next six months regardless of what central banks do,'' said Helen Henton, head of commodity research at Standard Chartered Plc in London. The U.S. Energy Department will probably say that U.S. fuel supplies rose last week, according to Bloomberg survey before the department's weekly report, scheduled for release at 10:35 a.m. in Washington. Gasoline Inventories Gasoline inventories probably gained 1.5 million barrels in the week ended Oct. 3 from 179.6 million barrels the week before. Consumption of the motor fuel dropped 9.5 percent from a year earlier to 8.625 million barrels a day last week, according to MasterCard Inc. Credit ``conditions are unlikely to improve significantly in the next few weeks or months,'' Goldman Sachs Group Inc. commodity research analysts Giovanni Serio and Jeffrey Currie said in a report yesterday. ``Commodities prices may very well remain under pressure in the near future.'' Crude and other commodities benefited as the Fed's looser monetary policy triggered the dollar's biggest declined against the euro in more than two weeks, bolstering the appeal of dollar-priced assets used to hedge against inflation. The dollar dropped 0.7 percent to $1.3679 per euro at 7:46 a.m. in New York. Copper recovered from a 31-month low and aluminum from its lowest since January 2006 after the move by central banks. Copper for delivery in three months declined $190, or 3.3 percent, to $5,440 a ton as of 12:13 p.m. on the London Metal Exchange. To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net

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