July 18 (Bloomberg) -- Crude oil rose, rebounding from the biggest four-day decline in more than three years, on speculation that prices fell too far, too fast this week.

Oil rallied as buyers bet that the 11 percent decline in the first four days of this week, the biggest since December 2004, was excessive. Prices fell after the U.S. decided to participate in nuclear talks with Iran, easing concern a conflict will cut supplies from OPEC's second-largest producer.

``We have come down about $14 this week which is too much,'' said Robert Laughlin, senior broker at MF Global Ltd. in London. ``Maybe it is a bit of a dead cat bounce today and there will be more selling next week.''

Crude oil for August delivery rose as much as $2.75, or 2.1 percent, to $132.04 a barrel in electronic trading on the New York Mercantile Exchange. It traded at $130.30 at 1:43 p.m. London time.

Yesterday, oil fell $5.31, or 4 percent, to settle at $129.29 a barrel, the lowest close since June 5. Futures are up 74 percent from a year ago.

Prices also rose after the International Monetary Fund raised its forecast for global economic growth this year. The world economy will expand 4.1 percent this year, faster than the 3.7 percent pace projected in April, the IMF said yesterday.

Brent crude oil for September settlement gained as much as $2.62, or 2 percent, to $133.69 a barrel on London's ICE Futures Europe exchange. It was at $132.29 a barrel at 1:43 p.m. local time.

Yesterday, it declined $4.74, or 3.5 percent, to settle at $131.07 a barrel, the lowest close since June 11. Prices climbed to a record $147.50 on July 11.

Weekend Talks

Crude oil may fall next week as slowing economic growth curbs fuel demand and the U.S. takes part in talks with Iran over its nuclear plans. Concern about a possible attack helped push oil prices to a record last week.

``Buying here is an opportunity if you are a deep believer in $200 a barrel oil, otherwise we think caution should be applied in front of an important weekend for the geopolitical premium,'' Olivier Jakob, managing director of Petromatrix Gmbh in Zug, Switzerland, said in a report today.

Undersecretary of State William Burns will participate in the European Union-Iran talks this weekend in Geneva. This is a shift in the U.S. position on talks with a government it has shunned since 1980.

Ten of 22 analysts surveyed by Bloomberg News, or 45 percent, said prices will fall through July 25. Seven of the respondents, or 32 percent, said oil will rise and five forecast little change. Last week 63 percent said futures would increase.

Gasoline Prices

Gasoline for August delivery was at $3.1976 a gallon in New York, up 3.43 cents, at 1:16 p.m. London time. Prices have fallen 9.9 percent this week.

In the U.S., regular gasoline at the pump declined 0.2 percent to $4.105 a gallon, AAA, the nation's biggest motoring group, said today on its Web site. Prices were at a record $4.114 a gallon yesterday.

Eni SpA, Italy's largest oil company, said 47,000 barrels a day of Nigerian production had been suspended yesterday after an ``unforeseen drop in pressure'' on pipelines leading to the Brass export terminal.

To contact the reporter on this story: Alexander Kwiatkowski in London at akwiatkowsk2@bloomberg.net

Last Updated: July 18, 2008 08:44 EDT