* Saudi Arabia to deepen output cuts in February
* Iran says OPEC could cut output again in March
* Russia-Ukraine deal on gas for Europe in doubt
(Releads, updates prices, adds details)
By Fayen Wong
PERTH, Jan 12 (Reuters) - Oil fell more than $1 to below
$40 a barrel on Monday, extending the previous session's 2
percent loss, on persistent fears about energy demand after a
big rise in U.S. unemployment renewed worries about the global
economy.
The decline came despite news that OPEC kingpin Saudi
Arabia plans to cut oil output to below its agreed OPEC target,
supply disruptions in Europe from the Russia-Ukraine gas
dispute and tensions in the Middle East.
U.S. light crude for February delivery <CLc1> fell $1.05 to
$39.78 by 0654 GMT, adding to Friday's 87-cent loss. London
Brent crude fell 32 cents to $44.10.
Oil's fall on Friday came after a U.S. government report
showed employers slashed jobs by 524,000 in December, driving
the national unemployment rate to its highest level in almost
16 years. []
"The market is also keeping an eye on other developments in
OPEC, Europe and tensions in the Middle East, but the
consumption worry is still a big bear," said David Moore, a
commodities strategist at the Commonwealth Bank of Australia.
Oil prices fell 54 percent last year and have shed more
than $100 from a record peak of above $147 a barrel last July
as the global economic downturn hits demand for fuel.
The world's top oil exporter, Saudi Arabia, plans to cut
output by up to 300,000 barrels per day (bpd) below its agreed
OPEC target, a proactive step to prop up a collapsing market,
industry sources said on Sunday. []
The OPEC kingpin has already lowered supply this month to 8
million bpd, meeting its target under OPEC's pact to reduce
overall supplies by a record amount from Jan. 1.
Saudi Arabia's cutbacks add to similar moves earlier this
month by other OPEC producers including Iran, the United Arab
Emirates, Kuwait and Libya to curb supplies, although evidence
that oil producers were cutting output has not lent much
support to prices so far.
But Iran's representative to OPEC was quoted as saying that
the cartel could decide to reduce oil output again at its
meeting in March if crude prices fall further. []
Analysts noted that the forward curve for crude prices was
in a contango, with March futures hovering around $46 a barrel,
on speculation that the OPEC cuts will eventually start to
impact the market and support prices.
Separately, a deal to restore Russian gas supplies via
Ukraine to Europe appeared on the verge of collapse after
Moscow rejected additions by Kiev as a 'mockery of common
sense'. []
And in the Middle East, Israel leaders trying to find a
knockout blow for Hamas militants defying a 17-day-old assault
have thrown army reservists into the battle. []
Although the Russian-Ukrainian gas price row and Middle
East tensions could help push oil prices higher, analysts said
any rebound was expected to be short lived.
"We believe that the upside drivers that drove prices from
a low of $33 per barrel to a high of over $50/bbl in the past
few weeks were mostly perceived or transient and do not create
the foundation for a sustainable recovery in prices," Goldman
Sachs Commodities said in a research note on Friday.
Goldman Sachs added that ongoing market surplus is expected
to continue to drive inventories higher and put pressure on its
forecast oil price of $30 a barrel for the first quarter of
2009.
(Editing by Ben Tan)
