* Iran says OPEC could cut output again in March
* Russia-Ukraine gas row not finally resolved
(Updates throughout, changes dateline, pvs PERTH)
By Christopher Johnson
LONDON, Jan 12 (Reuters) - Oil fell more than $1 to below
$40 a barrel on Monday, dragged down by widespread evidence that
deepening recession is reducing global energy consumption.
The decline came despite news that Saudi Arabia planned to
cut output to below its agreed target, as well as gas supply
disruptions in Europe as a result of the Russia-Ukraine dispute
and tensions in the Middle East.
U.S. light crude for February delivery <CLc1> fell $1.57 to
$39.26 by 0907 GMT. London Brent crude fell $1.12 to $43.30.
U.S. jobless data on Friday set the tone for the market.
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 U.S. unemployment numbers on Friday started the latest
leg downwards. We have had a string of bad news, with companies
and economies all reporting negative data. It is almost
relentlessly bad," said Rob Laughlin, senior oil analyst at MF
Global in London.
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. []
Riyadh 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.
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. []
The front months on oil futures have been taking the brunt
of the falls with the markets is steep contango. March U.S.
crude futures have been trading at a premium of more than $5
above February, while April is around $3 above March.
Traders say the wide price spread partly reflects a lack of
prompt demand but also a view that OPEC cuts will eventually
start to impact the market and support prices.
Also worrying the oil market was the status of a deal to
restore Russian gas supplies via Ukraine to Europe []
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.
Goldman Sachs Commodities said in a research note on Friday
that a market surplus was 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.
(Additional reporting by Fayen Wong in Perth; editing by
William Hardy)
