* China cuts rates for fifth time since September
* Saudi Arabia says OPEC curbs will stabilise prices
* Gunmen attack vessels in Nigeria, Russians kidnapped
(Recasts, updates prices)
By Jane Merriman
LONDON, Dec 22 (Reuters) - Oil fell below $42 a barrel on
Monday, in a retreat from session highs achieved earlier partly
in response to a weak U.S. dollar and comments from Saudi Arabia
that OPEC supply cuts will stabilise the market.
The January U.S. crude oil futures contract expired on
Friday after touching a low of $32.40, the lowest since February
2004, depressed by high levels of stocks at Cushing, Oklahoma,
the delivery point for New York crude futures.
February <CLc1>, which has taken over from January as the
prompt month, fell 52 cents to $41.84 a barrel by 1543 GMT,
after climbing as high as $43.44 earlier in Monday's session.
London Brent crude <LCOc1> was 70 cents lower at $43.30 a
barrel.
Brent is showing around a $1.50 a barrel premium to U.S.
crude, in a reversal of the more common market structure -- U.S.
crude at a premium to Brent.
"With Brent, it seems increasingly likely we've seen the
lowest point of a downward move," said Christopher Bellew, of
Bache Commodities Limited.
"A lot of bearish economic data is now well priced in," he
said.
Oil prices have fallen more than $100 from their peak of
above $147 in July as the global economic crisis has slashed
demand for oil.
In China, the world's second biggest energy consumer, crude
oil imports in November fell to their lowest this year as
refiners scaled back operations due to high stocks and weaker
demand. []
China has just made its fifth cut in interest rates since
mid-September to try to preserve economic growth. []
"I think the recent released headline economic data showed
that the economy is slowing more sharply than expected and I
think that's why the central bank rushed to cut rates again
now," said Xing Ziqiang, senior economist at CICC Securities.
The Organization of the Petroleum Exporting Countries last
week cut output by 2.2 million barrels per day, on top of an
earlier cut of 2 million bpd, to balance supply and demand and
put a floor under prices.
But supply cutbacks have yet to stem the oil price slide.
The world's largest exporter, Saudi Arabia, has tried to
quell doubts about OPEC's ability to stick to its new supply
limits.
"Don't doubt the efforts of OPEC or its members to return
the oil market to stability," Saudi Oil Minister Ali al-Naimi
told reporters at the weekend. []
But Asian refiners have yet to receive notice from OPEC's
core Gulf members of any further reductions to oil supplies
since the group announced cuts last week. []
The U.S. dollar fell against the euro on Monday, giving up
some of its gains made after the U.S. government offered a
lifeline to U.S. carmakers. []
In OPEC-member Nigeria, where production has been hindered
for years by repeated militant attacks, gunmen in speedboats
attacked three oil services ships and kidnapped at least two
Russians in separate incidents in the Niger Delta, sources said
on Saturday. []
(Reporting by Jane Merriman in London and Fayen Wong in Perth,
editing by Anthony Barker)
