US oil rose above $40 a barrel on Monday,recovering from earlier losses,after a report that said the US government could end up owning as much as 40 per cent of Citigroup sparked relief among investors and lifted sentiment.
But persistent worries about the health of the global economy and its impact on world energy demand continued to rank high on investors’ concerns,keeping oil prices rangebound.
US oil crude for April delivery rose 28 cents to $40.31 by 0533 GMT,having earlier fallen by as much as 50 cents. The contract ended down 15 cents at $40.03 on Friday,while the expired March crude settled down 54 cents at $38.94 a barrel.
London Brent crude rose 24 cents to $42.13.
“There may be some uplift due to talk of the US government taking stakes (in Citigroup) but the downward pressures remain strong,” said Victor Say,an analyst at Informa Global Markets in Singapore.
A fall in the US dollar may have also help lift oil prices,analysts said.
Asian stocks rebounded and the US dollar tumbled on Monday after the Wall Street Journal reported that the US government could end up owning as much as 40 per cent of Citigroup Inc.
The report cheered investors who cut their safety trades,prompting gold,a safe-haven investment,to fall on Monday after topping $1,000 an ounce last week.
Earlier,oil prices had fallen on worries about a deepening economic recession,amid comments from Paul Volcker,a top adviser to President Barack Obama,saying last week that the global economy may be deteriorating even faster than it did during the Great Depression.
Encouraging oil’s losses was data showing that Chinese crude oil imports in January fell 7.99 per cent from a year ago to 12.82 million tonnes.
Global energy consumption has collapsed as the financial crisis throws a raft of major economies into a recession,prompting oil prices to tumble nearly $110 since peaking in July.
OPEC is very likely to decide on a new production cut at its next meeting scheduled in March,Algerian Energy and Mines Minister Chakib Khelil as saying.
In the latest indication that OPEC members are complying with the agreed cuts,Kuwait notified at least two buyers in Asia that it will keep curbs of 5 per cent below contracted volumes for April-June term crude oil supplies,steady from March,trade sources said.
In the Middle East,Kuwait resumed oil exports on Sunday after a halt caused by adverse weather conditions,which also affected Iran,a spokesman of a Kuwaiti state oil company said on Sunday.
Analysts said the financial markets will keep their eyes peeled on Federal Reserve Chairman Ben Bernanke’s policy report to US Congress on Tuesday and Wednesday,when he is expected to offer assurance that help is on the way for the ailing US economy and may offer clues on additional steps that could be taken to halt the economy from its downward spiral.