Oil Below $40

U.S. light crude for April delivery fell 36 cents to $39.60 a barrel by 06:05 GMT, after rising to a two-week high of $40.13 the previous session.

London Brent crude slipped 50 cents to $42.00 a barrel at the same time.

"Yesterday's lift was linked to an improvement in equities that had a positive effect on sentiment," said David Moore, commodity strategist at Commonwealth Bank of Australia.

"But you've still got a situation where concerns about the international economy dominate and with that concerns about consumption," he added.

Uncertainty about the future of the U.S. banking system has raised concerns that the economic crisis could worsen, darkening an already gloomy outlook for U.S. energy demand.

Also supporting oil were figures showing higher-than-expected compliance by the Organization of Petroleum Exporting Countries to agreed production cuts.

Traders were looking ahead to March 15, the date of OPEC's next meeting in Vienna where its members are expected to consider deepening their output cuts.

The U.S. Energy Information Administration will issue its own inventory data on Wednesday at 15:30 GMT, and is expected to show that crude stocks probably rose 1.4 million barrels last week.

Figures from the American Petroleum Institute showed U.S. crude stocks rose a fewer-than-expected 341,000 barrels last week.

Oil traders consider the API report to be less credible than the U.S. EIA data, which requires energy companies to respond to their weekly survey.

Source: Reuters

Author: Ksenia Kochneva