Oil Prices Sink Again

New York's main futures contract, light sweet crude for delivery in March, sank to 34.93 dollars a barrel, down 2.58 dollars from its close Friday.

Floor trading on the New York Mercantile Exchange was closed Monday for a public holiday.

In London, Brent North Sea crude for April delivery slid 2.25 dollars to settle at 41.03 dollars a barrel.

"There is a combination of poor expectations of economic growth and concerns about demand prospects and ultimately the market is realizing that even if OPEC cuts supply, it will take quite a bit of time to unwind inventories and balance the market," Bart Melek, an analyst at BMO Capital Markets explained.

John Kilduff at MF Global agreed the bears were winning.

"The current divide in the market falls between those who conclude that economic deterioration will continue causing energy demand to contract and prices to retreat, and those who think that this effect has largely been priced in and selling overdone," said

Traders also took their cue from sinking stock markets amid fears for the health of the banking and automobile sectors, and doubts about the effectiveness of a US economic stimulus package and plan to stabilize the weak financial system.

Author: Ksenia Kochneva