London: Oil rose above $40 a barrel on Monday, recovering from earlier losses after sentiment was lifted by a report that the US government could end up owning as much as 40 percent of Citigroup.
But persistent worries about the health of the global economy and its impact on world energy demand continued to rank high among investors’ concerns, keeping oil prices rangebound.
US oil crude for April delivery rose 5 cents to $40.08 by 0905 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 fell 7 cents to $41.82.
“For the moment, the crude market seems to be holding up within the $32-50 trading range we suspect will be with us for some time to come,” MF Global said in its daily note.
European and Asian stocks rebounded and the dollar slipped on Monday after the Wall Street Journal reported the US government could end up owning as much as 40% of Citigroup Inc.
The report cheered investors who cut their safety trades, prompting gold, a safe-haven investment, to fall after topping $1,000 an ounce last week.
A fall in the US dollar may have also helped lift oil prices, analysts said.
Earlier, oil prices had fallen on worries about a deepening economic recession after comments last week by Paul Volcker, a top adviser to President Barack Obama, 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% from a year ago to 12.82 million tonnes.
Global energy consumption has collapsed as the financial crisis has thrown a number of major economies into recession, prompting oil prices to tumble more than $100 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 said.
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% 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 bad weather, which also affected Iran, a spokesman of a Kuwaiti state oil company said on Sunday.
Financial markets will be keeping an eye on Federal Reserve Chairman Ben Bernanke’s policy report to US Congress on Tuesday and Wednesday. He is expected to offer assurances that help is on the way for the US economy and may offer clues on additional steps that could be taken to halt the economy’s downward spiral.