NEW YORK (AP) — Oil prices wavered around $40 a barrel Monday even though OPEC appears to have slashed more than 4 million barrels of crude from production each day.
Benchmark crude for April delivery fell 13 cents to $39.90 a barrel on the New York Mercantile Exchange.
Brent crude rose 27 cents to $42.16 on the ICE Futures exchange in London.
Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, said traders have mostly shrugged off OPEC cuts, seeing them as insignificant compared to a plunge in demand as millions of laid off workers stay home and companies cut back on spending.
"They're having a tough time selling oil," Ritterbusch said. "There's so much out there right now."
Analyst Addison Armstrong noted a report by Petrologistics that OPEC has successfully slashed crude oil production in an attempt to force prices higher. The total February output for the Organization of the Petroleum Exporting Countries is expected to average 25.3 million barrels a day, down 4.3 million barrels a day from September, Armstrong said.
Meanwhile, the Energy Information Agency reported last week that crude inventories in U.S. storage fell unexpectedly from a 20-month high, an event that some experts saw as proof the OPEC cuts are starting to be felt around the world.
OPEC's former president, Algerian Energy and Mines Minister Chakib Khelil, told state media on Sunday that the 13-nation cartel is likely to cut further when it meets on March 15.
While production cuts will help drain a massive global surplus of crude, "if they cut too much, you'll start to see all sorts of inflation in oil prices and that's not good," said Gene McGillian, analyst with Tradition Energy.
Oil prices recently have been following equity markets as an indicator of confidence in the global economy, and investors seemed relieved by a report by the Wall Street Journal late Sunday saying Citigroup is in negotiations to let the U.S. government increase its stake in the troubled lender to as much as 40 percent.
However, analysts believe the uptick in confidence may be only temporary, as the backdrop of economic and corporate data remains weak and suggests oil demand may fall further.
Dismal jobs, industrial production and corporate earnings reports so far this year have heightened investor fears that the worst U.S. recession in decades is deepening.
The Campbell Soup Co. reported Monday that its second-quarter profit dropped 15 percent. The company said its profits were hurt by currency exchange rates and its margins were squeezed further by higher advertising and promotional spending.
"The macroeconomics news has been nothing but gloomy, especially on jobs, which really affects the real economy," said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore. "Demand looks gloomy in the near term, so there continues to be a lot of downward pressure on oil."
This downward pressure is not likely to recover soon, according to some analysts.
"Global economic statistics and lackluster performance in global shares suggest the odds are lengthening we will see a global economic recovery in the second half of this year," said analyst Stephen Schork.
Gasoline prices continued a weeklong decline Monday, down almost a penny to $1.91 overnight according to auto club AAA, Wright Express and the Oil Price Information Service. Gas prices were 6.3 cents lower a month ago but $1.233 higher last year.
Pump prices had been rising for three weeks before last Tuesday.
In other Nymex trading, gasoline futures fell less than a penny a gallon to $1.07 and heating oil rose less than a penny to $1.21 a gallon. Natural gas for March delivery rose 6 cents to $4.066 per 1,000 cubic feet.
Associated Press writers Jake Neubacher and Alex Kennedy in Singapore contributed to this report.
Copyright 2009 The Associated Press.