U.S. oil slips below $40, dogged by economic worries

                                
 * U.S. oil hovers below $40 a barrel amid economic concerns
                                
 * OPEC output cut decision likely in March - Khelil
                                
 * Bernanke to reassure help is coming for U.S. economy
                                
 By Fayen Wong
                                
 PERTH, Feb 23 (Reuters) - U.S. oil fell below $40 a barrel
on Monday, weighed down by persistent worries about the health
of the global economy and data showing an 8 percent fall in
January oil imports in China, the world's second-largest oil
consumer.
                                
 Analysts said oil prices were expected to be influenced by
Asian equities markets on Monday, after Wall Street tumbled in
the previous session on fears the government may be forced to
nationalise some big banks. [ID:nN20540841]
                                
 U.S. oil crude for April delivery <CLc1> fell 19 cents to
$39.84 by 0056 GMT. 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 <LCOc1> fell 31 cents to $41.58.
                                
 "At the moment, energy demand is facing downside pressure
and so are oil prices," said Gerard Burg, an analyst the
National Bank of Australia. "The broader economic climate will
continue to dominate sentiment in the oil market."
                                
 The global economy may be deteriorating even faster than it
did during the Great Depression, Paul Volcker, a top adviser to
President Barack Obama, said on Friday. [ID:nN20291037]
                                
 Volcker's comments underscored growing pessimism about the
state of the world economy, as services and manufacturing data
from Europe hit a record low and the Bank of Japan gave a dire
diagnosis.
                                
 Although the White House said on Friday that it did not
favour nationalising U.S. banks as a tool for repairing the
damaged financial system, markets remained sceptical in the
absence of specifics on plans to shore up the financial system.
                                
 Encouraging oil's losses was data showing that Chinese
crude oil imports in January fell 7.99 percent from a year ago
to 12.82 million tonnes. [ID:nBJI000143]
                                
 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. [ID:nLM123318]
                                
 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 percent below contracted
volumes for April-June term crude oil supplies, steady from
March, trade sources said. [ID:nT103776]
                                
 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. [ID:nLM111362]
                                
 Analysts said the financial markets will keep their eyes
peeled on Federal Reserve Chairman Ben Bernanke's policy report
to U.S. Congress on Tuesday and Wednesday, when he is expected
to offer assurance that help is on the way for the ailing U.S.
economy and may offer clues on additional steps that could be
taken to halt the economy from its downward spiral.
[ID:nN22517429]
                                
 Crude oil speculators on the New York Mercantile Exchange
increased net long positions in the week to Feb. 17, data from
the U.S. Commodity Futures Trading Commission released on
Friday showed. [ID:nN20297303]
 (Reporting by Fayen Wong; Editing by Ben Tan)