* U.S. oil rises above $40 on Citigroup news
* Economic worries still dog markets
* OPEC output cut decision likely in March - Khelil
(Updates throughout)
By Christopher Johnson
LONDON, Feb 23 (Reuters) - Oil rose above $40 a barrel on
Monday, recovering from earlier losses, after sentiment was
lifted by a report the U.S. government was in talks on
increasing its stake in Citigroup.
Further evidence the Organization of the Petroleum Exporting
Countries has enforced output cuts also provided support,
although persistent worries about the weakness of the global
economy limited gains.
U.S. front-month crude <CLc1> rose 29 cents to $40.32 by
1055 GMT, off a session low of $39.53. The contract ended 15
cents lower at $40.03 on Friday.
London Brent crude <LCOc1> gained 43 cents to $42.32.
"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.
"The upside remains sticky above $50 given the dreary macro
situation, while the downside will be kept in check by OPEC's
ongoing efforts to cut production."
European and Asian stocks rose and the dollar slipped on
Monday after the Wall Street Journal reported the U.S.
government could end up owning as much as 40 percent of
Citigroup Inc <C.N>. [] [] []
A source familiar with the situation told Reuters talks were
ongoing between Citi and regulators that could increase the
government's stake.
The Citigroup news cheered investors who cut their safety
trades, prompting gold <XAU=>, a safe-haven investment, to fall
after topping $1,000 an ounce last week.
OPEC COMPLIANCE
Global energy consumption has shrunk as the financial crisis
has thrown major economies into recession, prompting oil prices
to fall by more than $100 since last July's peak of nearly $150.
OPEC has already agreed on cuts totalling 4.2 million
barrels per day since last September and evidence has mounted of
a high level of compliance with the lower production targets.
In February, OPEC oil supply was expected to drop sharply,
declining to 27.6 million barrels per day (bpd), down 1.1
million bpd from 28.7 million bpd in January, consultant
Petrologistics told Reuters. []
The producer group is also very likely to decide on a new
production cut at its next meeting scheduled in March, Algerian
Energy and Mines Minister Chakib Khelil said at the weekend.
[]
Oil had fallen in response to worries about a deepening
economic recession after comments last week by Paul Volcker, a
top adviser to President Barack Obama, that the global economy
might be deteriorating even faster than during the Great
Depression. []
Financial markets will be keeping an eye on Federal Reserve
Chairman Ben Bernanke's policy report to the U.S. Congress on
Tuesday and Wednesday. He is expected to offer assurances help
is on the way for the U.S. economy and may offer clues on
additional steps that could halt the economy's downward spiral.
[]
(Additional reporting by Barbara Lewis in London and Fayen Wong
in Perth; editing by Anthony Barker)
