Oil prices fell on Monday as a gloomy US demand outlook outweighed talk of OPEC production cuts and hopes that a U.S. economic stimulus package would be passed by Congress this week.
US crude for March delivery settled at $US39.56 a barrel, down 61 US cents. London Brent settled at $US46.02 a barrel, down 19 US cents.
Earlier in the day, oil prices were boosted by comments from the secretary general of the Organization of Petroleum Exporting Countries that the group could cut oil output further to counter slumping demand.
The market also drew support from optimism that the administration of US President Barack Obama would secure Congressional passage this week for a giant economic stimulus plan.
Oil prices have dropped from a record high above $US147 a barrel in July as the global economic downturn slashed demand for fuel.