Oil fell below 42 USD a barrel on Monday, in a retreat from session highs achieved earlier partly in reply to a weak United States dollar and comments from Saudi Arabia that OPEC supply cuts will stabilize the market.

The January United States crude oil futures contract expired on Friday after touching a low of 32 USD, the lowest since February 2004, depressed by high levels of stocks at Cushing, Oklahoma, the delivery point for New York crude futures.

February, which has taken over from January as the prompt month, decreased 52 cents to 41 USD a barrel by 1544 GMT, after climbing as high as 43 USD earlier in Monday's session.

London Brent crude included 80 cents lower at 43USD a barrel.

Brent is showing around a 1.5 USD a barrel premium to United States crude, in a reversal of the more common market structure - United States crude at a premium to Brent.

"With Brent, it seems significantly increasing likely we've seen the lowest point of a downward move," reported Christopher Bellew, of Bache Commodities Limited.

"A lot of bearish economic data is now well priced in," he mentioned.

Oil prices have decreased more than 100 USD from their peak of above 147 USD in July as the world economic crisis has slashed demand for oil.

In China, the world's second largest energy consumer, crude oil imports in November fell to their lowest this year as refiners scaled back operations due to high stocks and weaker demand.

This country has just made its fifth cut in interest rates since September to try to keep economic growth.

"I guess the recent released headline economic data showed that the economy is slowing down more sharply than expected and I consider this is the reason why the central bank was in hurry to cut rates again now," added Xing Ziqiang, senior economist at CICC Securities.

The Organization of the Petroleum Exporting Countries previous week has cut output by 2.2 million barrels per day, on top of an earlier cut of 2 million bpd, to balance supply and demand and put a floor under prices.

The world's biggest exporter, Saudi Arabia, had intensions to quell doubts about OPEC's ability to stick to its new supply limits.

"Don't doubt the efforts of OPEC or its members to transfer the oil market to stability," Saudi Oil Minister Ali al-Naimi said to reporters this weekend.

But Asian refiners have yet to receive notice from OPEC's core Gulf members of any further reductions to oil supplies since the group announced cuts last week.

The United States dollar decreased against the Euro on Monday, giving up some of its gains made after the United States government proposed a lifeline to U.S. carmakers.