Oil inches lower near $40 on equities, inventories data
* U.S. crude stocks rise to 1-½ year high
* OPEC's signals it may cut output further limit losses
By Annika Breidthardt
SINGAPORE, Feb 5 (Reuters) - Oil inched down on Thursday, edging closer towards $40 a barrel as share prices continue to fall and U.S. crude inventories rise under the weight of an economic slowdown.
Crude stocks in the world's top energy consumer jumped by 7.2 million barrels to an 18-month high last week, data from the U.S. Energy Information Administration showed.
That was more than twice the rise that analysts had forecast and the sixth straight weekly increase. [EIA/S]
U.S. light crude for March delivery CLc1 fell 19 cents to $40.13 a barrel at 0156 GMT, almost $4 below London Brent crude LCOc1 for the same month, which shed 5 cents to trade at $44.10 a barrel.
NYMEX crude for April delivery CLJ9 is almost $4 a barrel more expensive than for March delivery, with the contango firming to more than $13 a barrel towards the end of the year, creating a chance for traders to profit from storing crude for later use and showing they may be betting on a recovery late this year.
U.S. equities dropped on Wednesday on concerns over a financial rescue plan, reversing gains from earlier in the day. Japan's Nikkei average .N225 slipped 0.7 percent on Thursday.
Adding further to the economic gloom, U.S. non-farm payrolls, due out on Friday, are estimated to have shed more than half a million jobs in January after losing a similar number in December as employers, fearing the impact of a weak economy on sales and profit, shrank their work forces to cut costs. [ID:nN04455795]
"The tenacity that WTI crude oil prices have shown over the past couple of weeks by being able to hold on at or above $40 per barrel is incredible given what seems to be a near unstoppable flow of bad fundamental news," said Martin King, an analyst at First Energy Capital.
"Can this continue? Much depends on where we are in the process of getting oversupply off the market," he added.
A global financial crisis, which started with a downturn in the U.S. housing market, has triggered recessions in all of the big industrialised economies, sharp slowdowns elsewhere and put millions of jobs on the line.
That in turn has cut the demand for oil and swelled fuel stocks, knocking more than $100 a barrel of the price off crude since its July 2008 peak near $150.
However, oil's losses have been limited by signals this week from the Organization of the Petroleum Exporting Countries that it may cut oil production further in an attempt to bolster the market.
OPEC's president said on Tuesday the group could remove more oil from the market if needed.
OPEC, worried that the global economic downturn is reducing oil demand and pressuring prices, has promised to reduce oil production by a total of 4.2 million barrels per day (bpd) from levels seen in September. (Reporting by Annika Breidthardt; Editing by Michael Urquhart)
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