Oil drops over 8 percent

By Rebekah Kebede

NEW YORK (Reuters) - Oil slid over 8 percent to under $46 a barrel on Monday, depressed by a rising U.S. dollar and growing caution about the pace of any economic recovery and its impact on oil demand.

U.S. crude for May delivery settled 8.8 percent lower at $45.88 a barrel, down $4.45. Brent crude for June settled 6.5 percent lower at $49.86, down $3.49.

The May U.S. crude contract expires on Tuesday, which traders also cited as a factor helping to pressure the market.

"Weaker equity markets and a stronger U.S. dollar may be encouraging the selling, and the expiration of the May crude futures on Tuesday may be adding a sense of urgency to the trade, but we also see this as a recognition that the poor U.S. demand and inventory statistics of the past few weeks do matter," Tim Evans, analyst at Citi Futures Perspective, said in a research note.

The International Monetary Fund will cut global economic forecasts in the coming week, the agency's head, Dominique Strauss-Kahn, said on Monday, adding that he expected a recovery to start in the first half of next year.

U.S. stocks slid on Monday as investors worried about the sustainability of better-than-expected quarterly earnings after Bank of America reported a big increase in troubled loans. .N

Shares of both Bank of America (BAC.N) and Citigroup (C.N), two of the nation's largest banks, dropped more than 16 percent.

The dollar hit a one-month high against a basket of currencies on Monday. A rising dollar can limit the appeal of commodities and oil to some investors.