Oil Slips On Weak U.S. Economy, Swelling Stocks

U.S. crude fell 35 cents a barrel to $41.81 by 0930 GMT, while London Brent crude lost 6 cents to $44.84.

U.S. oil prices fell 1.7 percent on Thursday, pressured by another round of gloomy economic data in the world's top energy consumer.

The losses were limited, however, by a potential U.S. oil refinery worker strike that could impact gasoline and heating oil output and anticipation that OPEC production cuts could further tighten up supplies by spring.

U.S. crude fell 72 cents to settle at $41.44 a barrel. London Brent settled up 50 cents at $45.40.

The losses came after reports showing U.S. unemployment rose to a record peak in mid-January, while new orders for long-lasting manufactured goods fell for a fifth month.

The deepening U.S. economic recession has cut demand for fuel and contributed to the biggest four-month buildup in U.S. crude stockpiles since 1990.

"Holding above $40 will become increasingly difficult as reportage enumerates evidence of contracting demand," John Kilduff, senior vice president at MF Global in New York, said in a research note.

Crude inventories continued their climb last week, rising by a higher-than-expected 6.2 million barrels nationwide, according to government data on Wednesday.

Prices for crude have dropped more than $100 since their peak last summer, ringing alarm bells for OPEC nations dependent on oil revenues and leading them to agree to output cuts of 4.2 million barrels per day since September.

OPEC Secretary General Abdullah al-Badri, at the World Economic Forum in Davos, Switzerland, said the group would not hesitate to act again if the oil price remained low.

OPEC next meets on March 15.

Also helping to limit oil's losses on Thursday was a potential U.S. oil refiner strike.

Contract talks between lead refiner negotiator Shell Oil Co and the United Steelworkers union could go down to the wire late on Saturday.

"Traders are speculating about a potential strike that could affect supplies of refined products," said Phil Flynn, analyst at Alaron Trading.

U.S. heating oil futures rose 0.68 cent to $1.4283 a gallon while U.S. gasoline futures rose 4.47 cents to $1.2309 a gallon.