LONDON, Jan 12: Oil prices slid under $40 on Monday on concerns that a deepening global economic downturn could spark a slump in demand for energy, analysts said.

The market was also weighed down by news of a possible resolution to the ongoing Russia-Ukraine gas supply crisis, they added.

Traders also tracked developments in the Middle East.

New York’s main contract, light sweet crude for delivery in February, slumped $2.95 to $37.88 per barrel on the New York Mercantile Exchange (NYMEX).

Brent North Sea crude for February shed $1.97 to $42.45 on London’s InterContinental Exchange.

The market had tumbled last week after a brief bounce above $50 on the back of jitters over the Russia-Ukraine crisis and ongoing unrest in Gaza, whose neighbours are key oil-producing nations.

On Monday, the European Union secured Russian assurances that gas shipments to Europe would resume shortly after Moscow and Kiev re-signed a deal to monitor the flow to EU markets.

With many EU countries suffering cuts in Russian gas, hopes were high that the latest development in the dispute between Russia and Ukraine would restore supplies crucial for heating European homes and factories by Tuesday morning.—AFP