LONDON, Dec 8: Oil prices rebounded on Monday after slumping under $40 a barrel to near four-year lows before the weekend on news of massive job losses in the United States, the world’s biggest energy consumer.

Despite the recovery, underlying sentiment remained fragile on deep concerns about weak energy demand, especially in the recession-hit US, traders said.

In early trading on London’s InterContinental Exchange (ICE), Brent North Sea crude for delivery in January jumped $1.96 to $41.70 a barrel.

Light sweet crude for January climbed $2 to $42.81 on the New York Mercantile Exchange (NYMEX).

“Oil futures were higher as it looked increasingly like Opec will respond to the sharp decline in oil prices by cutting output later this month,” said Sucden analyst Michael Davies.

“Libya’s top oil official, Shukri Ghanem, said Opec should make a ‘substantial’ cut in output at next week’s meeting.” The Organisation of Petroleum Exporting Countries (OPEC), which pumps 40 per cent of the world’s crude, is widely expected to agree on a oil production cut when it meets in Oran, Algeria on December 17.

Brent crude tumbled below $40 on Friday after the US Labour Department reported employers slashed 533,000 jobs in November, sending the unemployment rate to a 15-year high of 6.7 percent.

The number of job losses was the largest in 34 years and much higher than the 325,000 expected by private forecasters, suggesting the recession in the world’s largest economy would be longer and deeper than feared.

Oil prices have plunged by more than two-thirds since reaching record highs above $147 on July 11 as a global economic slowdown weakens energy demand.—AFP