Oil hovers above $40 after overnight fall

SINGAPORE // Oil prices hovered above US$40 a barrel in Asia today after grim US economic news and tumbling stock markets sparked a huge drop overnight. Benchmark crude for April delivery rose 28 cents to $40.43 a barrel by midday in Singapore on the New York Mercantile Exchange. Prices fell $4.61, or 10 per cent, to settle at $40.15 a barrel on Monday after American International Group reported losses of $61.7 billion in the fourth quarter, the largest quarterly loss in US corporate history. AIG, once the world's largest insurer, will receive up to $30bn of federal assistance on top of the $150bn in loans the company has already got from the government. Oil investors often look to equity markets as a measure of broad sentiment on the economy. The Dow Jones industrial average fell 4.2 per cent on Monday to 6,723, a 12-year low. "It seems like every day there's more and more bad news," said Clarence Chu, a trader with Hudson Capital Energy in Singapore. "It's looking like it will take longer for the economy to turn around." AP