Oil fell to around $44 a barrel Monday after OPEC decided to leave existing output targets unchanged.
OPEC agreed Sunday to enforce existing output curbs more strictly, rather than introduce new ones, to help heal the global economy even though crude oil inventories have remained relatively high and fuel demand has been weak.
Full compliance with OPEC's cuts would take away more than 800,000 barrels per day from the market as OPEC's compliance has been estimated at about 80 percent..
U.S. light crude rose to as high as $45.23 at one point but were trading $1.99 down at $44.26 by 1343 GMT (9:43 a.m. EDT).
London Brent crude was trading down $1.87 at $43.06.
OPEC cuts have been taking hold, Adam Sieminski, Deutsche Bank's chief energy economist, said.
In view of the still fragile global economy, downside risks to the oil price will not be eliminated until the very end of 2009, he said in his research note.
However, looking into the second quarter we believe oil prices are starting to find a floor.
Some analysts said OPEC's adherence to the existing cuts might be enough to offset falling demand and reverse the recent increases in oil inventories in many countries, including the world's largest oil consumer, the United States.
We believe the cuts made to date, coupled with falling non-OPEC output, could already be enough to offset weaker demand and result in observable inventory declines in the coming months, Collins Stewart said in a research note.
The Organization of the Petroleum Exporting Countries will next meet in May.
Ali al-Naimi, the oil minister of the world's top oil producer and OPEC's most influential member, Saudi Arabia, said Monday he was very happy with OPEC's decision.
The producer group's Angolan president said in an interview Sunday the supply curbs had brought some stability to oil markets, although prices remained too low to encourage investment in new supplies..
U.S. Energy Secretary Steven Chu said he was pleased with the outcome.
The market was turning to the economic data and the stock market as a gauge of economic activity.
Some support might come from the world stocks market, which rose Monday for their fifth session in a row, lifted by the feeling that the U.S. economic downturn may be bottoming out and with investors seeking to take advantage of cheaper equities.
(Editing by James Jukwey)