Oil prices dropped more than 10 percent on Monday as a deteriorating world economy threatened to cut further into fuel consumption and made OPEC's tight compliance with supply curbs look insufficient.

Economic woes were also battering financial markets and making it likely the IMF would downgrade its global growth forecasts into negative territory.

U.S. crude dropped $4.50 to $40.26 by 6:10 p.m. GMT (1:10 p.m. ET).

London Brent crude fell $4.09 to $42.26 a barrel.

Deepening recession has dented demand for oil worldwide and knocked more than $100 off the price of crude since July, prompting OPEC to pledge cuts totaling 4.2 million barrels per day (bpd) since September.

A Reuters survey showed the group enforced 81 percent of the curbs last month.

But even relatively strict adherence to the supply pact has failed to shore up prices.

The reason why better OPEC quota compliance is necessary is that yet again the economic goalposts are moving, and yet again in the wrong direction, said KBC Market Services. It estimates compliance at about 70 percent.

Oil prices are being undermined by persistent worries about the U.S. economy. Data on Friday showed it shrank by 6.2 percent in the fourth quarter from a year ago, the deepest slide since 1982.

Economic pessimism and weak equities are dragging us lower today, said Christopher Bellew, oil broker at Bache Commodities in London.

Conflicting signals from some members as to whether the Organization of the Petroleum Exporting Countries would reduce output at its March 15 meeting added pressure.

Algerian Energy and Mines Minister Chakib Khelil said it was quite possible OPEC would cut again.

But Iran's Oil Minister Gholamhossein Nozari said he did not expect another reduction because the group's 80 percent commitment to existing curbs had helped stem price falls.

(Additional reporting by Richard Valdmanis in New York; Editing by Christian Wiessner)