Oil in New York fell to around $37 a barrel on Tuesday as bleak economic indicators turned the focus back to the worldwide slump in demand, outweighing lower supplies due to OPEC cutbacks.

A Reuters poll showed confidence among Japanese manufacturers remained near record lows. That came a day after data showing the country's economy shrank by the most in 35 years.

The economic outlook will continue to dominate the first half of 2009. The United States, eurozone and Japan are in synchronized recession, said Harry Tchilinguirian, oil analyst at BNP Paribas.

OPEC supply cuts are only going to impact consuming country inventories with a lag, he added.

U.S. crude for March delivery fell to $37.06 a barrel by 6:57 a.m. EST, 45 cents off last Friday's settlement. London Brent crude for April rose 14 cents to $43.42.

The New York Mercantile Exchange did not print a settlement price on Monday as its trading floor was closed for Presidents Day, although electronic trading continued as usual. The floor will reopen on Tuesday.

U.S. crude for March expires on Friday and it was trading at a $3.70 discount to April due to high inventories at the storage hub in Cushing, Oklahoma. Brimming U.S. stocks are also keeping U.S. crude at an atypical discount to Brent.

World oil demand has fallen in the last few months as recession triggered by the banking crisis spreads through all continents. Oil has collapsed from a record high above $147 reached last year.

Other commodities have also declined. The Reuters-Jefferies CRB Index .CRB of 19 mostly U.S.-traded futures, as of Friday, had fallen 38 percent since the end of September.

Oil's drop has prompted the Organization of the Petroleum Exporting Countries to cut production three times by a total of 4.2 million barrels per day (bpd), about 5 percent of daily world demand, since September.

OPEC has implemented about two-thirds of the promised supply reduction, according to industry surveys. Officials from the group are raising the prospect of a further reduction at the next meeting, on March 15.

Iraq's oil minister, Hussain al-Shahristani, said OPEC should look to further cuts in supply if curbs to date fail to balance the market.

Later on Tuesday U.S. President Barack Obama is due to sign the $787 billion stimulus bill, while indicators including manufacturing production in New York State and U.S. home builder sentiment may set the market's tone.

(Additional reporting by Chua Baizhen; Editing by Anthony Barker)

Japan BNP Paribas OPEC