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LONDON, Dec 22 (Reuters) - Oil fell below $42 a barrel on Monday, in a retreat from session highs achieved earlier partly in response to a weak U.S. dollar and comments from Saudi Arabia that OPEC supply cuts will stabilise the market.

The January U.S. crude oil futures contract expired on Friday after touching a low of $32.40, the lowest since February 2004, depressed by high levels of stocks at Cushing, Oklahoma, the delivery point for New York crude futures.

February, which has taken over from January as the prompt month, fell 52 cents to $41.84 a barrel by 1543 GMT, after climbing as high as $43.44 earlier in Monday's session.

London Brent crude was 70 cents lower at $43.30 a barrel.

Brent is showing around a $1.50 a barrel premium to U.S. crude, in a reversal of the more common market structure -- U.S. crude at a premium to Brent.

"With Brent, it seems increasingly likely we've seen the lowest point of a downward move," said Christopher Bellew, of Bache Commodities Limited.

"A lot of bearish economic data is now well priced in," he said.

Oil prices have fallen more than $100 from their peak of above $147 in July as the global economic crisis has slashed demand for oil.

In China, the world's second biggest energy consumer, crude oil imports in November fell to their lowest this year as refiners scaled back operations due to high stocks and weaker demand.

China has just made its fifth cut in interest rates since mid-September to try to preserve economic growth.

"I think the recent released headline economic data showed that the economy is slowing more sharply than expected and I think that's why the central bank rushed to cut rates again now," said Xing Ziqiang, senior economist at CICC Securities.

The Organization of the Petroleum Exporting Countries last week cut output by 2.2 million barrels per day, on top of an earlier cut of 2 million bpd, to balance supply and demand and put a floor under prices.

But supply cutbacks have yet to stem the oil price slide.

The world's largest exporter, Saudi Arabia, has tried to quell doubts about OPEC's ability to stick to its new supply limits.

"Don't doubt the efforts of OPEC or its members to return the oil market to stability," Saudi Oil Minister Ali al-Naimi told reporters at the weekend.

But Asian refiners have yet to receive notice from OPEC's core Gulf members of any further reductions to oil supplies since the group announced cuts last week.

The U.S. dollar fell against the euro on Monday, giving up some of its gains made after the U.S. government offered a lifeline to U.S. carmakers.

In OPEC-member Nigeria, where production has been hindered for years by repeated militant attacks, gunmen in speedboats attacked three oil services ships and kidnapped at least two Russians in separate incidents in the Niger Delta, sources said on Saturday.