'The movements in the equity markets reflect the sentiment on the US economy and how other economies in the world may be affected ... if it slides into a deep recession,' said Mr Victor Shum, an energy analyst with Purvin & Gertz in Singapore. 'In the near term, oil prices will continue to react to the gyrations of the global stock markets.'

In Hong Kong, the blue chip Hang Seng Index fell as much as 3.7 per cent shortly after opening, and Japan's benchmark stock index dropped as much as 2.6 per cent in the Tokyo Stock Exchange's morning session.

The declines came as traders took their cues from Wall Street where the Dow Jones industrials fell 1.4 percent on Friday.

'This morning Asian stock markets are trading down, and the weak equity markets have spurred some profit taking in the oil market,' Mr Shum said.

Light, sweet crude for March delivery lost 63 cents to US$90.08 (S$128) a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore.

Mr Shum said oil futures were supported by expectations that the Organisation of Petroleum Exporting Countries will not increase its production levels when it meets Friday in Vienna, Austria.

The oil cartel has been coming under increasing pressure in recent weeks from the United States, the world's biggest oil consumer, to raise its output to meet growing demand and help ease high oil prices.

Opec officials have repeatedly asserted that high crude oil prices are largely the result of market speculation and geopolitical factors, not fundamental supply concerns, and are thus beyond its control.

The crude contract rose US$1.30 on Friday to settle at US$90.71 a barrel on a view that the recession worries that pulled prices lower in recent weeks may have been overblown.

Energy investors were heartened by recent moves by the US Federal Reserve and a proposed stimulus package to shore up the US economy, which could prevent oil demand from slowing as much as many had feared.

While investors believe the government's US$150 billion stimulus proposal and the Fed's rate cuts will stave off a serious economic slowdown, rate cuts also tend to weaken the dollar, giving investors another reason to buy oil futures. Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the greenback is falling.

Heating oil futures fell 1.61 cents to US$2.5030 a gallon (3.8 litres) while gasoline futures declined 1.23 cents to US$2.3059 a gallon.

Natural gas futures lost 1.3 cents to US$7.970 per 1,000 cubic feet.

Brent crude fell 50 cents to US$90.40 a barrel on the ICE Futures exchange in London. -- AP