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SINGAPORE : Oil prices reversed trends in early Asian trade Friday and fell below $41 a barrel on concerns of lower energy demand ahead of a key US data report.

Light crude for March delivery fell 43 cents to $40.74 a barrel, while London Brent crude fell 15 cents to $46.31 a barrel.

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US non-farm payrolls, due out later in the session, are estimated to have shed more than half a million jobs in January after losing a similar number in December.

A steep contango, with the April NYMEX contract $US4.86 more expensive than March barrels, is encouraging traders to buy crude now for storage and sale at a later date.

Oil has shed more than $100 from its July peak near $150 a barrel as the global financial crisis triggered recessions in all of the big industrialised economies and sharp slowdowns elsewhere, cutting demand.

Signals from producer group the Organization of the Petroleum Exporting Countries that it may cut output further to help bolster the market have supported prices this week.

The cartel may cut more oil output at a meeting next month, and one OPEC source said a reduction of 1 million barrels per day may be discussed.