By Alex Lawler
LONDON (Reuters) - Oil fell more than 1 percent to $36 a barrel a barrel on Monday as a ceasefire between Israel and Hamas in Gaza and the resolution of a gas row between Russia and Ukraine eased supply concerns.
The market also remained under pressure from investors' concern that the weakening economy will erode oil demand. The International Energy Agency and other forecasters cut their 2009 demand forecasts last week.
"Markets are likely discounting the final passage of the twin crises that have been hovering over us for much of the month," said Edward Meir of MF Global, of the Gaza conflict and Russia's row with Ukraine.
U.S. crude for February delivery, which expires on Tuesday, slid 60 cents to $35.91 a barrel by 0936 GMT (4:36 a.m. EST). London Brent crude
for March fell 57 cents to $46.00.
Only 571 lots were traded on the February U.S. crude contract. The March contract was more active as 4,682 lots changed hands.
Israeli forces began to pull out of the Gaza Strip on Monday following a tentative truce with Hamas after the three-week war, easing tension in a region which pumps about a third of the world's oil.
Also easing concern about energy supplies, Russia and Ukraine were aiming to sign an agreement on Monday to restart gas flows to Europe through Ukraine after finally agreeing a price for 2009 supplies.
Prices came under pressure on Friday after the IEA, an adviser to industrialized countries, joined the ranks of forecasters predicting a fall in world oil demand in 2009.
OPEC, the oil exporters' group, has cut production three times since September to try to stem falling prices. It might consider reducing output again, Algeria's oil minister Chakib Khelil said on Saturday.
Oil has collapsed by more than $110 a barrel since reaching a record high of $147.27 a barrel in the summer as the global economic slowdown eroded demand and consumer spending.
Still, some in the oil market think there is little room for prices to fall much further.
"It looks as if Brent will hold in the current $40-$50 range," said Christopher Bellew, a broker at Bache Commodities. "I do not anticipate new lows."
(Reporting by Alex Lawler and Maryelle Demongeot in Singapore, editing by Anthony Barker)
