Oil prices were little changed on Wednesday as traders took to the sidelines ahead of weekly US inventory data that is expected to show the first build in distillate fuel supplies for 10 weeks. US light crude was trading 4 cents lower at $48.90 a barrel, clinging to most of last week's rebound from a two-month low. Prices are up 50 percent from the start of the year but are nearly $7 off their all-time peak one month ago.
In London, Brent crude was up 9 cents at $44.54. Activity was limited ahead of the US Thanksgiving Day holiday, for which the New York Mercantile Exchange will be closed on Thursday and Friday.
Mild winter weather in major consuming nations and plentiful global crude oil supplies have weighed on prices, although stubbornly low heating fuel inventories limited losses as dealers fear a cold snap could strain supplies.
Weekly US government oil inventory data due will provide the next guide for prices, with traders looking for signs that rising refinery rates have topped up distillate tanks, which include heating oil and diesel.
The US Energy Information Administration (EIA) report is expected to show a small 400,000-barrel rise in distillates, ending a 9-week falling streak and narrowing a 15 percent deficit against this time last year, a Reuters poll found.
CRUDE SUPPLIES ROBUST: Crude inventories are also expected to climb by a slim 300,000 barrels, bolstering a year-on-year surplus and possibly reinforcing recent forecasts for an atypical winter stock build, which has spurred some discussion by Opec members of a need to rein in overproduction.
Opec meets on December 10 in Cairo to review output policy but is expected by traders to keep official output limits unchanged.
Analysts at Cambridge Energy Research Associates were the latest to highlight the potential for fourth quarter oversupply, saying that supplies running 400,000 barrels per day (bpd) ahead of demand could push US oil prices to the low $40s.
"However, many risk factors are still in play winter weather, Iraq, Nigeria and Russia," they added.
A cold spell will drive up domestic heating usage in the heavy consuming Northeast, adding to already healthy US distillate demand running about 8 percent above last year due to strong trucking and manufacturing activity.
But weather forecasts have been mixed, with some meteorologists expecting mild conditions to continue and others seeing a colder-than-normal winter in the eastern United States.
Meanwhile, the market has been on edge over supply hiccups, especially in Iraq, where exports from the main southern terminal were running at only 1 million barrels per day (bpd) following a pipeline blast on Monday.
Oil sources said it might take a week to mend the corroded pipeline, which has cut flows by 800,000 bpd.
While production in the US Gulf of Mexico has recovered to 88 percent of normal after September's Hurricane Ivan tore up facilities in the region, other outages flared.
Vietnam was forced to shut about 400,000 bpd of offshore oil production for three days due to a typhoon, while output at Canada's second-largest offshore field, the 165,000-bpd Terra Nova, was still suspended after a spill on Sunday.
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