Oil near $61 on US crude stock rise as winter looms

Oil held below $61 on Thursday, as brimming crude stockpiles in the United States eclipsed concerns of rising heating oil demand ahead of winter.
US light crudegained 31 cents to $60.97 a barrel, after sliding $1.78, or nearly 3 percent, on Wednesday. Prices are 14 percent below the record-high of $70.85 struck in end-August.
London Brent crude inched up 13 cents to $59.00 a barrel. "There was a bigger build than expected," said ABM Amro broker John Brady, referring to crude oil inventories in the world's largest energy consumer.
US crude stocks rose by a higher-than-expected 4.4 million barrels to 316.4 million barrels in the week to October 21, as higher imports bolstered the supply cushion to 34.6 million barrels from a year ago, the Energy Information Administration (EIA) said on Wednesday.
"The statistics are too bearish. Even the bullish products can't hold prices up," said a Singapore-based analyst from a European bank, who declined to be named.
But as the US Northeast braces for a colder-than-normal winter, stockpiles of distillates heating oil and diesel fell by 1.6 million barrels, against expectations for an 800,000-barrel draw.
Heating oil alone was down 900,000 barrels to 55 million barrels, signalling stocking up by wholesalers. Still, the EIA said distillate fuel supply "is improving" as imports hit their peak last week since January, 2005, and that most of the rise in refinery output was in distillates instead of gasoline, although plants are recovering slowly from hurricanes.
The EIA said refinery capacity gained just 1.6 percentage points last week to less than 81 percent of capacity. Refineries were running at 8.5 percentage points less than last year, because plants on the US Gulf Coast have been slow to return after hurricanes Katrina and Rita.
Temperatures in the US Northeast, the world's top heating oil consumer, are expected to average below normal until on Saturday, and near to above normal on Sunday and Monday, Meteorlogix predicted.
"While heating oil stocks as a whole and in New England are tracking above the normal range, these could clean up swiftly especially if severe weather materialises and utilities burn increasing volumes of distillate in lieu of costly natural gas," said J.P. Morgan in a report.