Oil prices briefly sank below $59 a barrel on Wednesday for the first time since late July, after US data showed crude supplies rose and warm weather sapped demand for winter fuels.
US light crude oil prices settled at $59.75, down 10 cents, after earlier falling 90 cents to $58.95 a barrel on the New York Mercantile Exchange. London's Brent crude rose 1 cent to $58.38 a barrel on the International Petroleum Exchange.
US crude supplies rose last week by 2.7 million barrels to 319.1 million, bringing them more than 12 percent higher than last year, the US Energy Information Administration said.
Gasoline stocks rose 1 million barrels, roughly in line with expectations, while distillates, including heating oil, fell by 200,000 barrels, compared with analyst forecasts for a fall of 800,000 barrels.
Traders said the data was largely bearish, though analysts pointed to the fact that an increase in refinery use had had a modest effect on inventory levels.
Temperatures in Europe and the United States have been above normal but, should longer term forecasts for colder weather prove correct, the market could struggle to cope.
US crude prices reached a peak of $70.85 in the immediate aftermath of Hurricane Katrina, which struck the US Gulf Coast August 29, but then fell back sharply and have lost more than $10 from the record high.
Evidence that demand has been weakened by high prices, as well as by warm weather, has helped to pull the market lower. Many analysts, nevertheless, are sceptical about "demand destruction" and Wednesday's data suggested any slowdown was limited.
Total product demand over the past four weeks was 1.8 percent lower than a year ago, the EIA said on Wednesday.
A week ago, it had said demand was 2.2 percent lower and two weeks ago it had said it was 3.2 percent lower.
US refining capacity is gradually recovering from damages during this most active Atlantic hurricane season on record, though concern is mounting about European fuel supplies because of a strike at Shell's 418,000-barrel-per-day Pernis refinery, the largest in Europe.
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