Oil holds below $60 on expected US stock builds

Oil prices steadied below $60 on Wednesday as investors waited for direction on supply and demand in the United States, the world's biggest consumer, from weekly data that is forecast to show rises in crude and fuel stocks.
US light crude oil was trading 1 cent up at $59.72 a barrel by 0715 GMT. London Brent crude stood 9 cents up at $57.90 a barrel. US crude prices hit a three-month low of $58.60 on Monday and have fallen more than $11 since a record $70.85 at the end of August as the US oil industry recovers from hurricane damage and warm weather dampens demand for heating fuel.
"The market pauses here because everyone is very cautious about new data," said Tony Nunan, the manager of Mitsubishi Corp's risk management business unit in Tokyo.
"Bearish (data) is widely expected and the market has already factored it in. But if it should show a recovery in demand, for example in gasoline, the market may rebound."
US government data due at 1430 GMT on Wednesday is expected to show stockpiles of distillate fuels, including heating oil and diesel, rose by 600,000 barrels last week, the first gain in seven weeks due to recent warm weather, according to analysts polled by Reuters.
Analysts also expected a gain of 1.3 million barrels in gasoline inventories and a build of 1.6 million barrels in crude stocks, due to heavy imports and higher refinery use.
US oil production from the US Gulf of Mexico continues to recover, with output on Tuesday rising to just over 50 percent of its normal 1.5 million barrels per day, official figures showed.
But the complete recovery of the region's energy operations will take until the middle of 2006, about three months longer than previously estimated, the US government said on Tuesday.
After Hurricanes Katrina and Rita hit the region in August and September, three refineries remain off-line on the Gulf Coast, representing less than 5 percent of total US refining capacity.
On Tuesday the US Energy Information Administration (EIA) forecast the tightly stretched supply situation could ease next year as demand cooled and Opec capacity increased.
It revised down its estimate for global oil demand growth next year by 100,000 barrels per day to 1.8 million bpd. Growth in 2005 was put at 1.1 million bpd.
In its monthly report, the EIA forecast a slight increase in Opec spare oil production capacity next year to 2 million to 2.5 million bpd from this year's 1 million to 1.5 million bpd.