Oil slips as fuel stocks rise, cold supports

Oil prices eased on Wednesday as US inventory data showed a bigger than expected rise in fuel stocks, though concerns about cold weather cushioned the fall. US light crude for January delivery settled down 13 cents to $58.71 a barrel while London Brent crude settled down 20 cents to $56.21.
Both contracts had gained more than a dollar on Tuesday as cold weather inspired buying in the run up to the US Thanksgiving holiday on Thursday and Friday.
Any further gains would depend on whether prolonged cold temperatures began to erode fuel inventories, analysts said.
"With the weather getting colder, bulls now need the other shoe to drop to solidify yesterday's up move," wrote Edward Meir in the Man Energy Daily Report. "This means that colder weather ... has to translate into higher distillate demand, a bigger draw on stocks, or both."
US government data released on Wednesday showed distillate stocks, including heating oil, had risen by 1.1 million barrels to 124.5 million barrels, 3.4 million barrels higher than the same time a year ago, and more than the 800,000-barrel increase forecast by analysts.
The data also showed a 400,000-barrel increase in crude stocks, bringing them more than 34 million barrels above last year, and a 200,000-barrel rise in gasoline inventories.
An unusually mild start to the winter has so far boosted heating oil supplies, but freezing temperatures this week have increased demand and pulled US crude prices up from a five-month low of $56.80 touched on Friday.
Prices remain around $12 lower than a record high of $70.85 hit at the end of August in the immediate aftermath of hurricane damage.
The International Energy Agency, the West's energy watchdog, said on Tuesday prices were still too high, though they should fall as production is outstripping consumption.
Ministers of the Organisation of the Petroleum Exporting Countries, which has been pumping at full throttle, have said they will not consider an output cut at their meeting in Kuwait on December 12 unless prices fall sharply.