Oil slumped on Monday as unusually mild temperatures in the United States curbed demand for heating oil and Opec ministers said they saw no need to trim their output in a "beautifully" balanced market.
US crude futures settled down $1.35, or 2.3 percent, to $57.36 a barrel, while London Brent eased 13 cents to $54.88.
Demand for heating oil in the United States, the world's largest energy consumer, is expected to be about 20 percent below normal this week thanks to mild weather, according to a government forecast.
Balmy conditions this autumn have helped US stockpiles build up a comfortable surplus, easing worries of a potential winter crunch touched off after a procession of hurricanes devastated energy operations on the Gulf Coast.
US heating oil futures settled down 5.36 cents to $1.6356 a gallon after falling to a four-month low of $1.6300.
Adding to Monday's losses, Opec signaled again that it would likely keep supplies steady despite a 20 percent slump in US crude prices since late August.
"The market is beautiful, it is in balance and inventories are at a very comfortable level," Saudi Arabia's oil minister, Ali al-Naimi, told reporters at a conference in Kuwait on Monday.
The cartel is due to meet in Kuwait on December 12 with oil well below its end-August record of $70.85 and plenty of fuel in stock for the start of winter in the United States, Europe and Japan.
Naimi, who steers policy of the world's biggest oil exporter, declared on Saturday there was no thought of cutting Opec's 30 million barrels per day output.
Instead the cartel wants to moderate prices, he said after a meeting of Arab Gulf producers in Riyadh. Consuming nations have repeatedly called on Opec to do its utmost to bring down prices that have acted as a brake on economic growth.
"Opec has been extremely accommodative in its policy in the last 1-1/2 years," said Deborah White, senior energy analyst at SG Commodities in Paris.
Opec President and Kuwaiti Oil Minister Sheikh Ahmad al-Fahd al-Sabah told reporters the cartel would keep its taps open until consuming nations had plenty of oil in reserve.
According to the International Energy Agency, industrialized nations had 52 days of demand cover in September. "We are trying to make stocks build even to 56 days," Sheikh Ahmad said.
Though well below its end-August peak, oil is still up by a third since the start of the year.
Prices have doubled during a two-year rally partly fueled by strong demand from the United States and the rapidly expanding economies of China and India. When Hurricane Katrina knocked out much of the US refining industry in late August prices soared to a peak of $70.85, their highest level in 25 years in real terms.
A winter freeze has gripped Northern European heating markets in recent days with snowfalls in France, Britain and Germany. But in the US Northeast, the world's largest heating oil market, temperatures are expected to hold above normal.
"Statistics have shown demand was reduced on a year-on-year basis in September and October. Traders are concerned that they may end up with seeing slower demand again in November," said Tony Nunan, of Mitsubishi Corp's risk management business.
US supplies of crude oil and heating oil are running more than 10 percent above year-ago levels, according to the most recent figures from the Energy Information Administration.
Industry stocks of heating oil in Europe's Rotterdam refining region fell with the temperature last week but remain 53 percent above the same time last year.
Japan's stocks of kerosene, used for heating in the world's third-largest oil consumer, also remain near a two-year high.
TOKYO: London Brent crude rose on Monday as colder weather boosted demand for heating in Europe, though ample winter fuel stock levels were expected to limit gains.
London's Brent crude gained 44 cents to $55.45 a barrel by 0508 GMT. But US crude oil futures fell 86 cents to $57.85 a barrel, catching up with Brent's $1.29 losses over Thursday and Friday when the US exchange closed for a holiday.
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