Oil prices held firm near $49 on Thursday as concern over potential attacks on Iraqi oil infrastructure leading up to Sunday's elections countered signs from Opec that a fresh output cut was not imminent. US light crude settled up 6 cents to $48.84 a barrel on the New York Mercantile Exchange, stabilising after Wednesday's 86-cent fall following a bigger-than-expected build in US crude inventories.
London Brent crude settled down 7 cents to $46.44 a barrel on the International Petroleum Exchange.
Traders were anxious about Iraq's election Sunday, fearing intensifying violence could hit southern exports, which have been largely spared the repeated sabotage that has paralysed northern flows for more than a month.
Wednesday was the deadliest day for American forces since they invaded the country 22 months ago as 31 troops died in a helicopter crash and six more were killed in insurgent attacks.
As oil prices firmed, Saudi Arabia's oil minister, Ali al-Naimi, said on Thursday the Organisation of Petroleum Exporting Countries did not need to cut production at the cartel's meeting on Sunday.
"One needs to wait until we get closer to the second quarter, possibly in the March meeting, possibly after. It just depends," he told Reuters in an interview on the sidelines of the World Economic Forum in Davos, Switzerland.
Naimi's comments were the first indication of Saudi Arabia's stance heading into Opec's ministerial meeting in Vienna. The group agreed last month to withdraw 1 million barrels per day, effective January 1, to bolster prices.
"This meeting is basically looking at the effects of the decision last December and see whether it has actually affected supply," Naimi said.
"What it looks like is supply is adequate, inventories are inching upwards," he said. "The market seems to be, from a fundamental point of view, in balance."
Kuwait, the UAE, Nigeria and Indonesia said this week they supported keeping production unchanged as prices remain high and world oil inventories are not building too fast. Crude prices are up 13 percent for the year after winter finally hit hard in the US Northeast, the biggest heating oil market in the world.
US heating oil inventories fell by 2.1 million barrels last week, keeping them 4 percent below year-ago levels as consumers and retailers stocked up ahead of the cold snap.
Winter supply worries are receding with temperatures in the frigid Northeast forecast to rise next week and stay warmer than usual in February and March.
US crude oil supplies, meanwhile, rose last week by 3.4 million barrels, swelling the year-on-year surplus to about nine percent.
Adding support on Thursday, Russian oil major Yukos said it will not export any oil in February as the company cannot pay duties on shipments. Yukos was Russia's largest crude oil exporter last year.