Oil deepened losses on Monday, easing toward $59 after a week of whipsaw trading left prices firmly stuck in a six-week trading rut and dealers looking ahead to winter weather or Opec action to break free.
US light, sweet crude for December delivery slipped 7 cents a barrel to $59.52, pausing after a sharp 2.6 percent fall on Friday wiped away most of the week's gains and left prices in the middle of their $56-$62 range.
Oil gained just 0.6 percent over last week, touching a two-week high of $61.33 at one point before the International Energy Agency's monthly report showing a huge build in third-quarter stocks and lesser need for Opec oil triggered profit-taking on Friday.
The adviser to 26 industrialised nations said stockpiles in OECD countries swelled by 1.15 million barrels per day in the third quarter, the biggest third-quarter rise since 1991, after demand in the first nine months grew more slowly than expected. But it also said markets would tighten more than expected in the fourth quarter as winter demand ratcheted up just as Opec's production curbs began to bite.
US winter fuel stocks have begun to decline, but distillate inventories are still at near the almost eight-year high they touched at the beginning of October. "Demand through the northern winter will determine whether inventories are more than comfortable," said Commonwealth Bank of Australia analyst Tobin Gorey in a report.
Last week DTN Meteorlogix forecast that colder than usual weather in the US Northeast the world's top heating oil consuming region would be followed by a warmer late-December and January, although most meteorologists have predicted a normal or chillier than average winter.
Swollen inventories have prompted Opec to consider further production cuts when it meets on December 14, potentially deepening the 1.2 million barrel per day (bpd) curbs they applied from the start of the month. Many analysts expect only about half of those cuts to materialise.