Oil fell to around $81 a barrel yesterday from a 15-month high as forecasts for milder weather in the US Northeast signalled lower demand in the world's largest heating oil market.
Officials from Kuwait and Saudi Arabia, as well as the US Energy Information Administration (EIA), said world demand for oil would continue to rise this year.
Icy weather in the United States this winter had so far drawn down US inventories of distillates, including heating oil. Stocks were forecast to have declined by 1.7 million barrels last week, a Reuters poll showed, their fifth-straight weekly drop.
US crude for February delivery fell 34 cents to $82.18 a barrel at 0814 GMT, after hitting $83.95 on Monday, the highest intraday level since October 2008. London Brent crude shed 32 cents to $80.65 a barrel.
"The market got a little bit ahead of itself after it broke $82 a barrel quite easily," said Tony Nunan, a risk manager with Tokyo-based Mitsubishi.
"With the February contract going off the board next week, we will soon be looking ahead to the end of the winter. Refineries should be going back into maintenance soon in preparation for the petrol season."
US Northeast temperatures six to 10 days from now will be near to above normal, said DTN Meteorlogix. And the country's heating oil demand was forecast be normal this week, after surging to 12 per cent above seasonal levels last week, the National Weather Service said.
Refiners are also limiting their intake of crude, aiming to reduce a glut in oil products that has prevailed for more than a year despite the recent freeze.
The Reuters poll found that crude oil inventories rose one million barrels for their second consecutive week of gains. US petrol supplies also probably climbed 900,000 barrels, ahead of data from industry group American Petroleum Institute at 2130 GMT yesterday.
Crude futures pared losses after Kuwait's oil minister said there would be no need for Opec to change supply policy at its meeting in March. The oil price is "fantastic" and oil demand is rising, Sheikh Ahmad Al Abdullah Al Sabah told reporters at Kuwait's parliament. "Next meeting will be the same... no change of course," he said.
Oil demand is rising slowly, helping to stabilise the oil market, Saudi Aramco's Chief Executive Officer Khalid Al Falih told the Al Watan newspaper.
"Prices have started to recover and demand is rising," Watan reported Falih as saying.
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