Oil was steady at just under $60 a barrel today after plunging 1.4 per cent yesterday as forecasters said icy US weather would ease in the new year.
The cold snap has propped up prices this month. US crude stood at $59.85 a barrel early this morning, losing 14 cents in thin trade. Prices fell 86 cents yesterday behind a 6 per cent slump in natural gas.
London Brent crude lost 20 cents to trade at $59.20.
Oil prices rose as high as $61.90 earlier this week, having rallied from a five-month low in mid-November as the onset of colder US Northeast and Midwest weather spurred demand for heating fuels.
Those gains have been checked this week by a rise in crude inventories on Wednesday and a forecast yesterday for much of the United States to be warmer than normal from January through March.
With many traders closing their books on a year that has seen oil climb nearly 40 per cent, dealers expected prices to hover around $60 in the near term.
Natural gas stocks slumped by a larger-than-expected 202 billion cubic feet, and the US Federal Energy Regulatory Commission said yesterday cold weather would trigger more large withdrawals of the fuel over the next two weeks.
Analysts said the market was keenly watching weather forecasts and inventories of crude oil and fuels. Forecaster Meteorlogix said freezing weather would extend into next week.
But price gains were limited by an unexpected rise of 900,000 barrels in US crude stocks last week and an increase of 1.8 million barrels in gasoline stocks. Heating oil stocks fell, but remain much higher than a year ago.