Oil steadied above $58 today, after a fall of nearly 4 per cent the previous session, on easing tensions in Nigeria, ample US fuel stocks and lingering doubts over OPEC output cuts.
US light crude fell one cent to $58.35 a barrel by 11am, after tumbling $2.39 yesterday. Brent crude rose 10 cents to $58.78 a barrel.
Traders are waiting to see if OPEC producers will adhere to an agreement to cut 1.2 million barrels per day from tomorrow.
"The dominant speculative sentiment remains overwhelmingly bearish," said Barclays Capital. "Those on the short side who are expecting global economic weakness...and weak OPEC cohesion are unlikely to change those core views in a hurry."
Saudi Arabia, the world's largest oil exporter, and the United Arab Emirates have told customers of supply cuts, but other OPEC members such as Kuwait and Libya have yet to do so. Nigeria, which was the first to instigate the voluntary cuts, was expected to raise oil exports in December.
Oil's 26 per cent slide since mid-July's peak of $78.40 has prompted funds to shift their money into other commodities in search of better returns. Gold prices hit a seven-week high and zinc in London touched a record yesterday.
Easing tensions in Nigeria also added to bearish sentiment.
Western oil companies were free to resume production of 62,000 bpd at four oil pumping stations after striking a deal with protesters late last night.
Villagers invaded the stations last Wednesday demanding contracts from the operators, Royal Dutch Shell and Chevron. But as one problem subsided, another dispute was brewing.
Nigerian unions threatened to shut all oilfields operated by Italian oil company Agip, which produces 200,000 bpd in the country, unless it paid staff a security bonus. Attacks have cut Nigerian output by 500,000 bpd since February.
Prices have also eased as forecasts for temperatures in the US Northeast, the world's top heating oil consuming region, are for a return to seasonal norms later this week.