LONDON (Reuters) -Oil prices dipped below $62 on Wednesday but concern about heating fuel stocks ahead of the northern hemisphere winter kept prices high.
Consumers will have to dig deep to pay winter heating oil bills as crude prices remain stubbornly above $60. U.S. light crude has not ended a day below $60 since the end of July.
U.S. crude was down 53 cents to $61.91 a barrel by 1040 GMT after jumping $2.12 on Tuesday. London Brent crude fell 51 cents to $59.73 a barrel.
Sustained high oil prices are feeding inflation concerns among economists.
Growing fuel bills may cause wage inflation as workers demand higher pay rises to compensate for the higher costs of living, European Central Bank Governing council member Axel Weber warned on Tuesday.
So far, high prices have had little effect on economic forecasts, Weber said.
But markets are on alert for signs that high prices are destroying demand growth in the world”s largest energy consumer, the United States.
Recent stock data from the U.S. government has shown demand for oil products lower than it was at the same time last year.
Data due later on Wednesday was expected to show that U.S. distillate stocks — heating oil and diesel fuel — fell by 800,000 barrels in the week ended October 21, a Reuters survey of 13 analysts showed.
Oil prices rose by more than $2 on Tuesday as chilly weather in the U.S. Northeast, the world”s largest heating oil market, brought stock levels sharply back into the market”s focus.
The cool weather in the Northeast is a "warning sign of colder weather ahead," said Dale Mohler, meteorologist at Pennsylvania-based AccuWeather. (Click on ).
"Heating fuel stocks are going to be a theme all through winter," said Geoff Pyne, analyst at Enerpy. "Every single refinery outage will feed concern."
The U.S. market got a brief supply disruption scare, after ConocoPhillips” 263,000 barrel-per-day Bayway refinery in New Jersey suffered an outage on Tuesday afternoon.
But the company later said power had been restored and it was assessing plans to restart the plant.
Supplies of another winter heating fuel, natural gas, were also tight heading into the cold season after Hurricanes Katrina and Rita dealt strong blows to U.S. Gulf natural gas output.
On Tuesday, the U.S. Minerals Management Service reported that nearly 56 percent of U.S. Gulf natural gas output was still shut in after the storms.
Demand from Europe may further tighten global heating fuel supply if a cold winter forecasters are expecting materialises.
Europe is bound for its coldest winter in a decade, the UK government”s weather agency forecast on Tuesday.