LONDON (Reuters) -Oil slid toward $57 a barrel on Tuesday as unseasonably warm U.S. weather encouraged refiners to stockpile winter fuel.
With balmy weather limiting demand and OPEC pumping nearly flat out in response to devastating autumn storms in the U.S. Gulf, oil has given up most of its hurricane rally — falling last week to its lowest point since July.
The cartel”s acting Secretary General Adnan Shihab-Eldin said prices are now "more realistic" and reflect a recovering balance between demand and supply.
U.S. light crude oil was trading at $57.37 a barrel at 1211 GMT, down 32 cents from Monday”s close. London Brent also lost 37 cents to stand at $54.36 a barrel.
"There”s an awful lot of bearish momentum, but at these levels, we are getting to the stage when we should start finding a base," said Mark Keenan of MPC.
"It”s looking like all the perceived demand destruction that catalyzed the downtrend is not really true."
Warmer-than-average pre-winter conditions have given consumers time to build inventories drained after Katrina and Rita knocked out rigs and refineries in the U.S. Gulf.
U.S. crude oil inventories, already nearly 13 percent above year-ago levels, likely rose 2 million barrels in the week to November 11 while distillate stocks — including heating oil — probably increased by 700,000 barrels, according to a preliminary Reuters forecast of nine analysts .
Temperatures are getting colder in the northern hemisphere, but demand for heating oil in the heavy consuming U.S. Northeast is likely to be about 4.6 percent below normal this week, the U.S. National Weather Service said on Monday.
OPEC President Sheikh Ahmad al-Fahd al-Sabah said on Monday the cartel will wait until cold weather sets in before charting its production policy.
The 11-member producer group meets on December 12 in Kuwait. It has offered an extra 2 million barrels per day (bpd) of crude to world markets through year-end, but has yet to find takers.