Oil prices eased on Monday, tracking a big sell-off in sky-high heating oil futures as dealers expected rising production and a stretch of mild U.S. weather to boost winter stockpiles.

U.S. light crude (search) for January delivery settled down 25 cents a barrel at $48.64 a barrel. Prices are up from a two-month low a week ago of $45.25, but remain well below last month's peak of $55.67 a barrel.

In London, Brent slipped 51 cents to $44.38 a barrel.

Dealers said the losses came on profit-taking in heating oil futures after price gains last week of 12 percent triggered by concerns over thin fuel stockpiles heading into the Northern Hemisphere winter.

Analysts surveyed by Reuters Monday predicted a government report to be released Wednesday would show the first recovery in U.S. distillate stocks in 10 weeks, after repeated drawdowns brought them 15 percent below the year-ago level.

"Hopefully, we will get a long-awaited and long-predicted rise in distillates," said Marshall Steeves, analyst at Refco Group in New York.

Experts said continued milder-than-normal weather in the U.S. Northeast, the world's largest heating oil market, and a recovery in fuel production after this autumn's refinery maintenance would help boost the stockpiles.

U.S. home heating needs were 22 percent below normal last week during unseasonably mild weather, with more mild weather this week expected to keep demand down 12 percent below normal, the U.S. National Weather Service said Monday.

New York heating oil futures fell 3.77 cents to $1.4449 a gallon, cutting some of last week's gains, while London gas oil futures, the benchmark for European heating fuel purchases, dropped $11.75 a tonto $435.75.

The market remained on edge as economic growth kept fuel demand high and distillates stocks thin in major consuming centers around the globe.

A surge in Chinese demand for heating oil and diesel has contributed to bullish sentiment as China boosts stocks to prevent a repeat of last year's winter supply crunch.

October imports of diesel by the world's second-largest energy consumer were up 140 percent versus last year, customs data showed, although crude imports fell to their lowest level in 11 months as refiners ran down stocks for accounting purposes.

Dealers are watchful for signs of diminished demand from China, where blistering economic expansion this year has fueled the fastest global oil demand growth in a generation.

An explosion on Monday on one of Iraq's main export pipelines helped prevent crude prices falling further.

Flows to the Iraqi Gulf terminal of Basra were cut by 750,000 barrels a day to about 1 million bpd after a blast on one of two southern export lines, industry sources in Iraq told Reuters.

Northern exports are limited at the moment to only 250,000 bpd following sabotage attacks but the south had escaped serious disruption since late August.

High crude prices are expected to trim global oil demand growth levels for next year and OPEC (search) is predicting a rare winter build in stockpiles, if it keeps producing at current levels.

This month's price fall has spurred some discussion in the cartel about a potential clamp-down on quota-busting output when it meets on Dec. 10.

The group, excluding Iraq, pumped about 27.9 million bpd in October, 900,000 bpd over official limits that took effect Nov. 1.