Oil prices slipped on Thursday after a bigger-than-expected rise in U.S. fuel inventories soothed worries of a winter squeeze.

U.S. oil futures eased 20 cents to $47.35 a barrel on the New York Mercantile Exchange (search), recovering from a low of $46.66. London Brent crude was down 15 cents at $44.56.

U.S. commercial crude inventories rose last week by 3.4 million barrels, bringing supplies to about 8 percent above last year as refineries slowed for seasonal maintenance, the Energy Information Administration (search) reported late on Wednesday.

Winter heating oil tanks fell by 500,000 barrels but their deficit compared to a year ago narrowed to just 4 percent as the first half of the northern winter proved milder than usual.

"Inventories fell and would be expected to fall more sharply in coming weeks," said Barclays Capital in a report. "Heating oil remains the strongest part of some rather soggy data."

Worries of a winter crunch still linger as the U.S. Northeast is in the midst of its most severe cold spell of the season, driving up demand as householders fire up heating furnaces.

Temperatures have been 18-24 degrees Fahrenheit below normal and will remain at least 14 F below normal through the weekend, forecasters Meteorlogix said on Thursday.

Prices are up nine percent since the start of the year, with only 10 days until Iraqi elections that traders fear could spur sabotage attacks.

Sabotage on Iraq's northern pipeline is expected to keep oil exports through Turkey at a standstill for another two to three weeks, an Iraqi oil official said Wednesday.

Iraq's 1.5 million bpd of southern exports have been mostly spared the sabotage that has paralyzed northern supplies.

OPEC (search) meets on Jan. 30 to discuss whether it may need to deepen supply cuts ahead of the second quarter. But oil is still some way above the $40 target that some members recently mooted as a possible new price floor.

The International Energy Agency's (search) Executive Director Claude Mandil told Reuters on Thursday that OPEC should refrain from further production cuts at the meeting to calm nervous markets.

"They don't have to be afraid of high stocks...prices are high compared to last year and there's still a lot of uncertainty," Mandil said.

OPEC President and Kuwaiti Oil Minister Sheikh Ahmad al-Fahd al-Sabah said on Wednesday that the current high prices were the result of the U.S. cold snap and that the production group will ensure global markets are adequately supplied.

OPEC oil to be shipped in the four weeks ending February 5 sank by 650,000 barrels per day, marking the biggest drop since April last year, a shipping analyst said on Thursday.