VIENNA, Austria – Oil fell nearly a dollar Monday as mild weather blanketed much of the United States, cutting into heating oil demand in the world's largest energy consuming nation.
The drop in prices was limited, however, as dealers looked ahead to OPEC's meeting in Nigeria on Thursday, when the group's ministers will consider deepening a production cut to drain soaring world energy stockpiles.
U.S. crude prices settled down 81 cents, or 1.3 percent, at $61.22 a barrel, while London Brent crude fell 36 cents to $61.84 a barrel.
"The mild weather should keep some pressure on prices," said Mike Fitzpatrick, vice president for energy risk management at Fimat USA. "The market is waiting for OPEC and inventory data, or something substantial, to move it."
U.S. heating demand was expected to be nearly 27 percent below normal this week, with warmer temperatures in most regions east of the Rockies, the National Weather Service said Monday.
The warmer weather comes after the season's first cold blast last week pushed heating demand about 18 percent above normal, the NWS said in its weekly report.
U.S. oil prices are about 20 percent below the all-time high of $78.40 a barrel hit in July, but have been sticking in a range near $60 a barrel since the end of September as dealers weigh high inventories against OPEC cuts.
The Organization of the Petroleum Exporting Countries agreed to lower output by 1.2 million barrels a day, effective Nov. 1, to stem a slide in prices.
A slim majority within the cartel wants to cut the group's output further at Thursday's meeting, a top OPEC official told Reuters. However, Saudi-owned newspaper Al Hayat quoted OPEC sources as saying the group would keep supply unchanged.
"I see mixed signals," Hasan Qabazard, OPEC's director of research, told Reuters. "Some ministers believe there should be cuts, but some other ministers believe the market is balanced."
According to a Reuters survey, OPEC, which pumps more than a third of the world's oil, has implemented about 730,000 bpd of the promised cutback, OPEC's first in two years.
On Friday, OPEC President Edmund Daukoru said he favored a further cut to counter ample inventories, particularly in the United States, the world's top oil consumer.
U.S. crude oil inventories are at the highest level for this time of year since 1993.
Some analysts say an additional cutback is not needed as world oil demand is heading toward its seasonal peak during the Northern Hemisphere winter.
"I don't think OPEC needs to cut any further because of winter demand and the impact of cuts they have already made," Mike Wittner, analyst at investment bank Calyon, said.
Even so, Saudi Arabia has told oil refiners in Asia that it will reduce their supplies next month.
About half of the kingdom's 7 million bpd of crude exports move to Asia. The world's largest oil exporter kept supplies to European and U.S. refiners mostly steady, traders said.