LONDON (AFP) - Oil prices continued their decline after a brief rally on the back of renewed concerns over heating oil stocks in the United States fizzled out.
New York`s main contract, light sweet crude for delivery in December, dropped by 69 cents to 46.15 dollars a barrel at 1630 GMT.
In London Brent North Sea crude for delivery in January dipped by six cents to 42.70 dollars a barrel.
"A lot of people are talking about the fact that there is a lot of oil around," said Kevin Blemkin, a trader with GNI-Man Financial.
"At the moment, we are seeing a slower demand in the Asian region. China does not require so much at the moment. So yes, if anything, we may have seen the top (for prices) for the time being."
The Organization of Petroleum Exporting Countries (OPEC) trimmed its forecast for global oil demand growth this and next year owing to expectations for lower economic momentum.
In its latest monthly report, OPEC estimated global demand of 2.5 million barrels per day this year, cutting its forecast by 120,000 bpd. At that lower rate of growth, total demand was expected to stand at 81.74 million bpd.
"The world oil demand estimate for the current year has been slightly adjusted downwards to account for the slowdown in Chinese consumption in the second half of the year as well as expected lower apparent demand in the FSU (former Soviet Union) due to the slower pace of economic activity," OPEC said.
It also lowered its forecast for 2005 oil demand growth by 180,000 bpd to 1.49 million bpd. At that rate of growth, total oil demand was seen at 83.33 million bpd next year.
Markets went into reverse a day after spurting higher as a weekly snapshot of US oil inventories revived jitters over tight winter supplies.
The US Department of Energy said Wednesday crude stockpiles rose by 800,000 barrels to 292.3 million in the week to November 12, smaller than the 1.8 million expected by analysts.
Distillates stocks, which include heating oil, declined by one million barrels to 114.6 million, the ninth consecutive weekly fall, defying expectations of a one-million-barrel rise.
Reserves of heating fuel, which are considered crucial as the winter season looms, rose 700,000 barrels to 49.1 million barrels, dashing traders` hopes of a bigger rise ahead of the peak demand period.
"The output from refineries is not recovering as fast as the crude stock builds," said Richard Griffith, analyst at stockbroker Williams de Broe.
US inventories have been hit by recent supply problems in the Gulf of Mexico caused by the hurricane season, as well as by fast-growing demand and efforts by the OPEC producer group in recent years to limit output.
Although production difficulties in the Gulf of Mexico have now been largely resolved, refinery bottlenecks in the United States mean that oil companies are racing to process enough crude in time for the northern winter.
However, increasing optimism on markets that a supply crunch can be avoided has seen oil prices slump in recent weeks, fuelled also by expectations of a slowdown in demand next year.
"I think we are going to remain in 40-45 dollar range for the moment," said Blemkin. "I think we will have a chance to get back down to 40 dollars, but it is still very high. The market should be slightly weaker but not too much."

11/18/2004 - 19:26 GMT - AFP