LONDON, Jan 26 (AFP) - Oil prices slipped slightly on Wednesday from the previous day's strong gains, as a fall in heating oil stockpiles in the snowbound United States was balanced by a rise in crude inventories.
New York's main contract, light sweet crude for delivery in March fell 14 cents to 49.50 dollars, having closed up 83 cents on Tuesday, hitting its highest day-end since November.
In London, the price of Brent North Sea crude oil for delivery in March dropped 21 cents to 46.74 dollars.
New York had flirted with the 50-dollar a barrel level during Tuesday as traders fretted about violence ahead of Iraq's landmark elections at the end of the month as well as US supply levels.
On Wednesday, the focus was firmly on the weekly commercial fuel inventory snapshots put out by the US Department of Energy (DoE) and the private American Petroleum Institute (API).
The DoE said that stocks of distillate fuels had fallen 2.3 million barrels in the week to January 21 to 121.5 million barrels, and that within this category, heating oil inventories were down 2.1 million barrels.
In contrast, the department's figures showed that crude oil inventories increased 3.4 million barrels over the week to 295.6 million barrels.
While the API gave a similar decline for heating oil stocks, it said crude oil inventories had actually fallen by 3.66 million barrels.
Traders had been worried about a sharp fall in heating fuels, which were already notably lower than the same period a year ago.
The US northeast was battered by a howling snowstorm over the weekend, said to have been one of the five worst blizzards in the last 100 years, dumping large amounts of snow on many cities.
However, Societe Generale analyst Frederic Lasserre said that overall, no one was panicking yet.
"The increase in crude oil stocks (according to the DoE) is well above what was expected, it's almost three times what was hoped for," he said.
"It's not totally cancelled out by the fall of heating oil stocks, as that was more or less in line with what we expected.
The consensus was for a fall of about two million barrels, and in fact we got a fall of 2.1 million, so it's not too far off what we expected."
Although forecasters are predicting an easing of US weather conditions in the coming days, the effect of the big freeze on the market might still be to on its way, Lasserre said.
"During the week to come, we'll start to get statistics on the weeks when it was really cold, so the fall in heating fuel stocks will increase," he said.
Traders were also keeping an eye on a second day of talks in Nigeria between government officials and union leaders to avert a potentially damaging strike by oil workers.
Also still looming on the horizon was the January 30 meeting of ministers from the Organisation of Petroleum Exporting Countries (OPEC) cartel in Vienna.
On Tuesday, Kuwait's energy minister called for OPEC's production ceiling to be maintained at 27 million barrels a day at the meeting.
01/26/2005 18:38 GMT - AFP