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Oil steady as OPEC cuts but stocks weigh

Written by: Staff
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LONDON, Oct 25 (Reuters) Oil prices were roughly unchanged below a barrel on Wednesday after another OPEC producer followed Saudi Arabia's lead in enforcing output cuts, but high levels of inventory wiped out gains.

Government data for release later on Wednesday was expected to show a further rise in U.S. crude inventories, although stocks of refined products, including heating oil, were expected to fall.

U.S. light crude was trading four cents lower at .31 a barrel by 0854 GMT, after gaining 54 cents on Tuesday. London Brent was five cents lower at .81 a barrel.

On Tuesday, U.S. crude had gained half a dollar after Abu Dhabi's state oil firm told major customers it would cut crude exports by about 5 percent in November.

Leading OPEC producer Saudi Arabia, which is shouldering the greatest part of a 1.2 million barrels per day (bpd) production cut agreed last week, also informed customers earlier this week it would cut back November supplies.

Doubts OPEC would abide by its agreement helped to push U.S.

crude down to .55 a barrel last week, the lowest level this year, and analysts said OPEC has yet to prove its determination.

''It shows some resolve on the part of OPEC producers, but it is going to take more than these two countries to restore the group's credibility,'' said Jim Ritterbusch, president at Ritterbusch and Associates in Galena, Illinois, of the Saudi and UAE cuts.

Citigroup analysts said they were less optimistic on the prospect of countries like Iran and Venezuela would meet their pledges.

SWELLING STOCKS High levels of OPEC production have boosted U.S. fuel stocks and refinery maintenance in the United States has reduced demand for unrefined crude, adding to the surplus.

With a more than one-month sailing time from the Middle East to U.S. shores, any OPEC export reductions might not affect U.S.

inventory levels until December.

A Reuters survey of analysts forecast U.S. inventory data to be released at 1430 GMT would show a 2.6 million barrel rise in crude inventories.

Distillate stocks, including heating oil, which stood 15 percent above year-ago levels in the previous week, were seen falling by 1.1 million barrels and gasoline stocks by 600,000 barrels, the survey found.

''We've got surplus supplies of winter fuels, which despite concerns over a colder than expected winter, should keep up with demand through winter,'' Ritterbusch said.

Temperatures in the U.S. Northeast, the biggest oil consuming region in the world, will be colder than usual and higher heating demand was expected over the next five days, U.S.

based private forecaster Meteorlogix said on Tuesday.

Private WSI Corp on Monday predicted warmer-than-normal Northeast temperatures in November, but said they would be followed by cooler weather in December and January.

REUTERS KR RN1450

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