Oil eases, higher consumer stocks weigh

LONDON, Nov 14 (Reuters) Oil edged lower towards $58 a barrel on Tuesday, extending a two-day slide triggered in part by weaker-than-expected heating fuel demand in the world's biggest oil consumer the United States.

U.S. crude was 15 cents lower at $58.43 a barrel by 1202 GMT, after falling $1.01 on Monday. London Brent crude , was flat at $59.05.

Unseasonably mild temperatures in the United States were expected to leave heating oil demand about 16 percent below normal this week, the National Weather Service said.

U.S. heating oil stocks are nearly 7 percent above last year's level.

Analysts polled by Reuters have predicted inventory data for release on Wednesday would show distillate stocks -- including heating oil -- had fallen by only 390,000 barrels last week.

''Inventory levels are too high, with heating oil inventories ultra-high. But energy demand should pick up with winter,'' said Tony Nunan, manager at Mitsubishi Corp.'s risk management unit.

High levels of fuel stocks prompted the Organization of the Petroleum Exporting Countries (OPEC) to announce an output cut of 1.2 million barrels per day from Nov. 1.

The producer group believes prices should be between $55-$60 a barrel, a senior Kuwait energy official said on Tuesday without specifying whether he was referring to OPEC's reference crude basket price or international oil prices.

Since the beginning of October, U.S. and Brent crude have traded between around $58 to $62 a barrel, with speculative hedge funds playing a part in keeping prices in this range.

They have sold when the price begins to break higher and bought as it nears the bottom of the six-week range, analysts and traders said.

The latest data from U.S. regulatory body the Commodity Futures Trading Commission showed speculators on the New York Mercantile Exchange cut net crude short positions in the week ended Nov. 7, taking their overall position to around neutral.

''This lack of commitment and a net position which is neutral should partly explain the flat price swings that we currently have,'' said Olivier Jakob, analyst at Petromatrix.

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