Oil steady after 4 pc drop, heating stocks seen up

SINGAPORE, Jan 4 (Reuters) Oil prices held around on Thursday, after falling 4 percent a day earlier due to mild weather in the world's largest heating oil market, as analysts expected a rise in U.S. distillate stocks but a fall in crude.

The drop reflected the lack of fund interest as investors appeared to favour equity markets as other commodities took a beating, led by copper, which lost 7 percent to a near nine-month low on Wednesday due to fears over a possible glut.

U.S. light crude traded up 2 cents at .34 a barrel by 0422 GMT in Globex electronic trading. It settled SINGAPORE, Jan 4 (Reuters) Oil prices held around $58 on Thursday, after falling 4 percent a day earlier due to mild weather in the world's largest heating oil market, as analysts expected a rise in U.S. distillate stocks but a fall in crude.

The drop reflected the lack of fund interest as investors appeared to favour equity markets as other commodities took a beating, led by copper, which lost 7 percent to a near nine-month low on Wednesday due to fears over a possible glut.

U.S. light crude traded up 2 cents at $58.34 a barrel by 0422 GMT in Globex electronic trading. It settled $2.73 lower at $58.32 on Wednesday, the lowest settlement since Nov. 17, before hitting $57.72 in after hours electronic trade.

London Brent crude prices rose 14 cents to $58.10 a barrel in thin activity after plunging by $2.48.

The global oil markets have been undermined by warm weather in the U.S. Northeast as the National Weather Service said demand for heating oil in the week to Jan. 6 would be about 33 percent below normal.

Lower-than-normal heating oil demand and higher refinery runs are expected to have boosted distillate inventories in the United States by 900,000 barrels, while gasoline was seen up by 1.5 million barrels, a Reuters poll showed.

Analysts forecast U.S. weekly crude oil stocks data, due out later on Thursday, to show a fall of 800,000 barrels, but a lack of fund interest in commodities would stymie any support.

Many investors lost their money in 2006 as oil prices fluctuated sharply, sliding from record highs. U.S. crude shot up to $69.20 by late January last year after investment funds piled into the crude market, from $61.04 at the end of December 2005.

The rush into the buoyant equity markets also saw corn, wheat and soybeans fall by 2-5 percent, while coffee and silver were pounded on the first U.S. trading day of the new year after most of the markets ended 2006 on a high note.

The Reuters/Jefferies CRB Index, which measures prices of 19 commodity futures, fell 2.80 percent to 298.49, the lowest since Oct. 11, 2006.

OPEC's supply cuts by 500,000 barrels per day (bpd) from Feb. 1, on top of a 1.2 million-bpd reduction from Nov. 1, had failed to lift the market, although Nigeria's top oil official said OPEC's move would balance the market and Nigeria would comply with its share of the cut.

Analysts are not optimistic that the supply growth this year would be matched by higher demand.

''For the first time since 2002, a terrible year for oils, in 2007 we are likely to have more non-OPEC oil supply growth than global oil demand growth,'' Deutsche Bank said in a report.

''We need a U.S. oil demand upside surprise, possibly combined with a weak supply if high turnarounds keep the U.S. market tight.

We struggle to see either.'' REUTERS PKS SSC1134 .73 lower at .32 on Wednesday, the lowest settlement since Nov. 17, before hitting .72 in after hours electronic trade.

London Brent crude prices rose 14 cents to .10 a barrel in thin activity after plunging by SINGAPORE, Jan 4 (Reuters) Oil prices held around $58 on Thursday, after falling 4 percent a day earlier due to mild weather in the world's largest heating oil market, as analysts expected a rise in U.S. distillate stocks but a fall in crude.

The drop reflected the lack of fund interest as investors appeared to favour equity markets as other commodities took a beating, led by copper, which lost 7 percent to a near nine-month low on Wednesday due to fears over a possible glut.

U.S. light crude traded up 2 cents at $58.34 a barrel by 0422 GMT in Globex electronic trading. It settled $2.73 lower at $58.32 on Wednesday, the lowest settlement since Nov. 17, before hitting $57.72 in after hours electronic trade.

London Brent crude prices rose 14 cents to $58.10 a barrel in thin activity after plunging by $2.48.

The global oil markets have been undermined by warm weather in the U.S. Northeast as the National Weather Service said demand for heating oil in the week to Jan. 6 would be about 33 percent below normal.

Lower-than-normal heating oil demand and higher refinery runs are expected to have boosted distillate inventories in the United States by 900,000 barrels, while gasoline was seen up by 1.5 million barrels, a Reuters poll showed.

Analysts forecast U.S. weekly crude oil stocks data, due out later on Thursday, to show a fall of 800,000 barrels, but a lack of fund interest in commodities would stymie any support.

Many investors lost their money in 2006 as oil prices fluctuated sharply, sliding from record highs. U.S. crude shot up to $69.20 by late January last year after investment funds piled into the crude market, from $61.04 at the end of December 2005.

The rush into the buoyant equity markets also saw corn, wheat and soybeans fall by 2-5 percent, while coffee and silver were pounded on the first U.S. trading day of the new year after most of the markets ended 2006 on a high note.

The Reuters/Jefferies CRB Index, which measures prices of 19 commodity futures, fell 2.80 percent to 298.49, the lowest since Oct. 11, 2006.

OPEC's supply cuts by 500,000 barrels per day (bpd) from Feb. 1, on top of a 1.2 million-bpd reduction from Nov. 1, had failed to lift the market, although Nigeria's top oil official said OPEC's move would balance the market and Nigeria would comply with its share of the cut.

Analysts are not optimistic that the supply growth this year would be matched by higher demand.

''For the first time since 2002, a terrible year for oils, in 2007 we are likely to have more non-OPEC oil supply growth than global oil demand growth,'' Deutsche Bank said in a report.

''We need a U.S. oil demand upside surprise, possibly combined with a weak supply if high turnarounds keep the U.S. market tight.

We struggle to see either.'' REUTERS PKS SSC1134 .48.

The global oil markets have been undermined by warm weather in the U.S. Northeast as the National Weather Service said demand for heating oil in the week to Jan. 6 would be about 33 percent below normal.

Lower-than-normal heating oil demand and higher refinery runs are expected to have boosted distillate inventories in the United States by 900,000 barrels, while gasoline was seen up by 1.5 million barrels, a Reuters poll showed.

Analysts forecast U.S. weekly crude oil stocks data, due out later on Thursday, to show a fall of 800,000 barrels, but a lack of fund interest in commodities would stymie any support.

Many investors lost their money in 2006 as oil prices fluctuated sharply, sliding from record highs. U.S. crude shot up to .20 by late January last year after investment funds piled into the crude market, from .04 at the end of December 2005.

The rush into the buoyant equity markets also saw corn, wheat and soybeans fall by 2-5 percent, while coffee and silver were pounded on the first U.S. trading day of the new year after most of the markets ended 2006 on a high note.

The Reuters/Jefferies CRB Index, which measures prices of 19 commodity futures, fell 2.80 percent to 298.49, the lowest since Oct. 11, 2006.

OPEC's supply cuts by 500,000 barrels per day (bpd) from Feb. 1, on top of a 1.2 million-bpd reduction from Nov. 1, had failed to lift the market, although Nigeria's top oil official said OPEC's move would balance the market and Nigeria would comply with its share of the cut.

Analysts are not optimistic that the supply growth this year would be matched by higher demand.

''For the first time since 2002, a terrible year for oils, in 2007 we are likely to have more non-OPEC oil supply growth than global oil demand growth,'' Deutsche Bank said in a report.

''We need a U.S. oil demand upside surprise, possibly combined with a weak supply if high turnarounds keep the U.S. market tight.

We struggle to see either.'' REUTERS PKS SSC1134