Oil holds at $ 55 ahead of US fuel inventory data

SINGAPORE, Jan 10 (Reuters) Oil prices held steady on Wednesday, ahead of U.S. data expected to show further builds in fuel stocks as mild weather cuts demand, but a drop in crude supply.

U.S. light crude for February delivery edged 3 cents lower to .61 a barrel by 0349 GMT, after losses of 45 cents on Tuesday, when the market pulled back from an intraday slide of over SINGAPORE, Jan 10 (Reuters) Oil prices held steady on Wednesday, ahead of U.S. data expected to show further builds in fuel stocks as mild weather cuts demand, but a drop in crude supply.

U.S. light crude for February delivery edged 3 cents lower to $55.61 a barrel by 0349 GMT, after losses of 45 cents on Tuesday, when the market pulled back from an intraday slide of over $2 that took prices to the lowest since June 2005.

London Brent crude rose 4 cents to $55.22.

Prices have been hammered 9 percent this month by warm weather in the U.S. northeast, the world's top heating oil consuming region, as well as by a broad commodity sell-off by investors.

''People have been chasing the trend on oil prices but the fundamentals are weaker this year and they have to look for other opportunities,'' said Tetsu Emori, chief strategist at Mitsui Bussan Futures. ''Inventories are too much, added to warm weather.'' U.S. distillate inventories, which include heating oil, were seen increasing by 2.2 million barrels last week in U.S.

government data due later on Wednesday, a Reuters poll showed, the fourth build in a row amid warm weather.

Gasoline stocks were also seen rising 2.6 million barrels to add to the previous week's hefty build on high refinery run rates, which helped push down U.S. crude oil supply for the seventh straight time, the poll showed Weather forecaster DTN Meteorologix predicted above normal temperatures for the rest of the week in the U.S. northeast, prolonging a balmy winter.

The weather overshadowed a trade dispute between the world's No. 2 oil exporter Russia and Belarus, which saw Russia threaten on Tuesday to cut oil output after halting its main crude export pipeline than runs through Belarus.

Hopes of a quick resolution faded after Russian Economy Minister German Gref said no breakthrough was achieved at talks with Belarus on Tuesday.

Russia has accused Belarus of stealing oil from the line.

The disruption comes one year after Russia's natural gas dispute with Ukraine hit supplies to Europe, and is likely to revive debate about Moscow's reliability as an energy supplier.

Oil traders have also pointed to market talk of large losses at one or more hedge funds as a reason for oil's January slide, although no single fund has been identified.

The price slide has prompted talks between OPEC's president and fellow oil ministers on what further action should be taken to brake oil's decline, OPEC sources said on Tuesday.

''I don't think we are taking any action immediately on this matter unless the price continues to go down,'' an OPEC source said. ''It's more likely we will wait to see how the market reacts to the Feb. 1 cut.'' Analysts are unconvinced that more pledges by OPEC will offset the loss of winter demand. OPEC so far has implemented just over half of its first 1.2 million barrels per day cut which took effect on Nov. 1, according to Reuters estimates.

REUTERS CS DS1156 that took prices to the lowest since June 2005.

London Brent crude rose 4 cents to .22.

Prices have been hammered 9 percent this month by warm weather in the U.S. northeast, the world's top heating oil consuming region, as well as by a broad commodity sell-off by investors.

''People have been chasing the trend on oil prices but the fundamentals are weaker this year and they have to look for other opportunities,'' said Tetsu Emori, chief strategist at Mitsui Bussan Futures. ''Inventories are too much, added to warm weather.'' U.S. distillate inventories, which include heating oil, were seen increasing by 2.2 million barrels last week in U.S.

government data due later on Wednesday, a Reuters poll showed, the fourth build in a row amid warm weather.

Gasoline stocks were also seen rising 2.6 million barrels to add to the previous week's hefty build on high refinery run rates, which helped push down U.S. crude oil supply for the seventh straight time, the poll showed Weather forecaster DTN Meteorologix predicted above normal temperatures for the rest of the week in the U.S. northeast, prolonging a balmy winter.

The weather overshadowed a trade dispute between the world's No. 2 oil exporter Russia and Belarus, which saw Russia threaten on Tuesday to cut oil output after halting its main crude export pipeline than runs through Belarus.

Hopes of a quick resolution faded after Russian Economy Minister German Gref said no breakthrough was achieved at talks with Belarus on Tuesday.

Russia has accused Belarus of stealing oil from the line.

The disruption comes one year after Russia's natural gas dispute with Ukraine hit supplies to Europe, and is likely to revive debate about Moscow's reliability as an energy supplier.

Oil traders have also pointed to market talk of large losses at one or more hedge funds as a reason for oil's January slide, although no single fund has been identified.

The price slide has prompted talks between OPEC's president and fellow oil ministers on what further action should be taken to brake oil's decline, OPEC sources said on Tuesday.

''I don't think we are taking any action immediately on this matter unless the price continues to go down,'' an OPEC source said. ''It's more likely we will wait to see how the market reacts to the Feb. 1 cut.'' Analysts are unconvinced that more pledges by OPEC will offset the loss of winter demand. OPEC so far has implemented just over half of its first 1.2 million barrels per day cut which took effect on Nov. 1, according to Reuters estimates.

REUTERS CS DS1156