SINGAPORE, Jan 30 Oil steadied at $ 54 a barrel on Tuesday as traders balanced an expecte

SINGAPORE, Jan 30 (Reuters) Oil steadied at $54 a barrel on Tuesday as traders balanced an expected rise in US crude inventories and signs of OPEC producers lifting March output with forecasts for lower distillate fuel stocks after a cold snap.

The market held its ground after a slide of over $1 on Monday, when Saudi Arabia's ambassador to the United States said OPEC's largest producer was satisfied with U.S. crude near $50 and as other commodities were also hit by an investor sell-off.

U.S. light crude for March delivery was up 9 cents at $54.10 a barrel by 0303 GMT, having fallen $1.41 on Monday. London Brent crude was up 11 cents to $53.79.

Saudi Arabia's outgoing ambassador to the U.S. said on Monday current prices were good for both consuming and producing nations, adding to sentiment that Saudi backing for further output cuts to shore up prices is unlikely.

''OPEC does risk overreacting with larger than necessary production cuts,'' said JP Morgan, adding steady OPEC production through the first quarter would ''clean up'' swollen commercial inventories that have helped push down prices this month.

Prices were further dampened by news that other OPEC members Nigeria and United Arab Emirates were boosting supplies in March, leaving traders sceptical that producers will adhere to an OPEC agreement to deepen output cuts from February.

Nigeria's oil exports were expected to climb to a 14-month high of 2.21 million barrels per day (bpd) in March, from 1.8 million bpd the previous month, which traders attributed to a backlog in shipments following militant attacks last month.

Industry sources also said Abu Dhabi, the main producer in the United Arab Emirates, was increasing supplies to Asia in March, after cutting shipments in February.

OPEC agreed in October to curb output by 1.2 million bpd or 4 percent from Nov. 1, and to reduce supplies by an additional 500,000 bpd on Feb. 1.

Oil is down 11 percent this year on mild U.S. weather and fund selling, though prices have picked up from a 20-month low of $49.90 on Jan. 18 after recent colder weather in the U.S. Northeast, the world's biggest heating oil market.

The cold snap is likely to have reduced distillate inventories, including heating oil, by 2.2 million barrels last week in U.S.

government data due on Wednesday, though crude stocks are seen building, analysts said in a Reuters poll. S] Prices have also been bolstered by an influx of pension funds into passive commodities indexes, Lehman Brothers said, while support came from the U.S. government's announcement last week that it would add 11 million barrels to strategic oil reserves.

REUTERS PV ND1125