LONDON, Feb 14 Oil fell a dollar to around $ 58 a barrel on Wednesday after a U.S. govern

LONDON, Feb 14 (Reuters) Oil fell a dollar to around $58 a barrel on Wednesday after a U.S. government report showed a smaller than expected drop in inventories of heating oil in the world's top consumer.

U.S. stocks of distillates, which include heating oil, fell by 3 million barrels, less than the expected 4.2 million-barrel drop, the Energy Information Administration said. [EIA/S] ''The distillates decline should disappoint market bulls following the recent cold spell last week,'' said Christopher Jarvis, senior analyst at Caprock Risk Management in New Hampshire.

U.S. crude was $1.12 lower at $57.94 a barrel by 1631 GMT, having traded as low as $57.70 earlier in the session. London Brent was down $1.40 at $57.38.

Oil rose $1.25 in New York on Tuesday after the International Energy Agency, an adviser to 26 industrialised countries, raised its forecast for world demand in 2007.

Prices have climbed from a 20-month low of $49.90 reached on Jan.

18 as colder U.S. weather boosted heating demand and OPEC members reduced supply. Oil is still down from an all-time high of $78.40 hit in July 2006.

Limiting oil's drop, U.S. crude and gasoline inventories both unexpectedly declined last week, the EIA said. Crude stocks fell by 600,000 barrels and gasoline by 2 million barrels.

''There were some bullish aspects to the release,'' BNP Paribas said in a report. ''Gasoline recorded a surprise fall.'' ''In recent weeks gasoline stocks have been rising strongly as exceptionally elevated levels of production helped drive the build,'' the bank said.

With only a few weeks of the northern hemisphere winter to go, attention is starting to shift from heating oil to gasoline, which is the main driver of prices during the U.S. summer.

Threats to supply in places such as Nigeria and Iraq, and political tension remain supportive for prices.

Rex Tillerson, chief executive of Exxon Mobil Corp. , said on Tuesday U.S. crude prices would be between $40 and $45 a barrel if there were no risks of supply disruptions.

Violence has stemmed oil flows from Nigeria and Iraq. OPEC's second-biggest exporter Iran is at odds with the United Nations over its nuclear programme and at risk of tougher sanctions.

Russia, the world's number two oil exporter, halted a pipeline across Belarus last month in a trade dispute with Minsk. The rest of Europe felt the impact.

REUTERS KR KN2249