Oil falls for third day as winter winds down early

SINGAPORE, Feb 21 (Reuters) Oil fell for a third day on Wednesday as a U.S. cold spell lifted and some forecasters said March would be moderate, signalling a likely end to an exceptionally mild winter season in the world's top consumer.

However, with violence in Nigeria's oil patch and a looming deadline in the saga of Iran's nuclear programme limiting losses, the market appeared to have little momentum for breaking out of the - range it has tested for the past three weeks.

U.S. light, sweet crude for April arrival the new front-month contract, fell 34 cents to .51 a barrel by 0729 GMT. London Brent crude which fell 16 cents on Tuesday, extended losses by a further 40 cents to .58 a barrel.

''The onset of milder weather in the U.S., and expectations that more is on its way, have taken the top off oil prices,'' said analysts at the Commonwealth Bank of Australia in a report.

U.S. heating oil demand is likely to be about 2 percent below normal this week, the U.S. National Weather Service said, after snow and ice storms in the Northeast passed on.

Forecasters including WSI Corp. have also said that temperatures were likely to remain above normal through March, curbing fuel demand and focusing traders on the lull in seasonal oil consumption during the second quarter.

''More likely than not, spring will come early to the consuming east,'' said Jim Rouiller, senior meteorologist for Planalytics.

The chilly weather last week probably caused U.S.

distillate stocks to fall by 2.9 million barrels in the week to Feb. 16, although crude oil inventories were expected to have extended a rebound by rising 1.2 million barrels, a Reuters poll found.

The U.S. government's weekly stock data is due for release on Thursday, a day later than usual due to Monday's holiday.S] Ahead of the data, however, Iran was set to thwart the U.N.'s Wednesday deadline to stop enriching uranium fuel, prompting the Security Council to weigh broader sanctions that traders fear could provoke Tehran into disrupting oil flows.

Iran's chief negotiator Ali Larijani, speaking after talks on Tuesday with the U.N.'s nuclear watchdog director, said Iran would not suspend nuclear work as the West demands.

The International Atomic Energy Agency's report confirming Iran has defied the deadline is likely to appear on Thursday, not Wednesday as expected, a diplomat close to the IAEA said.

Traders are also alert to any news from Nigeria, where the United States has warned that militants may broaden violence that has already halted a quarter of the country's output.

Analysts also fear it may intensify ahead of April presidential elections.

North American refinery fires have also unsettled traders as they fear it may stymie efforts to build up gasoline stocks for the summer season.

Valero Energy Corp. said on Tuesday it would take several weeks before it could attempt even a partial restart of its 170,000 barrels per day (bpd) oil refinery in Sunray, Texas, which was shut down after a fire last Friday.

REUTERS KR DS1403