LONDON, Nov 16: Oil prices steadied on Tuesday near two-month lows as the market took the view that the northern winter will be mild and heating fuel stocks adequate, and after a planned strike in Nigeria was called off.
The main New York oil contract, light sweet crude for delivery in December, rose by three cents to $46.90 a barrel in electronic trading at about 1200 GMT.
It had traded as low as $45.25 on Monday, the lowest level for almost two months, before paring losses.
"Forecasts for warmer weather in the US Northeast that should lighten heating oil and natural gas use, plus news that the planned general strike in Nigeria had been suspended after the government reduced domestic fuel prices, helped push crude oil down," Barclays Capital analysts wrote in a note.
"However, a late rally, sparked by a recovery in natural gas, dragged prices back... Technical support is indicated at $45 a barrel and appears likely to be tested again in the short-term."
In London Brent North Sea crude for January delivery, the new benchmark contract, gained seven cents to $43.11. The December contract had plunged by $1.76 to $40.55 on Monday before expiring.
"Prices are all over the place, while dealers try to establish a good level for new January contracts," said GNI-Man Financial trader Lee Elliott.
"Warmer weather forecasts in the US, along with warmer weather expected in the US by the end of the week, will push prices down to $40 a barrel (in London) by Friday," Elliott predicted.
Markets were expecting a fresh rises in US inventories of crude oil, and even those of heating oil, in a weekly report from the US Department of Energy due to be published on Wednesday.
Last week's report showed that crude oil inventories had increased by 1.8m barrels to 291.5m in the week to November 5, helping to offset an eighth weekly drop in stockpiles of heating oil.
Elliott notes prices have also fallen now that Nigeria's general strike over domestic fuel subsidies has been "definitely called off", but said he would continue to monitor the situation.
Nigeria's central labour movement and a coalition of civil society groups decided on Monday to suspend a nationwide general strike just hours before it was due to begin at midnight.
The move came after the government made an 11th-hour bid to avert the strike - which had already been deemed illegal by a court ruling - ordering a temporary increase in fuel subsidies and an immediate cut in pump prices.-AFP
