LONDON, Oct 22: Oil prices retreated on Wednesday after estimates of US inventories calmed worries about heating oil supplies going into the northern hemisphere winter.

The price of benchmark Brent North Sea crude oil for delivery in December dropped 20 cents to $28.43 per barrel in late deals.

New York’s reference light sweet December contract lost 25 cents to $30.07 in early trading.

The US Department of Energy said US stocks of distillate fuel, of which heating oil is a main component, increased by 2.6 million barrels to 132.4 million in the week ending October 17, confounding predictions of a 1.0-million barrel decline.

The figure offset news of a drop in crude stocks of 1.8 million barrels.

“It would appear that what’s really catching the eyes is the build in heating oil and distillate stocks ahead of the winter,” said Commerzbank analyst David Thomas.

“Heating oil stocks are now close to where they were a year ago and that’s what’s attracting people’s attention, because before there were fears about a potential supply shortage this winter.”

Traders were also mulling fresh comments from Opec ministers, who have come under renewed pressure from consumer countries since their decision last month to trim output by 3.5 per cent from November sent prices soaring.

But Algerian energy minister Chakib Khelil played down the chances of an output increase, painting a gloomy picture of the outlook for prices.

“Next year will be very difficult and prices could fall to very low levels,” he was quoted by the Algerian press agency APS as saying.

The situation will force Opec to “maintain quotas at their current levels”.

The market largely ignored a denial by Iranian oil minister that Iran was considering quitting Opec, a possibility that few traders were considering anyway.

“Our membership of Opec is in our national interest, and currently we are not pursuing any plans or discussions to get out of Opec,” Bijan Namdar Zanganeh was cited by Iranian state news agency IRNA as saying.

On Oct 18, Zanganeh made a speech in which he said Opec was losing its international importance and its grip on the world oil market prices. This was interpreted by domestic media as a hint that the country might leave the cartel.—AFP