LONDON, Feb 26: Oil prices eased below $61 a barrel on Monday as dealers looked toward an end to the Northern Hemisphere winter heating season, but losses were limited as world powers discussed tightening UN sanctions on Iran.

US crude dipped 17 cents to $60.97 a barrel by 1715 GMT, less than $1 below the 2007 high of $61.80 hit on Friday. London Brent was down 14 cents at $60.74.

Analysts said the mild losses came amid expectations that demand for heating fuels will ease, but they added that prices could find more speculative strength.

“It is the first time this year that the large speculative funds are showing a net long position in crude oil,” said Olivier Jakob, an analyst at Swiss-based Petromatrix.

Oil prices have swung between a high of $78.40 last July, when fighting flared in Lebanon, and a 20-month low of $49.90 in January, when an expected influx of fund money failed to materialise, disappointing oil investors.

A steady recovery in prices since late January has been supported by gradually tightening supplies -- Opec has twice cut output since November -- and by concerns over a possible disruption of Iran’s oil supplies.

“Iran is a key factor for oil prices recovering from just below $50. However, it is a psychological factor, and many market players are sceptical at the same time,” said Tetsu Emori, the chief strategist at Mitsui Bussan Futures.

News of a militant attack on foreign nationals in Saudi Arabia was also potentially bullish, analysts said.Prices had begun to rally following data last Thursday showing an unexpected drop in weekly US gasoline stocks.The focus of oil traders and refiners has shifted from heating oil to gasoline as the market readies for peak summer motor fuel demand in the United States, the top consumer.

“The shift towards summer grade gasoline is the catalyst we believe will continue to underpin refining margins and, if followed by the funds, as has been the trend, may provide the impetus for a seasonal push higher by oil,” Citigroup analysts said in a report.

The Organisation of Petroleum Exporting Countries, which pumps more than a third of the world’s oil, also has its sights on the second quarter, when demand for its crude typically slows from a winter peak.—Reuters