Oil edged up yesterday, adding to the previous day?s recovery on improving heating fuel demand amid colder temperatures in the northern hemisphere. US crude for January rose 15 cents to $ 57.85 a barrel by 0820 GMT, adding to Monday?s 49-cent gains that helped the market bounce back from Friday?s five-month low. London Brent crude traded up 27 cents to $ 55.61. ?Forecasts calling for below-normal temperatures in the next two weeks should bolster heating oil use,? said JP Morgan in an energy report.

The US National Weather Service forecasts heating oil demand to be about 7 per cent above normal this week as colder-than-normal temperatures arrive in the north-east.This would be the first week in four that heating oil demand is higher than normal, ending a mild start to the heating season, a main driver for winter oil prices. Chilly sub-zero weather also crept across Northern Europe, including the region?s main market Germany.

But price gains were expected to be limited by a healthier fuel stocks picture and assurances over crude supplies from the Organization of Petroleum Exporting Countries (OPEC) producers cartel. Analysts in a Reuters poll forecast an average increase of 400,000 barrels in US crude supplies last week, following a surprise stock draw in the previous week. The US data due today is expected to show distillate stocks, including heating oil, gained 600,000 barrels, which would only be the second rise in nine weeks.

Refinery production continues to recover in the US Gulf Coast, where all but three refineries remained down post hurricanes. ?The downstream bottlenecks and hurricane disruptions that have played havoc with the oil markets appear to be largely behind us now,? the Center for Global Energy Studies said in a report. Unseasonably warm temperatures thus far have allowed the industry to replenish US stockpiles of crude and oil products badly depleted by a savage hurricane season, with demand for heating oil well below normal levels in recent weeks.

Rising stocks and fears that higher costs are curbing consumption have sent prices spiraling lower for nearly three months, taking them $ 13 below their end-August peak of $ 70.85. OPEC producers have been pumping at top rates so far this year but exporters say they would not consider a cut at a meeting next month unless prices fall steeply. The cartel next meets in Kuwait to plot output policy for early next year.

Chen AIZHU