Oil ambled below $ 60 yesterday, pausing from a four-day rally fueled by an extended chill in the US Northeast that should stoke demand in the world?s biggest heating oil market. US crude was down 11 cents or 0.2 percent at $ 59.80 a barrel, having briefly hit $ 60.80 in New York on Monday, its highest level in a month. Prices have risen more than $ 5.00 since touching a five-month low in mid-November. Brent crude was off 18 cents at $ 57.55 a barrel.

?We?re now seeing the long-awaited cold snap and even some snow storms in the United States,? said Gerard Burg, minerals and energy economist at the National Australia Bank in Melbourne. ?The greater pressure on heating oil should now flow through to crude and give some direction, which we?ve lacked over the past couple of months.? . Temperatures this week are expected to be up to 12 degrees Fahrenheit below average in the US Northeast, driving up demand for heating oil, said private forecasters Meteorlogix.

That is likely to erode stockpiles that now stand 12 percent higher than this time in 2004 after a late start to winter. Crude oil stocks probably fell 1.1 million barrels in the week ended Dec. 2, a preliminary poll of analysts showed, ahead of weekly inventory data from the US Energy Information Administration due yesterday. They expected distillate stocks, including heating oil, would rise by 1.6 million barrels and gasoline stocks by 1.2 million barrels during the period before temperatures dropped.

?There is a bit of a time-lag in all this, but a prolonged cool spell should see a real impact on heating oil stocks, which until now have been robust,? said National Australia Bank?s Burg.

Natural gas, which has led the energy complex?s rebound amid the ongoing reduction in US Gulf output and rising heating demand, fell a sharp 1.5 percent to $ 13.45 per million British thermal units in early trading. Analysts said the market would remain focused on weather conditions until the Organization of the Petroleum Exporting Countries meets in Kuwait next Monday to discuss output policy. The market rally of the past few days has been capped by key OPEC ministers suggesting they are happy with current prices and that they see little need to reduce supplies.

<B>Paul MARRIOTT</B>