Oil fell below $61 a barrel on Monday but prices remained stubbornly high as traders were torn between the potential for higher energy costs to curb consumption and the looming season of peak winter fuel demand. The market is alert to any softening in demand that might ease the global refining supply strains that took prices to record highs in July. But robust third-quarter economic growth in the United States and a rise in Chinese energy use in September helped support prices.

US crude slipped 65 cents to $60.57 a barrel by 1101 GMT. London Brent crude was down 68 cents at $ 58.74 a barrel. US light crude prices are down over $10 from their record high of $70.85 a barrel two months ago. With prices stuck above $60, fuel bills look set to stay high for some time and traders fear consumers in the world?s top consumer, the United States, may take steps to curb energy use.

OPEC?s acting Secretary-General, Adnan Shihab-Eldin said on Monday that the cartel expects world oil prices to ease a little but to stabilize at $45-$55 next year. ?If you look at statistics every week, there?s a drop in demand year-on-year. People are focusing on that,? said Tony Nunan, a manager at Mitsubishi Corp.?s risk management. ?That?s the big question on everybody?s mind, how much this (high prices) affected the demand.? But many analysts are wary of talk of ?demand destruction? argument. The US economy logged faster-than-expected 3.8 percent annual growth in the third quarter, lending more weight to the idea that $60-plus oil is having only a marginal impact.

The approach of the northern hemisphere winter comes at a difficult time for the US oil industry, with refiners and producers still struggling to restore operations after being battered by hurricanes in the Gulf of Mexico. Lost heating oil output and high natural gas prices have led to concerns in some quarter that Americans could run short of winter heating fuels, especially if conditions turn chilly quickly. ?We expect colder weather in the next two weeks, so heating oil prices and natural gas prices will continue to stay high, and that should support oil prices?, said Gordon Kwan with CLSA in Hong Kong.

Production from the Gulf region, home to more than a quarter of US domestic oil supply, will not fully recover until the end of March due to extensive damage to platforms and undersea pipelines, said the US Department of Interior. Nearly 68 percent of the US Gulf?s 1.5 million-bpd crude production was still shut as of Friday. Four refineries remained idle due to damage caused by Hurricanes Katrina and Rita, removing over a million bpd of refining capacity from the US supply chain. Oil traders are also closely monitoring a strike threat at Europe?s largest refinery, Shell?s 418,000-bpd Pernis plant in Rotterdam. Workers were set to go on strike on Monday over pension demands, threatening to disrupt Europe?s supply of distillates.