Oil prices dropped to $49.13 a barrel on Tuesday on the news of increasing U.S. heating fuel supplies alleviated worries about the fuel crisis in the North-East in anticipation of coder-than-usual temperatures.

 

 

The growth in heating oil stocks overshadowed concern about production disruptions in the North Sea and eastern Canada that earlier sent the prices over $50 a barrel. Approximately 280,000 barrels per day remain shut in the North Sea due to two separate gas leaks in the Norwegian and UK sectors.

 

London Brent crude was down 24 cents at $45.48 a barrel.

 

The drop in prices came in expectation of the release of the Energy Information Administration scheduled for Wednesday that is forecast to show the second consecutive weekly increase in U.S. distillates stocks, including heating oil and diesel. The projected increase of 1.4 million barrels in the week to Nov. 26 would help to alleviate the fear caused by the 16% year-on-year deficit.

 

 “Winter will play a big part," said analyst Kevin Norrish of Barclays Capital. "Let's face it, we have not yet reached the seasonal peak for winter demand."