Oil prices dipped to $43.28 after the US Energy Information Administration report showed better-than-expected rise in inventories amid continuing warm weather in the Northern Hemisphere.

Ahead of the EIA report analysts expected a 160,000-barrel rise in stocks. The real figures showed a 2-million-barrel rise in distillates’ inventories to 121.1 million barrels, with heating oil alone rising by 1.2 million barrels, despite remaining at the level that is 9% lower than last year.

"That’s a very bearish report," said Ed Silliere, vice president at Energy Merchant Corp. in New York. "It’s pretty conclusive."

The rise in inventories was made possible due to the beefed up output of the nation’s refineries that now produce 4.3 million barrels of distillates per day. The increased production led to a steeper-than-expected drop in crude oil supplies that amounted to 3.3 million barrels.

"This week’s drop in crude stocks is completely irrelevant... Their move reflects temporary tax considerations favoring lower year-end stocks rather than any shortage of crude," Societe Generale said in a note.

Concerns about political unrest in the world’s leading producer Saudi Arabia and in Iraq prevented the prices from slipping further.

Royal Dutch/Shell resumed operations in its pumping stations in Nigeria that was recently interrupted by a strike of the local inhabitants.

US manufacturers are still struggling to restore production in the Gulf of Mexico that was ruined by the Hurricane Ivan in September.

Saudi Arabia announced on Tuesday a cut of 500,000 barrels per day in line with the OPEC’s decision to reduce output to avoid the build-up of crude stocks before the drop in demand expected at the end of the winter.