Oil prices declined after hitting a seven-week high but hovered above the $48 mark on the forecasts of milder weather following the spell of heavy frosts in the US Northeast.

February crude fell $0.36 to $48.02 a barrel.

The National Weather Service said that the end of the month could see a rise in temperatures despite a spell of cold weather that is expected to last till the end of the week when temperatures will be 15 to 25 degrees Fahrenheit below normal.

``There are forecasts out there that show it’s going to turn milder again,’’ said Kevin Blemkin, a broker at Man Financial in London. The freeze, he says, ``is only going to be lasting for a short length of time.’’

Analysts are split on the outcome of the US government data on changes in oil supplies to be released at around 5 p.m. on Wednesday. The median forecast of the analysts polled by Bloomberg indicates a 500,000-barrel rise in stockpiles compared to the 123 million barrels in stock the previous week

Another factor that contributed to the price rise is the concern that OPEC may decide to cut output in its January meeting.

The International Energy Agency released a report on Tuesday that says oil demand growth will slow in 2005 after rising 3.3% last year. Still, supply was behind expectations in 2004, as non-opec countries raised exports by only by 1.4 million barrels a day, while forecasts gave the number of 1.9 million b/d.

As a result, IEA raised its ‘call’ on the OPEC members for 2005 by 300,000 b/d to 28.0m b/d. The organization sees OPEC spare capacity to equal only 1 million b/d.