Oil prices slipped yesterday, but remained supported near $48 on worries that Opec producers may cut supplies before the end of the first quarter.
US light crude dropped 35 cents to $47.85 a barrel, pulling back after a late rally on Monday took it just over $1 higher. London's Brent crude shed 40 cents to $45.52 a barrel.
"Opec's decision in Vienna to keep quotas and production stable reflects the organisation's confidence that market fundamentals are strengthening," said analysts PFC Energy. "It also remains ready to defend a (price) floor."
The Organisation of the Petroleum Exporting Countries kept official production limits steady at 27 million barrels per day despite oil prices close to $50 a barrel, confident that higher fuel costs were not damaging global economic growth.
The cartel formally abandoned its $22-$28 price target and appears set to defend $40 a barrel, by leaving the door open to cutting production later to contain a second quarter stockbuild when the northern winter ends.
Opec next meets in Isfahan, Iran, on March 16, but ministers could agree on an output cut by telephone before then.
"It depends on whether demand slows but I think they will have to do something. It is unlikely we will have a second quarter this year like last year when Chinese demand exploded," said Deborah White, senior economist at SG Commodities in Paris.
Opec will be watching US stockpiles carefully as the focus shifts away from low winter fuel supplies toward healthier crude and gasoline inventories ahead of the second quarter, when demand hits a seasonal low.
US crude oil inventories are running nine percent above year-ago levels and gasoline stockpiles are up three per cent, although fires at two US refineries have raised concerns over motor fuel supplies months before the peak summer season. Analysts expect US crude inventories to rise 1.3 million barrels in the week to January 28 when the US government publishes its weekly oil stocks report today. If correct, US crude tanks will have risen for four straight weeks.
"We will continue to see a build-up of US commercial crude stocks as refiners go into turnaround maintenance and imports remain high," said brokers Refco in a report.
Analysts also forecast US distillate stocks, which include heating oil and diesel, to fall by 2.4 million barrels after a cold snap hit the northeast region, the world's largest consumer of winter heating fuels.
Temperatures are forecast to return to seasonal norms this week and remain warmer than usual the rest of winter, easing pressure on low fuel inventories.