OIL

LONDON (AFX) - Oil edged up as the market recovered from a steep fall yesterday that was driven by a much smaller-than-expected decline in US heating fuel stocks.At 10.35 am, front-month Brent North Sea crude contracts for April delivery were up 50 cents at 57.93 usd a barrel. Yesterday, oil settled down 1.35 usd at 57.43 usd.Meanwhile, front-month New York light sweet crude contracts for March delivery rose 27 cents to 58.84 usd a barrel, after closing down 1.06 usd at 58.00 usd yesterday.Veronica Smart, analyst at the UK-based Energy Information Centre, said market participants might be thinking yesterday's falls were slightly overdone."Stock draws in the US which normally means prices go up," she noted, but added yesterday's declines were not as significant as people had expected.US government data released yesterday showed distillate stocks, which include heating oil, fell by 3 mln barrels last week, well short of the 4.9 mln barrel drop predicted.The data also showed a drop in crude and gasoline stocks, which went against market expectations for a rise. The drops helped temper the declines in oil prices.However, the market was hinged on the distillates number, as some players had been hoping the recent freezing temperatures in the US Northeast would have taken their toll on stock levels."With less than six weeks left to go until spring begins, the winter window is rapidly closing in on the bulls," noted Man Financial analyst Ed Meir.He added that "with OPEC acting non-committal at this stage on the issue of further cuts, we may start to see crude values come off from here to test the lower end of the 50-60 usd range they seem to be in".Saudi Arabia's oil minister, Ali al-Naimi, said Monday the cartel might keep its output levels unchanged at its mid-March meeting if current market conditions remain as they are.His comments sent oil prices sharply lower, although they recovered a day later after the International Energy Agency upped its forecast for oil demand this year, citing an expected increase in demand from China.Smart said the IEA forecast was significant, especially as it was the first time the global energy watchdog had raised its 2007 forecast.She added market participants will now be looking to the OPEC report, scheduled for release around midday today, to see if the cartel's forecasts line up with those of the IEA.