Oil prices slipped back today from the previous day's $2 rally as a mild start to the northern winter and recovering US production outweighed signs of improved demand in the world's largest consuming nation.
US light crude oil prices traded 53 cents down at $61.25 a barrel this morning. London Brent crude fell 65 cents to $59.87 a barrel.
Prices had jumped more than $2 a barrel on Wednesday, boosted by stronger-than-expected US retail sales data.
Analysts have been concerned that reduced fuel production during peak winter demand could drive prices back up, but the mild start to winter helped drive US crude futures below $59 on Wednesday for the first time since July.
Prices remaining above $60 a barrel are not sustainable as supplies rise and the world weans itself off costly fuel and looks for cheaper energy sources, BP Chief Executive John Browne said today.
Crude oil production from the hurricane-battered Gulf of Mexico has recovered to its highest level since late August, when Hurricane Katrina thrashed the region. Output rose to nearly half its 1.5 million barrels per day capacity.
Also easing supply worries was a deal reached by Shell and trade unions yesterday to end a three-day strike over pensions that had cut production by around 50 per cent at its 418,000 barrels per day Pernis refinery.