Oil steadied near $51 today, after falling to a 20-month low the previous session as top exporter Saudi Arabia said there was no need to worry about the market's 16 per cent slide so far this month.
US crude futures eased 11 cents at $51.10 a barrel by 11.30am while London Brent rose six cents at $51.68.
The market found support from investors' reluctance to bet that prices would fall below the psychologically key $50 mark.
Yesterday, NYMEX prices briefly touched $50.53, the lowest level since May 25th, 2005, after Saudi Arabia said OPEC production cuts were working well and an emergency meeting of the producer group was unnecessary.
The market has plunged more than 35 per cent since hitting a record peak of $78.40 a barrel in July 2006 in the wake of escalating Middle East tensions.
But many technical analysts said it was not a question of if, but when the market would test the $50 support level. "Most of our charts suggest the prices will continue heading south, perhaps punctuated by the odd bounce," said Man Financial.
"In crude's case, the $50 level should not impede any selling either, as it does not constitute major chart support, but rather, is more of a psychological price point at this stage."
As colder weather reached the region, heating demand in the US Northeast was forecast to rise above average early in the week, with Wednesday demand well above usual, private forecaster DTN Meteorlogix said.
But the coming of the cold was a little too late to radically change the recent fundamentals, analysts said.