NEW YORK Oil fell on Wednesday due to rising inventories and flagging demand in top consumer the United States.
U.S. distillate demand fell to the lowest level in five years as the economic recession battered industrial consumption, according to the Energy Information Administration.
Inventories of the fuel -- which includes heating oil and diesel -- surged by 6.4 million barrels in the week to January 9, while gasoline and crude stocks likewise rose, the EIA reported.
U.S. crude settled down 50 cents at $37.28 a barrel. London Brent crude -- which has been supported by the disruption of Russian gas supplies to Europe -- rose 25 cents to $45.08 a barrel.
"Inventories continue to build. This morning we had negative sales numbers. This is more economic weakness affecting demand," said Tom Bentz of BNP Paribas Commodity Futures in New York.
The U.S. Commerce Department said total retail sales fell 2.7 percent to a seasonally adjusted $343.2 billion last month. Analysts polled by Reuters had forecast December retail sales falling 1.2 percent.
"The retail sales figures are horrible. They confirm that the United States is in recession, which means oil demand is falling and so the market is weakening," said Rob Laughlin, senior oil analyst at MF Global.
Oil prices have crashed from record highs over $147 a barrel struck in July as the economic crisis clips global oil demand, with the EIA now forecasting world consumption will drop by more than 800,000 barrels per day (bpd) this year.
The Organization of Petroleum Exporting Countries agreed to a series of output cuts late last year, including a record 2.2-million-bpd reduction in December, to help stem the price slide.
Top exporter Saudi Arabia said on Tuesday it was prepared to go even further than cuts it had made since December if the market warranted it, while OPEC's secretary general said the group may reduce oil output again at its meeting in March.
Libya's top oil official said on Wednesday OPEC's existing oil output cuts should support oil prices and that it was too early to tell if another reduction will be needed.
EU states cut off for days from Russian gas in freezing temperatures pleaded on Wednesday for an end to wrangling between Moscow and Kiev which has stalled a deal to restore fuel supplies.
(Additional reporting by Gene Ramos and Robert Gibbons in New York, Alex Lawler, Joe Brock and Christopher Johnson in London; Editing by Christian Wiessner)