Crude oil fell the most in more than three weeks as warm U.S. weather reduced demand for heating fuels, helping inventories to increase.

Supplies rose 2.75 million barrels, according to the median of eight responses in a Bloomberg News survey. Stockpiles fell the previous week when the Louisiana Offshore Oil Port, the largest U.S. import terminal, shut because of bad weather. Higher-than-normal temperatures will cover most of the U.S. from Nov. 6 through Nov. 12, the National Weather Service reported.

``Inventories are high, spare capacity is growing and demand is going nowhere,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. ``Until winter hits, demand will be somnolent.''

Crude oil for December delivery fell $2, or 3.3 percent, to $58.75 barrel at 11:28 a.m. on the New York Mercantile Exchange. Futures are down 4 percent from a year ago. Prices have plunged 25 percent from the record of $78.40 a barrel reached July 14 amid concern that fighting in Lebanon would spread through the Middle East, source of a third of world's oil.

``Inventories are looking healthier and the weather should be getting warmer,'' said Ric Navy, a broker at BNP Paribas SA in New York. ``The market is vulnerable on the downside. OPEC will be tested in the weeks ahead.''

OPEC Production Cut

The oil price decline led the Organization of Petroleum Exporting Countries, which produces about 40 percent of global supply, to agree to cut output by 1.2 million barrels a day starting Nov. 1. OPEC ministers will review their cuts when they next meet on Dec. 14 in Abuja, Nigeria.

``It is not ruled out that a new reduction can be decided at the meeting that OPEC will hold in Abuja, Nigeria, in December, if the instability continues in the international oil market,'' Shokri Ghanem, chairman of Libya's state-run National Oil Corp., said in comments published on the company's Web site.

Ghanem instructed National Oil to reduce production by 72,000 barrels a day starting Nov. 1. Libya, the eighth-largest member of OPEC, produced 1.7 million barrels of crude oil a day in September, according to Bloomberg estimates.

``We are dubious about OPEC's cuts,'' said Kyle Cooper, director of research at IAF Advisors in Houston. ``Any actual cuts may hurt OPEC. Prices have risen in the face of high inventories for three years now because of fears about spare capacity, and now they may give us that cushion.''

Oil rose on Oct. 27 after reports that U.K. forces were sent to Saudi Arabia's Ras Tanura oil terminal. Saudi Arabia is the world's top oil exporter. Nawaf Obaid, managing director of the Saudi Strategic National Security Assessment Project and an independent consultant, said the deployment is part of regular exercises and had nothing to do with defending oil installations.

Eroding Premium

``The rise on Friday was based on fears of a terrorist attack in Saudi Arabia but nothing happened over the weekend,'' said Jim Wyckoff, senior markets analyst at TradingEducation.com in Wesley Chapel, Florida. ``There's been a geopolitical premium added to the price in recent years but it's eroding. Threats may have increased but the oil has continued to flow.''

Brent crude oil for December settlement fell $2.22, or 3.6 percent, to $58.86 a barrel on the London-based ICE Futures exchange.