Crude oil futures hit $55 a barrel on Friday as traders worried over thin heating oil inventories ahead of winter and even as Federal Reserve Chairman Alan Greenspan (search) predicted the soaring costs would not crimp economic growth as they did in the 1970s.

U.S. light crude settled up 17 cents to $54.93 a barrel on the New York Mercantile Exchange (search), after setting a new all-time high of $55 during the regular session. London Brent eased 16 cents to $49.93 a barrel on the International Petroleum Exchange (search).

"So long as supply-demand fundamentals remain tight and inventories remain low, prices will stay strong or strengthen," said London energy consultant Geoff Pyne. "High prices have had little effect on demand so far."

Greenspan, while warning of more serious risks if oil prices were to move "materially higher," said he did not see current levels inflicting the kind of pain on economic growth seen in the 1970s.

"The impact of the current surge in oil prices, though noticeable, is likely to prove less consequential to economic growth and inflation than in the 1970s," Greenspan told a conference in Washington, adding that over the long haul technology and the transition to alternative energy sources will ensure the world's oil supply met demand.

"In one sense, comments of this nature are just begging the market to spike even higher. If $40 and $45 and $50 didn't hurt, well gee, how about $60? Let's go see," said Tim Evans, senior oil analyst at IFR-Pegasus.

Oil has risen $20 in less than four months, lately spurred on by a U.S. production outage in the Gulf of Mexico that has exacerbated a global shortage of light, low-sulfur crude, which is easy to refine for transport and heating fuels.

About 462,000 barrels per day of crude production, or 27 percent, remains shut more than a month after Hurricane Ivan (search) disrupted oil operations in the Gulf of Mexico. Some fields are expected to remain shut beyond the end of the year, the U.S. government's resource agency said this week.

The shortfall has impeded refiners' ability to build up U.S. heating oil stocks, which at 50 million barrels are 10 percent below last year, weekly government data showed on Thursday.

U.S. heating oil futures set a record of $1.5520 a gallon on Friday, before settling at $1.5491 a gallon.

Heating oil supplies in the U.S. Central Atlantic region, a major distribution point for the heavy consuming U.S. Northeast, are running well below average.

"If, indeed, heating oil inventories have peaked for this key region, then there is little likelihood that heating oil prices will ease significantly this winter," the Energy Information Administration said on Thursday.

The shortage is also evident in other major regions, with consumers in Germany, Europe's biggest market, keeping supplies of heating oil well below last year due to high prices.

German end-user tanks were only 60 percent full at the start of this month versus 68 percent last year, traders said, while in Japan, the world's third-biggest energy user, kerosene supplies are more than 15 percent below last year.

As fears of a winter fuel squeeze dominate traders' near-term perspective, some see signs emerging that China's massive oil thirst — a major factor in this year's price spike — could slacken as the government moves to prevent the booming economy from overheating.

Double-digit oil demand growth from China, now the world's second-biggest importer, took the world by surprise this year, stretching OPEC supplies to the limit.

The International Energy Agency said this week that increased costs were encouraging conservation measures in China and fuel switching away from oil.

But high prices appear to have done little so far to deter demand from the fast-growing Indian economy.

State Indian Oil Corp. said on Friday its crude imports in the fiscal year 2005-2006 were likely to rise 12 percent to 37 million tonnes. India's crude imports so far in the fiscal year from April to end-September are up 7 percent at 16 million tonnes.