Oil prices fell below $48 a barrel Thursday as markets digested news of a rise in crude inventories but lower-than-expected U.S. heating oil stocks. A Nigerian high court also banned a planned general strike that would have targeted oil exports — a situation that had been worrying traders.

Crude for December delivery was down $1.16 at $47.70 per barrel on the New York Mercantile Exchange (search). Heating oil fell 3.69 cents to $1.366 per gallon, while natural gas was down 43.8 cents at $7.24 per 1,000 cubic feet.

December Brent crude was trading at $44.02, down 73 cents, at the International Petroleum Exchange in London .

In Nigeria, Justice Tanko Mohammed Yusuf said in an order to the main Nigeria Labor Congress that "it shall not embark on any strike from 16th of November 2004 or any day thereafter." Nigeria, pumping 2.5 million barrels of oil a day, is Africa's largest oil producer and the No. 5 source of U.S. oil imports.

The announcement Thursday of Palestinian leader Yasser Arafat's (search) death was expected and so did not significantly move the market, analysts said, but added that prices could move higher if Middle East unrest follows.

Light, sweet crude had risen $1.49 on Wednesday to close at $48.86 per barrel after a weekly Energy Department (search) report showed commercially available supplies of distillates dipped by 100,000 barrels last week to 115.6 million barrels.

That signaled the eighth straight week that supplies of distillates, which include heating oil, diesel, jet fuel and kerosene, had fallen. That fueled concerns of possible shortfalls ahead of the Northern Hemisphere winter.

While distillates fell, however, the weekly supply report showed crude inventories rose 1.8 million barrels last week to 291.5 million barrels, or just slightly below year-ago levels.

Traders believe the steady rise in crude supplies augurs a period of robust activity for refiners, who entered pre-winter maintenance earlier than usual this year due to Hurricane Ivan (search), which forced many of them to shut down and evacuate employees. Rather than restart operations once the storm had passed, many refiners took the opportunity to conduct maintenance and that partly explains why heating oil inventories are now 13 percent below year ago levels.

Oil prices would have to surpass $90 per barrel to reach the inflation-adjusted peak set in 1980, and crude futures are down more than 12 percent from the Nymex closing high of $55.17 set twice in late October.

But analysts suggested prices could soon head upward again.

"All we need is a cold snap, particularly in the United States," said Kevin Norrish, head of commodities research at Barclay's Capital, or "evidence that China is returning to the market in force and buying."

Oil supplies in the United States, the world's largest consumer, have grown steadily over the past seven weeks due to high levels of imports and the recovery of pre-hurricane season production levels in the Gulf of Mexico.

But there is still widespread concern about limited excess production capacity, now hovering just above the world's daily diet of 82.4 million barrels, which leaves little wiggle room in a possible extended production outage.

Attacks on Iraqi energy facilities and a prolonged battle for survival by Russian oil giant Yukos also remained areas of concern Thursday.