LONDON – Crude oil extended gains over $51 a barrel on Thursday as concern that producer group OPEC was becoming comfortable with prices near $50 countered swelling stockpiles in the United States, the world's largest energy consumer.
U.S. crude oil rose 22 cents to $51.39 a barrel on the New York Mercantile Exchange (search), after peaking at $52.05 during the open call session, the highest level since Nov. 1. Prices are now a bit more than $4 below the record high of $55.67 hit in late October.
London Brent crude settled up 93 cents to $49.44.
The strength came after Saudi Oil Minister Ali al-Naimi said on Thursday he expected crude prices to stay between $40 and $50 throughout this year -- a signal the OPEC (search) cartel may not be committed to cooling the red-hot market.
"Where the price is today, between $40 and $50, will probably be with us throughout 2005," Naimi told CNBC television in an interview.
"I'm always reluctant to make a prediction as to what the price is, but just looking at fundamentals -- inventories, supply, demand and the worldwide desire for a stable oil market -- I believe it will be in this band."
OPEC members have, in the past, called crude oil prices near $50 too high.
The gains came despite a U.S. government report showing continued increases in already-robust crude oil and gasoline inventories and smaller-than-expected decreases in distillate stockpiles.
The Department of Energy (search) said it expected a year-on-year gasoline supply surplus to grow to more than 11 percent by the end of May, the traditional start of the summer driving season.
"I don't think this will be enough to break the back of the rally," said Phil Flynn of Alaron Trading in Chicago.
Crude prices have soared by about $5 in the past two weeks as continued strong demand growth, disappointing supply forecasts and cold Northern Hemisphere weather have spurred a renewed surge of buying from big-money speculative funds.
The rally has gathered pace as a steep fall in the dollar -- the currency of international oil trade -- has spurred funds to switch money out of foreign exchange markets and into commodities such as energy, metals and coffee.
The OPEC cartel has said if prices rose further it might look to cool the market by raising output, but the growth in global consumption has undermined OPEC's ability to lower prices.
The cartel, which will meet March 16 in Iran, is already producing at close to capacity, leaving little cushion to cope with supply problems.
The upward price strength overshadowed Chinese data showing January crude imports fell to the lowest level in 14 months, down 24 percent from a year before.
China increased crude imports rapidly last year in an effort to cope with soaring demand for transport fuel and power generation.
January's import fall may have been the result of refiners drawing down inventories, which swelled late in 2004, analysts said.