Crude prices briefly rose above the key $55-a-barrel level Wednesday as a weak dollar and strong international demand offset a government report saying U.S. oil stockpiles had risen to their highest level in eight months.

Oil prices retreated toward the end of the day, though prices remain more than 50 percent higher than a year ago.

On the New York Mercantile Exchange (search), light, sweet crude rose as high as $55.65 per barrel — just two cents short of the intraday record — before retreating to $54.65, a gain of 6 cents.

The highest Nymex settlement price on record was $55.17 per barrel, set twice in late October, although prices would have to surpass $90 per barrel to meet the inflation-adjusted peak set in 1980.

Analysts said the rally was speculative in nature, though they conceded that prices were likely to remain high so long as the global economy continues to grow. Strong demand growth from the United States and Asia and lower-than-expected production from countries like Russia have put pressure on world supply this year.

"There is no shortage anywhere," said James Cordier, president of Liberty Trading Group in St. Petersburg, Fla.

Prices held strong although the Energy Information Administration (search) said crude oil stocks rose 3.2 million barrels last week, a fourth straight increase, to hit 302.6 million barrels, the highest level since July.

OPEC oil ministers have signaled they will not raise output — a stance that analysts said was not surprising considering the organization already is producing over its quota.

And even a decision to boost production at the meeting in Iran on March 16 would come too late to compensate for the late outburst of wintry weather in the Northern Hemisphere that is driving demand for heating oil. Cordier said the recent cold weather is no doubt fueling the rally in oil futures, but he believes that factor will dissipate soon with spring around the corner.

"Supplies in the U.S. are at very comfortable levels coming out of the heating season and months before the driving season," Cordier said.

Strong demand growth and lower-than-expected production have put further pressure on world supply this year.

The rally has gathered pace as a steep fall in the dollar — the currency of international oil trade — spurred funds to switch money out of foreign exchange markets and into commodities such as energy, metals and coffee.

But so far there have been few signs that high oil prices are hurting economic growth.

"Oil prices appeared to have risen very much in dollar terms, but they have not risen much in terms of other currencies," South Korea's Deputy Finance Minister Bahk Byong-won said in a radio interview on Wednesday.

The New York Mercantile Exchange said an option with a strike price of $100 a barrel traded on Tuesday, the highest level thought to have traded on the exchange.

The United States said it had contacted OPEC members to let them know high oil prices hurt the U.S. economy. The White House said, however, there was no current need to tap the nation's emergency oil reserve to bring prices lower.

Even the top executive of Exxon Mobil Corp. (XOM), the world's largest oil company, said Wednesday that energy markets were red-hot beyond what supply and demand alone would dictate.

"We are in the mode where the fundamentals of supply and demand really don't drive the price," Lee Raymond, the chairman and chief executive of Exxon Mobil said during the company's annual analyst conference in New York.

Raymond said he believed the main reason for the "risk premium" placed on oil prices these days was the market's fear of a terror attack or some other political action that would disrupt the global oil supply chain and cause a real shortage. This premium would be smaller, Raymond suggested, if not for the fact that producers are pumping just slightly more than the 84 million barrels a day the world is consuming.

Reuters and the Associated Press contributed to this report.