NEW YORK – Crude oil prices were holding steady near $56 a barrel Wednesday, holding a stretch of previous losses after the U.S. government reported an eighth straight weekly rise in crude oil stockpiles.
U.S. light crude was up 1 cent to $56.05 a barrel on the New York Mercantile Exchange (search), more than $2 below Monday's all-time high of $58.28. London Brent crude eased 4 cents to $55.40 a barrel.
The Energy Information Administration (search) said Wednesday morning that inventories of crude oil in the world's largest energy consumer rose more than two million barrels to the highest level since June 2002.
U.S. stockpiles of crude have swelled about 8 percent in two months, the EIA said, helping to counter some lingering fears that rising global demand growth will outpace increases in production capacity.
Tempering the bearish impact of the crude inventory rise, the EIA report also showed gasoline stocks fell by 2.1 million barrels as demand ran nearly 2 percent ahead of last year despite record high prices at the pump.
Gasoline stocks fell even though refineries increased crude oil use to pump more as they emerged from maintenance ahead of the summer, when vacation driving demand peaks.
"The key to this report is that crude runs are moving higher but we saw a significant draw in gasoline. That caught the market off guard," said Ed Silliere, Energy Merchant Intermarket Futures.
Worries that rapid energy demand growth in Asia's emerging economies could outpace supply growth have helped send U.S. crude prices more than 30 percent higher so far this year. Heavy buying from big-money funds has helped fuel the gains.
The head of the International Monetary Fund (search) said Wednesday that further sharp increases in oil prices could start to weigh on global growth.
"So far the effects of higher oil prices on global growth and inflation have been manageable," Rodrigo Rato said in a speech prepared for delivery at Georgetown University in Washington. "But, further sharp increases may have more serious effects."
Consuming countries need to work together to ensure market stability through better energy conservation, reduced obstacles to investment and improved transparency of oil data, he said.
Federal Reserve Chairman Alan Greenspan (search) said Tuesday market forces could eventually lead to a big enough increase in crude oil inventories to cool the recent oil price "frenzy" but expressed concern about a lack of global refining capacity.
Higher prices have slowed oil demand growth, "but only modestly," Greenspan said.
The Organization of Petroleum Exporting Countries raised output limits by 500,000 bpd to 27.5 million bpd last month and left room for a second increase before a June meeting if prices failed to drop below $55.
OPEC oil production rose 175,000 bpd in March as the group boosted output, a Reuters survey showed.