Oil prices eased from near record highs today but held above $54 a barrel amid heavy heating oil use in the wintry US northeast and concerns global demand growth could stretch above expectations.
The weak dollar, which hit a two-month low against the euro, also provided support as it encouraged investors to stick with the soaring oil market, which has climbed 25 per cent since the start of the year.
US light crude traded down 48 cents to $54.29 a barrel in Asian dealing after coming within 2 cents of last October's all-time high of $55.67 on Wednesday.
Prices held firm despite another increase in US crude oil inventories, which topped 300 million barrels for the first time since last July after four consecutive weeks of rises, the Energy Information Administration reported on Wednesday.
The weak dollar has boosted oil markets by encouraging speculators to pile into commodities and has helped protect demand by insulating many European and Asian consumers from the full impact of the climb in dollar-denominated oil costs.
A late-winter cold snap buffeting the US northeast is expected to relent slightly at the weekend, but below-normal temperatures should still keep demand running strong, testing thin heating oil inventories, traders fear.
The US said it was in contact with OPEC countries to let them know that high oil prices hurt the US economy, although most cartel officials have scotched talk of a possible increase in output at the March 16th meeting in Iran.
Iran, Qatar, Venezuela and Algeria have come out in favour of keeping production steady and high US crude stock levels appear to back their stance that markets are well supplied.