US oil prices held strong above $41 today as traders fretted that expectations for a rise in US petroleum inventories and rising OPEC output will not deter bulls.
US light crude futures were up two cents at $41.16 a barrel, after a 58-cent fall on Tuesday. London Brent crude rose six cents to $37.50 a barrel.
Heavy investment fund buying has driven oil prices up 27 per cent this year on growing demand, supply security fears, and a tight US gasoline situation.
Prices have failed to respond even to leading OPEC producer Saudi Arabia's promise to raise production sharply in June and pump at full capacity if necessary.
Fears are the funds will stay long in oil, and wait to see firm evidence of inventory builds in key consumer economies before relaxing their bet on continued oil strength.
"What we have here is a speculative bubble...There is no real shortage on the markets. That is the reality," European Energy Commissioner Ms Loyola de Palacio told a news conference in Brussels.
This year's weak dollar has contributed to oil's attractiveness for investors. A renewed decline to $1.21 today versus the euro was the dollar's lowest in three weeks. The dollar hit a low against the euro in February of just over $1.28.