Oil prices hovered near $55 a barrel today on rising fears of a winter fuel supply crunch and robust but slowing economic growth in China.
US light crude traded 17 cents higher at $54.64 a barrel in Asian dealings, extending a late recovery yesterday to within $1 of Monday's all-time peak of $55.33. Prices have hit a succession of record highs over $50 for the past three weeks.
A wave of profit-taking by big-money funds cut back gains at the start of this week, but prices quickly resumed their upward march after US government data on Wednesday showed a deepening yearly deficit of heating oil inventories.
US supplies of winter fuel fell last week to stand 12 per cent below this time in 2003, a worryingly wide gap that traders fear refiners will not be able to close if the heavy consuming Northeast is hit with an early or severe winter.
Federal weather forecasters said today they were still unable to predict whether the US Northeast or Midwest would have a cold, warm or normal winter, with equal chances of each.
The normal autumn stockbuild has been hampered by last month's Hurricane Ivan in the oil-producing Gulf of Mexico, where more than 400,000 barrels per day (bpd) of US production remains shut in, a government agency said yesterday.
Heating oil futures were trading at $1.5820 a gallon, just 10 points away from yesterday's all-time high.
Supplies are more than 10 per cent below 2003 levels in Japan, the world's third biggest user, although forecasters say normal winter temperatures should help avert major shortages there.
US distillate consumption is running 4 per cent above last year's level as solid US economic growth drives diesel demand, but dealers are growing increasingly worried about the longer-term impact of high prices on import-dependent economies.
China, the engine behind this year's surge in oil demand, has moved to rein in blazing economic growth to avert a potential meltdown. Annual economic growth has slowed three-quarters in a row, but at 9.1 per cent the pace of expansion remains strong, third-quarter official data showed today.