LONDON (AFP) - World oil prices ducked back below 48 dollars per barrel as the US government said it was considering a request by refineries to tap strategic reserves after inventories plunged due to Hurricane Ivan.
New York's main contract, light sweet crude for delivery in November, eased 37 cents to 47.98 dollars a barrel in early trading.
The contract surged 1.59 dollars to 48.35 dollars a barrel on Wednesday, approaching a record close on August 19 of 48.70 dollars and an all-time high of 49.40 dollars seen on August 20.
Benchmark Brent North Sea crude oil for delivery in November dropped 13 cents to 44.80 dollars a barrel in late deals in London.
"The market is waiting to see if the US government will release some strategic petroleum reserves to help calm prices," said GNI-Man Financial trader Kevin Blemkin.
The White House said Thursday that the Department of Energy was considering Gulf Coast refineries' request to borrow oil from the US Strategic Petroleum Reserve because of Hurricane Ivan.
"That's something that the Department of Energy has been reviewing," spokesman Scott McClellan told reporters.
The White House has pledged to fill the reserve to its capacity of 700 million barrels. The reserves are kept in salt mines on the Gulf Coast in Louisiana and Texas.
So far the US administration has refused to dip into the reserves, which it says are for national emergencies or in the event of severe supply disruptions, but it has come under renewed pressure to tap the oil.
"A couple of refiners have apparently made a request to the government to borrow from the SPR, because their stocks and tankers are too low," said Commerzbank analyst David Thomas.
"It would be a question of borrowing it and giving it back as soon as supplies arrive towards their storage centre.
"But obviously the market would take it nervously because it would be seen as a release of strategic reserves rather than just a borrowing," he said.
Prices surged on Wednesday on news that US oil inventories tumbled to their lowest levels since February last week in the wake of Hurricane Ivan.
The US Department of Energy said crude reserves fell by 9.1 million barrels in the week to September 17 to 269.5 million barrels, the lowest levels since February 6.
The American Petroleum Institute, a private trade association, said its survey showed an even steeper drop of 12.9 million barrels to 266.7 million.
Analysts said prices could set new all-time high levels if supply worries flare up elsewhere as well.
"Whether (prices) hit new record highs will very much depend on other factors outside of the US, such as security supply in the Middle East and commentaries out of Russia and Yukos in particular," said Thomas.
Embattled energy giant Yukos "caused a little bit of flurry in oil prices earlier this week when it threatened to cut exports to China. But they seem to have resolved their difficulties for a while," he noted.
Russia promised to sort out Yukos oil deliveries to China on Thursday, as Chinese Premier Wen Jiabao arrived in Moscow for talks dominated by the struggling oil major's decision to cut supplies to the energy-hungry Asian giant.