LONDON (AFP) - Oil prices resumed their march towards 50 dollars in New York as peace talks in major producer Nigeria and an unexpected rise in US crude inventories failed to ease traders' fears about supply.
The price of light sweet crude for November delivery rose 44 cents to 49.95 dollars a barrel in early trading on the New York Mercantile Exchange.
The contract had closed lower Wednesday for the first time in nearly two weeks, dropping 39 cents to 49.51 dollars a barrel.
In London the price of reference Brent North Sea crude oil for delivery in November rose 42 cents to 46.50 dollars in late deals.
"The market is still very strong," Prudential Bache trader Tony Machacek said. "The overall supply/demand balance is still very, very tight."
Prices had been falling since Wednesday after the start of peace talks between Abuja authorities and the leader of a separatist movement fighting for the control of Nigeria's oil wealth.
Talks between Mujahid Abubakar Dokubo Asari, leader of the Niger Delta People's Volunteer Force, and the government of President Olusegun Obasanjo were expected to continue Thursday.
"We will meet again today with the president," Asari told AFP by telephone.
Asari's rebel movement claims it is fighting for the interests of ethnic Ijaw people in the oil-rich southern region, while the government accuses it of engaging in oil theft and trafficking.
Oil accounts for more than 95 percent of Nigeria's foreign exchange earnings and the United States is one of the key clients for Nigerian oil.
Oil prices hit all-time peaks of 50.47 dollars in after-hours New York deals on Monday and 46.80 dollars in London on Tuesday amid the Nigerian unrest.
But prices fell Wednesday and into early Thursday as tensions eased in Nigeria and as US crude oil inventories showed a surprise increase a week after tumbling to their lowest levels since February.
The Department of Energy said crude oil reserves rose 3.4 million barrels in the week to September 24 to 272.9 million barrels, a week after a spectacular drop of 9.1 million barrels due to Hurricane Ivan.
"Everybody has focused very much on the fact that we had a largely unexpected rise in (oil) stocks," Societe Generale analyst Frederic Lasserre said.
Along with events in Nigeria the stocks' data contributed to "a fairly significant drop in prices" before Thursday's rebound, he added.