NEW YORK (AFP) - World crude oil prices swung higher as deep-seated fears over winter energy supplies overcame relief at the resolution of industrial action in oil-rich Norway.
New York's light sweet crude for delivery in December rose 63 cents to 55.17 dollars, equal to a record finish on Friday. It also hit a peak of 55.25 dollars, below the previous day's all-time high of 55.67.
Brent North Sea crude for December surged 78 cents to 51.56 dollars, after spiking at a high for the day of 51.60 dollars.
Prices had dropped earlier, after the Norwegian government announced it would intervene in an oil-sector dispute so as to prevent an interruption of Norwegian oil production.
Offshore workers were expected to return to work as of midnight (2200 GMT) Wednesday, oil workers' union said.
But concerns over supply, exacerbated a day before the release of weekly US commercial petroleum inventories data, forced the market to perform a U-turn, analysts said.
"It's the same old story with tight supplies, trying to get those supplies to market and refined," said Alaron Trading analyst Daniel Flynn.
In addition, global demand was hot.
"It is an all new ball game with regard to demand. With winter coming up, they are going to be cracking (refining) the crude for the heating oil. At this point we are just looking for higher prices," Flynn said.
New York crude was closing in on 60 dollars, he said.
Heating oil supplies were a major concern, said analysts at the Sucden brokerage firm said.
Inventories of distillates -- mostly diesel and heating oil -- dropped by 1.9 million barrels to 119.0 million in the week to October 15, last week's US Department of Energy report showed.
"Prices could go stronger because of the cold weather in the States, so we are keeping an eye on the heating oil," said Lee Elliott, a trader at London-based brokers GNI-Man Financial.
Producers tried to bring calm to the market.
The president of the Organization of Petroleum Exporting Countries (OPEC), Purnomo Yusgiantoro, said global crude oil overproduction was now running at some 2.1 million to 2.5 million barrels per day (bpd), mostly from OPEC members.
Yusgiantoro, who is also Indonesia's energy and mineral resources minister, said in Jakarta he had called on members of OPEC to release all supplies "to give a positive signal to the market".
But Prudential Bache broker Christopher Bellew, also in London, said there was no transparency to China's energy needs, a key ingredient in global demand.
"There is no real figure available as to what China is using and what China is storing," he said.
"There is no indication of what the Chinese supply cushion is, and so no real understanding of what world demand really is."
World oil prices have surged by about two-thirds since the start of this year.
Adjusted for inflation, however, they remain well below the levels reached in the wake of the 1979 Iranian revolution when prices surged beyond the equivalent of 80 dollars a barrel in today's money.
10/26/2004 - 20:35 GMT - AFP