LONDON - World oil prices rocketed Wednesday as Brent crude broke through 54 dollars per barrel and New York futures neared a record high at 55.65 dollars despite rising US stocks, dealers said.
New York`s main contract, light sweet crude for delivery in April, came within a whisker of the record high of 55.67 dollars set in October.
The New York Mercantile Exchange (Nymex) cancelled a reported transaction of 55.70 dollars that was announced as a new record, and prices slipped further to 55.30 dollars, a gain of 71 cents.
The price of Brent North Sea crude oil for delivery in April rocketed 1.21 dollars to 54.05 dollars a barrel at 1730 GMT in London -- exceeding the previous record of 53.36.
In New York, dealers blamed soaring oil prices on sustained demand and a cold snap that hit the eastern United States.
High prices are also being supported by tension between the United States and Iran, next week`s OPEC meeting and the closure of a Norwegian oil platform.
The surge in prices came despite a greater-than-expected increase in US crude inventories, dealers said.
Inventories of US crude oil rose sharply over the past week, but there was a drop in distillates -- including crucial heating fuels -- according to the US Department of Energy (DoE).
"The figures are very bearish," said Societe Generale analyst Deborah White, adding:
"The build in crude inventories is roughly twice bigger than expected."
Crude oil supplies rose 3.2 million barrels to 302.6 million in the week ended March 4, the DoE said in its weekly report.
Reserves of distillates, which include heating oil and diesel fuel, dropped 800,000 barrels to 109.2 million, the DoE said, as the cold wave heightened demand for heating oil.
"The distillate number was not very different from expectations," White said.
Stocks of gasoline dipped by 200,000 barrels in the past week to 224.3 million, according to DoE.
Oil prices had jumped Tuesday on comments by US President George W. Bush regarding the Middle East that were deemed aggressive.
Syria and Iran must "end all support for terrorism", Bush said.
Iran -- the second biggest OPEC member -- produces about 3.7 million barrels per day and has reserves of almost 100 billion barrels. OPEC is to meet next week in Isfahan, Iran, to discuss output levels.
"There are many supporting factors at the moment" for strong oil prices, said Barclays analyst Kevin Norrish, citing instability in the Middle East and the closure of an oil platform in Norway.
"We don`t see the price much below 50 dollars to be honest. It would seem to be a good floor area at the moment."
World oil prices have now more than doubled since early 2002.
Adjusted for inflation, however, they remain far below levels reached in the wake of the 1979 Iranian revolution when prices surged to upwards of 80 dollars a barrel in today`s money.
03/09/2005 18:44 GMT