NEW YORK - World oil prices inched up Thursday with concerns mounting over the impact on petrol supplies following a fatal blast at the third largest US oil refinery, dealers said.
New York's main contract, light sweet crude for delivery in May, finished 1.03 dollars higher at 54.84 dollars ahead of a long weekend. The US market is closed Friday for Easter.
The price had fallen by 3.65 dollars over the course of Tuesday and Wednesday, due to massive speculative selling and a sharp rise in US crude inventories.
In London, the price of Brent North Sea crude oil for delivery in May added 89 cents to 53.93 dollars.
Fimat oil analyst John Kilduff said brokers were beginning to doubt assurances by British giant BP that the damage in Wednesday's blast at its huge refinery in Texas City was minor.
"Initially the market discounted the damage at the BP refinery, but as the day wore on some scepticism appeared toward the initial reports, coupled with short-covering ahead of the weekend," he said.
The refinery is the biggest of the five operated by BP in the United States. When operating at full tilt it pumps out enough petrol to fill up a car every seven seconds.
The explosion, which occurred when a gasoline unit that had been shut down for maintenance was being brought back online, killed 15 people and injured more than 100 others, according to BP.
But operations at the rest of the petrochemical complex were unaffected, BP said, adding that the impact on its bottom line was "not going to be massive".
The blast worried traders because most US refineries are running at full capacity. Gasoline is in strong demand ahead of the summer holiday season when many Americans take to the roads.
Prices rose despite a sharp drop in crude stockpiles from the US Department of Energy (DoE), revealed the day before.
Crude oil supplies were up 4.1 million barrels to 309.3 million, the DoE said.
The DoE said gasoline supplies fell by 4.1 million barrels to 217.3 million in the week to March 18, while the private American Petroleum Institute said its survey also showed a fall of 4.71 million barrels to 214.33 million.
Despite the drawdown -- expected as US refiners shift to cope with summer driving demand -- gasoline stockpiles remained above normal for this time of year, it added.
Kilduff said that next week, the oil price could test its record high of 57.60 dollars reached in intra-day trading on Thursday last week.
"But with crude inventories building and as the rhythm of drawdown in gasoline inventories slows down, prices should come down," he said.
Meanwhile, traders were keeping a wary eye on key producer Nigeria. The government was to meet with oil firms and unions to try to avert a planned strike that may disrupt exports of crude oil from the west African giant.
Nigeria is the world's ninth-biggest oil producer and exports around 2.5 million barrels per day.
03/24/2005 21:48 GMT