Oil Prices Post Small Gain

Updated from 2:06 p.m. EDT

Oil futures erased an early run-up and ended just slightly higher Tuesday, as the Energy Department toned down some price predictions for the second quarter.

June crude closed up 4 cents at $52.07 a barrel on Nymex trading. An electrical outage at ConocoPhillips'(COP Quote) refinery in Louisiana, which produces 250,000 barrels a day, kept gasoline higher by 3 cents at $1.51 a gallon.

The Energy Department published a monthly update Tuesday in which it cut its estimate of crude oil's average cost in the second quarter by $6, to $51 a barrel. It also lowered its projection for the average price of gasoline during the months of April through September to $2.17 a gallon, from $2.28.

The report reiterated that global oil markets remain tight despite the downturn in crude prices, noting that "prices remain sensitive to any incremental oil market tightness. Imbalances (real or perceived) in light product markets could cause light crude oil prices to increase to levels above the $51 to $53 per barrel range."

Elsewhere, OPEC President Sheikh Ahmad al-Fahd al-Sabah said on Tuesday that the cartel will produce 30.3 million barrels per day this month, up about 600,000 barrels from April, and will keep up that level through June, Reuters reported. "Based on the market and the market's needs, we need to continue with 30.3 million until the third quarter, because the prices have started to stabilize," he told Reuters.

OPEC's acting secretary general Adnan Shihab Eldin said in an interview on CNBC that the global oil market "is not only responding to market fundamentals" but to geophysical tensions and downstream bottlenecks on which "speculators are thriving."

Members of the cartel have been investing heavily in exploration and production, according to OPEC's secretary general, and are expected to reach excess capacity of 4 to 5 million barrels a day within five years. Nowadays there are about 2 million barrels of spare capacity, he said.