Crude Oil Rally Cools Off

The benchmark U.S. crude, however, remains close to its record high.
By TSC Staff ,

Updated from 3:03 p.m. EST

Crude oil prices fell sharply Thursday, following a volatile session Wednesday when the benchmark U.S. crude came within pennies of setting a new intraday record high.

The April futures contract closed $1.23 lower at $53.54 a barrel in Nymex floor trading. The contract traded as low as $52.90.

Semibullish inventory data yesterday sent oil as high as $55.65, 2 cents below its previous high set in October and well above the record close for a futures contract.

Indeed, traders say it is just a matter of time before the benchmark U.S. crude surpasses its record closing high of $55.17, also set in October.

Worries about heating oil supplies amid a prolonged bout of unseasonably cold late-winter weather as well as questions about OPEC's production plans ahead of its regular meeting March 16 have stoked prices.

U.S. data out Wednesday morning showed a larger-than-expected decline in distillates, which include heating oil. Gasoline stocks declined unexpectedly. Crude oil inventories, however, came in well above consensus.

Prices have risen more than 10% in the past three weeks, breaking $50 a barrel for the first time since last October, when prices routinely hit record highs.

The latest surge comes amid daily speculation about whether OPEC plans to keep production at its current official level of 24 million barrels a day. The cartel cut production by a million barrels a day, effective Jan. 1, having boosted production three times by a total of 2.5 million barrels a day in the second half of last year as prices marched irrevocably higher.

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