Updated from 1:03 p.m. EDT

Oil prices fell again Monday after a brief climb in early trading, highlighting the uncertainty among investors about whether futures will bounce from or fall through the $50-a-barrel level.

The May crude contract was down 19 cents to $50.30 a barrel in Nymex floor trading, having slipped to $49.66 earlier in the day. Gasoline futures gained a fraction of a cent to $1.486 a gallon.

Crude prices have dropped for two weeks, falling about 14% from their record high of more than $57 a barrel, as traders reassess supply-and-demand fundamentals. Data showing China's economic growth has been decelerating are yet another sign that global demand for crude might be on the downside.

OPEC said on Friday it plans to increase its daily crude capacity to 32.7 million barrels a day, 1.6 million more than the average capacity in 2004. The expansion reflects new projects in Kuwait, Nigeria and the UAE, the cartel said.

But growing crude and gas inventories in the U.S. gave reason for some OPEC officials to express concern about too much oil. Sheikh Ahmad al-Fahd al-Sabah, Kuwait's energy minister, said he believes prices were almost at a fair level, and Qatar's energy minister said OPEC should be careful not to let stockpiles build too fast,

Reuters

reported.

Still, the cartel announced over the weekend that it will go ahead with its previous pledge to increase production by 500,000 barrels in May, reiterating its interest in providing a comfortable supply buffer ahead of the summer driving season.

Oil prices during this time a year ago were trading around $37 a barrel.

"Looking at historical levels, speculators holding long positions in the energy market are still at extreme levels," says John Person from the National Futures Advisory Service, a private advisory group.

Person referred to the weekly Commodities Futures Trading Commission's Commitment of Trading report, which shows the positions of commercial hedgers, or companies that produce or buy the underlying commodity, and non-commercials, or speculators -- often hedge funds and smaller retail investors. The

latest report shows speculators (i.e. non-commercials) are long 154,538 contracts as of April 12, down over 19,000 from the prior week but still a very bullish position even though prices have been on the decline.

"There is still strong bidding under the market, it defies logic," Person says. He believes that investors have been programmed to fear future supply disruptions, despite growing supplies and signs of weakening demand. "They prefer the risk of losing a few bucks on a slightly lower oil price than being left out when prices reach $60 or even $80 a barrel."

Person estimates prices are likely to hit a low of $47 to $49 per barrel in the next 30 days.

In company news,

Royal Dutch/Shell

(RD)

was raised to a buy from neutral by Merrill Lynch's strategists in London. Ahead of the merger between the Royal Dutch and Shell Transport & Trading holding groups, Merrill's strategists see exposure to refining as a "source of potential upside earnings surprise in the next six months." The company might also have "positive newsflow on asset disposal execution," the strategists say in a note.

Tesoro

(TSO)

, the independent refiner and marketer of petroleum, said it has prepaid the remaining $96 million principal balance of its senior secured term loans due 2008; this will result in a $3 million pretax charge in its second-quarter earnings report.

Shares of major oil producers gained despite choppy oil prices.

Exxon Mobil

(XOM) - Get Report

rose 80 cents, or 1.42%, to $56.99;

ChevronTexaco

(CVX) - Get Report

increased 29 cents, or 0.56%, to $52.50; Royal Dutch/Shell climbed 27 cents, or 0.46%, to $59.23;

ConocoPhillips

(COP) - Get Report

jumped $2.33, or 2.33%, to $102.40; and

BP

(BP) - Get Report

rose 54 cents, or 0.91%, to $59.94.