Updated from 3:13 p.m. EDT

Energy traders again looked past rising U.S. crude inventories Thursday, sending the price of oil higher for a second session.

The June crude contract closed up 70 cents to $50.83 on Nymex. Gasoline prices rose 1 cent to $1.47 a gallon.

The Energy Department reported Wednesday that U.S. crude stocks rose by 2.6 million barrels last week to 327 million barrels, the highest level since March 2002. The report showed average U.S. crude imports were 10.2 million barrels a day during the week, while local production was about 5.5 million barrels.

Gasoline inventories added 2.2 million barrels, three times analysts' consensus forecast.

While the numbers looked bearish, crude buyers have repeatedly materialized around $50 a barrel, with yesterday's bounce occurring at $48.80, the lowest price in about two months.

Despite the rising supply, prices remain at a long-held range of $50-$55 a barrel. Analysts are saying that prices are likely to decrease as driving season approaches and refineries increase their output, but for the longer-term outlook, most see a ramp-up in demand and a slowdown in supply by the fourth quarter.

"With a small spare capacity cushion of about 1 million barrels a day, and a tight price environment, prices will stay very strong throughout the year," says Larry Goldstein at the Petroleum Research Association, a not-for-profit research organization.

Goldstein says that historically, from the 1980s through the mid 1990s, the world had comfortable shock absorbers of 6 million to 8 million barrels a day of spare capacity. Today, these cushions are virtually non-existent, and energy markets are vulnerable to the smallest supply disruptions, such as pipeline stoppages or refinery outages.

The negative impact of high oil prices has already cut the rate of growth in the U.S. economy by as much as three-quarters of a percentage point, Goldstein said.

Another factor crimping global supplies is disappointing production growth from Russia, the biggest non-OPEC oil exporter.

Reuters

reported that after rising to a new high of 9.42 million barrels per day last September, output from Russia has slowed due to seasonal factors and the crisis at oil firm Yukos. On Wednesday, three leading Russian brokers reduced their forecasts for Russian oil output growth for 2005 by 0.5% to 1.5%.

Venezuela, the fifth largest oil exporter producing about 4.2% of the world's oil supply, also recently reported a slowdown in production, adding to worries about sufficient future supplies. Petroleos de Venezuela, the state-owned oil company, said facility maintenance hasn't been adequate, causing a 100,000-barrel decrease in its daily output. The country produces about 3 million barrels a day.

Oil prices are still well below their all-time high of $58.20, hit April 4. On May 5 of last year, a barrel of crude oil cost $39.57.

In company news, drilling contractor

GlobalSantaFe

(GSF)

reported a nearly six-fold increase in its first quarter net income. Earnings rose to $50.2 million, or 21 cents per share, on revenue of $488.6 million, from $8.7 million, or 4 cents per share, on revenues of $380 million in the same time a year ago. Excluding income from discontinued land drilling operations of $4.6 million, the company earned 19 cents a share. That missed analysts' estimates by 7 cents.

The company said that operating income from the contract drilling segment was driven by higher rig utilization of 91%, from 82% in the year before, and by increased average daily rates of $68,400, compared to $60,100 a during the same time last year. Revenue, however, were "partially offset by higher repair and maintenance expenses," the company said. Shares were little changed at $34.86.

Frontier Oil

(FTO)

, the independent refiner, said first quarter net income rose to $34.4 million, or $1.23 a share, compared with a loss of $3.7 million, or 14 cents a share, for the same period a year ago. Excluding an after-tax inventory gain of approximately $19.4 million, or 69 cents a share, earnings were 54 cents a share. Analysts' average earnings estimate was 64 cents a share, according to Thomson Financial. Shares rose $1.93, or 4.71%, to $42.93.

The company cited the light vs. heavy crude oil crack spread as the main source of revenue, which increased to $14.10 per barrel for the quarter, compared to $8.17 for same period in 2004. The diesel differentials increased as well to an average of $9.92 per barrel from $4.07 a barrel a year ago.

Electric utility company

Calpine

TheStreet Recommends

(CPN)

more than doubled its loss from last year's first quarter. Calpine's loss widened to $168.7 million, or 38 cents a share, from a loss of $71.2 million, or 17 cents a share, a year ago. The company said results were affected by a $100.5 million increase in interest expense as new plants entered commercial operation. Shares tumbled 20 cents, or 8.71%, to $2.05.

Global Industries

(GLBL)

, which provides marine construction and support services to offshore oil and gas companies, said its net income for the first quarter was $7.5 million, or 7 cents a share, compared with a loss of $7.4 million, or 7 cents a share, for the same period last year. Analysts on average were expecting earnings of 9 cents a share, according to Thomson First Call. Shares dropped 51 cents, or 5.26%, to $9.19.

In industry acquisition news,

Oil States International

(OIS) - Get Report

bought Stinger Wellhead Protection Inc. for $83.1 million. Oil States, a services and equipment provider to oil and gas drilling companies, acquired Stinger's wellhead isolation equipment that's utilized during pressure pumping operations.

Oil States expects the transaction to provide incremental earnings in 2005 of about 13 cents to 17 cents a share. Shares jumped $1.06, or 4.96%, to $22.42.

Shares of major oil producers were mixed.

Exxon Mobil

(XOM) - Get Report

was unchanged at %57.26;

ChevronTexaco

(CVX) - Get Report

was also unchanged at %$53.03;

ConocoPhillips

(COP) - Get Report

rose 0.53%;

Royal Dutch/Shell

(RD)

gained 0.68%; and

BP

(BP) - Get Report

rose 0.37%.