Updated from 3:14 p.m. EDT

Crude oil prices closed lower for a third day Wednesday, following Energy Department data that showed crude and gasoline inventories came in as expected.

The May futures contract lost 19 cents to $55.85 in Nymex floor trading. The benchmark U.S. crude fell almost 2% Tuesday, after

Fed

Chairman Alan Greenspan again argued that price pressures eventually will be moderated by waning global demand. Gasoline prices fell 2.5 cents to $1.659 a gallon.

The government said crude stocks rose 2.4 million barrels last week while gasoline stocks fell by 2.1 million barrels. Both readings were broadly in line with analyst estimates.

"Crude prices have entered a trading range of $54 to $57.50 and will probably remain there until signs of economic weakness from places like China will slow demand," said Bill O'Grady, director of futures research at A.G. Edwards. The energy report today didn't provide enough bullish data to get oil prices higher than $60, but global economic growth will maintain the tightness, O'Grady said.

Some analysts have argued that tight gasoline supplies will ease in the near term when refineries come out of their winter maintenance periods, which typically occur during February and March.

But the broader issues of global economic growth outpacing oil production capacities remain.

"The U.S. and China in particular are experiencing a spectacular growth in economic activity, and since there are no cushions of excess capacity to absorb this phenomenal growth, crude prices will remain high," says Larry Goldstein, president of Petroleum Industry Research, a private energy consultancy group.

The negative impact of high prices is already impacting the market but is "invisible" because of the economy's strength, Goldstein says. He warned that consumers may be swallowing fuel prices now, but if prices continue being high, the negative impact will reveal itself by dampening demand.

Oil prices have staged an unexpected rally in 2005 after a steep price correction in the final two months of 2004. Prices hit a new record high last week of more than $57 a barrel. A year ago, the benchmark U.S. crude was trading around $35 a barrel.

Three of the world's biggest energy producers,

Exxon Mobil

(XOM) - Get Report

,

ChevronTexaco

(CVX) - Get Report

and

Royal Dutch/Shell

( RD), signed a joint venture agreement Wednesday to develop a natural gas project in the Greater Gorgon Area in offshore Western Australia. The project is estimated to recover and produce about 40 trillion cubic feet of natural gas. The U.S. consumed about 2.3 trillion cubic feet of natural gas during December of last year.

Natural gas is mainly used for household heating and for power plant generation in the U.S, and represents about a fifth of the country's energy sources. The recent rally in the oil market has helped push prices of natural gas to highs not seen in more than three months; it recently cost $7.45 per million British thermal units. Power plants substitute gas intermittently with fuel power, which links its price to oil prices, analysts say.

Some major oil and gas service companies have been accelerating investment in deep sea pipelines, which deliver liquefied natural gas instead of shipping it via tanker. As global gas markets get more connected by liquefied natural gas pipelines, prices are likely to decrease, analysts say.

Global Industries

(GLBL)

, which provides construction services to oil and gas companies, won a $212 million contract with India's national oil company to replace about 115 miles of oil and gas pipelines off the coast of Mumbai. Shares rose 56 cents, or 5.63%, to $10.50.

Shares of major oil producers were mostly higher: Exxon Mobil gained 57 cents, or 0.95%, to $60.63; ChevronTexaco rose $1.29, or 2.32%, to $57; Royal Dutch/Shell increased 36 cents, or 0.60%, to $60.71;

BP

(BP) - Get Report

gained 16 cents, or 0.25% to $63.21; and

ConocoPhillips

(COP) - Get Report

gained $2.10, or 1.94%, to $110.42.

Shares of other production and refining companies moved higher Wednesday, spurred by data showing gasoline reserves fell for the fifth week:

Sunoco

(SUN) - Get Report

rose $3.16, or 3.01%, to $108.22 and

BJ Services

( BJS) gained $1.75, or 3.03%, to $53.37.