Oil Retreats From $40 Level

Supply worries continue to dominate the market with prices at their highest levels since 1990.
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Updated from 2:33 a.m. EDT

Oil futures closed slightly lower Thursday after an early rally put the benchmark U.S. crude within pennies of the $40-a-barrel mark, as concerns about supply keep prices at their highest level in almost 14 years.

Prices ended down 20 cents at $39.37, while gasoline futures closed a fraction of a cent at $1.31 a gallon.

A Department of Energy report released Wednesday said U.S. crude inventories were lower than expected, which factored into the continuing price climb. The report also highlighted gasoline supply worries for the U.S. summer driving season, while security concerns in the Middle East continued unabated.

Earlier in the day, the benchmark European crude, Brent North Sea, hit a 14-year high, breaking $37 a barrel for the first time since Oct. 17, 1990.

Light sweet crude for June delivery had closed at near 14-year highs for the past three sessions -- the highest level since October 1990, after Iraq had invaded and occupied Kuwait.

The Organization of Petroleum Exporting Countries expressed concern at rising U.S. oil prices, according to media reports, and OPEC will examine the market at a meeting of producing and consuming nations in Amsterdam on May 22-24.