Updated from 3:01 p.m. EST
Crude oil erased losses Friday, ending a brief pullback.
The benchmark U.S. crude closed up 89 cents at $54.43 in Nymex floor trading. On Wednesday, oil traded as high as $55.65, just 2 cents shy of its record intraday high set last October.
Traders say it is still just a matter of time before oil surpasses its closing record high of $55.17, also set last October.
The turnaround in prices Friday came after a report by the International Energy Agency that showed increased demand in China, which has become a major consumer as it imports a vast amount of energy supplies to accommodate an economic boom.
Prices have risen about 10% in the past three weeks, breaking $50 a barrel for the first time since last October, when prices routinely hit record highs.
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.
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.
U.S. inventory 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.