Updated from 2:20 P.m. EST
Crude oil prices erased early losses and closed solidly higher Monday, even though OPEC's president said the cartel was prepared to increase production if necessary at its meeting later this week.
The April futures contract added 52 cents to $54.95 on the Nymex, having traded almost 2% lower earlier in the session. Prices flirted with a new record last week, trading within pennies of the intraday high of $55.67 set last October. Traders say it is just a matter of time before oil surpasses its closing-record high of $55.17, also set last October.
The latest comment about OPEC's production plans is something of a surprise and comes amid an unusually long cold snap in parts of northeastern U.S., which has inflated demand for heating oil at a time of the season when supplies are usually on the decline.
Monday reported that OPEC President Sheik Ahmed Fahd Al Ahmed Al Sabah -- who is also Kuwait's oil minister -- said the cartel was ready to change its official output ceiling.
"If the prices continue at the present rate, then we will increase our production," Al Sabah told the
. "If necessary, we will increase by 500,000."
In addition, the International Energy Agency said that there is increased demand in China, which has become a major consumer as it imports a vast amount of energy supplies to accommodate an economic boom.
OPEC meets in Iran on Wednesday with nagging questions about whether it plans to keep production at the 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.