Updated from 2:14 p.m. EDT
Oil prices reversed course and surged higher Wednesday afternoon, making Tuesday's decline nothing more than a one-day interruption in a relentless rally.
Based on preliminary data, the November futures contract closed up $1.13 to $53.64 in regular floor trading on the Nymex, having been down 1.5% earlier in the session. Prior to closing lower Tuesday, the benchmark U.S. crude had hit five straight record highs, topping out at $53.64. The all-time intraday high is $54.45, touched on Tuesday.
The market hunch appears to be that weekly inventory data from the American Petroleum Institute and the Department of Energy -- whose release was postponed a day until Thursday because of the Columbus Day holiday -- will be bullish for prices.
Earlier, prices had been under pressure following an International Energy Agency report Tuesday forecasting a decline in 2005 global demand -- largely because the enormous run-up in prices is slowing economic growth.
In its monthly report, however, the API said September production fell to its lowest level in more than 15 years, to 4.85 million barrels a day. U.S. production was down 15% from a year ago, largely because of Hurricane Ivan, which disrupted operations in the Gulf of Mexico.
Despite the two-day decline, market fundamentals would appear to remain bullish. In Nigeria, some oil workers remain on strike for a third day.
U.S. production remains depressed in the aftermath of Ivan.