Updated from 12:07 p.m. EST

Crude oil prices failed to reclaim $49 a barrel Thursday as the benchmark U.S. crude hovered around a two-month high.

The March futures contract closed up 8 cents at $48.84, well off morning highs, in Nymex floor trading as extremely cold weather continued to grip the northeastern U.S. Prices, which rose as high as $49.75 in the session, have not closed above $50 since late November.

The upcoming elections in Iraq on Jan. 30 have raised concerns about new sabotage attacks on the oil industry infrastructure there, a factor that helped boost prices during much of 2004.

Traders continue to speculate on the possibility that OPEC members would agree to a second round of production cuts at its meeting next week, having trimmed output by 1 million barrels a day as of Jan. 1.

Prices are now about 10% below their record high of some $55 a barrel touched in late October, having fallen close to $40 a barrel at the peak of the correction.

Weekly Energy Department data Wednesday showed an increase in crude oil but a decline in gasoline and distillate products.