Updated from 2:14 p.m. EST

Oil prices fell again Thursday and neared the psychologically important $50 level following news of higher inventories in the U.S.

Front-month crude contracts closed down $1.76 to $50.48 a barrel on the New York Mercantile Exchange, and other key products in the energy space were lower, as well. Heating oil was down 3 cents at $1.47 a gallon, while gasoline was lower by 2 cents to $1.36 a gallon.

Natural gas was the one riser, gaining 9 cents to $6.32 per million British thermal units.

The decline in oil came after the Energy Information Administration said that stocks of crude oil grew 2.2% last week to 322 million barrels. Inventories of gasoline and distillate fuel oils also were up, the EIA said.

"It seems the world is flush with oil, especially relative to recent years," says Peter Rodriguez, professor of economics at the Darden Graduate School of Business Administration and an energy market watcher. "This is the opposite of what one would expect this time of year," he says, noting that warm weather had reduced demand for heating fuels in the Northern Hemisphere.

With inventories so high, Rodriguez expects crude prices to remain closer to $50 a barrel than $60 for the next several weeks. In turn, that should help keep a lid on consumer price inflation, he says.

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