Crude prices waffled above $55 a barrel Thursday, moving hesitantly as traders weighed ample supplies against signs that demand could surge and that OPEC members are acting on their pledges to cut output.
With little news in the energy markets Thursday, movements were choppy, driven mostly by traders repositioning themselves after oil's recent surge. A week ago, crude briefly fell below $50 a barrel, but it has since risen $5, or 10 percent.
"The big question now is whether this will just be an anemic rally that dies suddenly and without warning, or if it will become a full-blooded corrective advance that then builds a recognizable top," Peter Beutel of Cameron Hanover wrote in a note.
Light, sweet crude for March delivery on the New York Mercantile Exchange slipped 9 cents to $55.28 a barrel in midday trading. Prices had risen as high as $55.90 earlier in the day.
Some market watchers said they did not expect prices to remain above the $55 a barrel level for long.
"I don't think it will stay higher than $55. OPEC will try to maintain the $50 mark but they're fighting strong bearish sentiments in the financial market," said ANZ Global Natural Resources analyst Andrew Harrington in Sydney. "They're pedaling uphill."
Oil prices rose Wednesday after ConocoPhillips' Chief Executive Jim Mulva said that the company was firmly instructed to curb output in its Libya and Venezuela operations. The comments led some traders to abandon their skepticism that the Organization of Petroleum Exporting Countries would not enforce the production cuts announced late last year.
"The ConocoPhillips story is another sign that OPEC is starting to comply more with cuts that were announced last year," said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.
On Wednesday, crude prices initially fell more than $1 a barrel after the U.S. Energy Information Administration reported a larger-than-expected build in gasoline stockpiles and a surprise increase in distillates. But prices later rebounded as traders considered other factors in the report, forecasts of colder weather in the U.S., and the ConocoPhillips comments.
The contract settled 33 cents higher at $55.37 a barrel Wednesday in New York, the highest settlement since Jan. 9.
In Nymex trading Thursday, heating oil futures for February fell less than a cent to $1.5823 a gallon.
Gasoline futures fell less than a cent to $1.4609 a gallon.
The energy market was also being pressured by natural gas, which dropped 25.5 cents to $7.166 per 1,000 cubic feet despite the U.S. Energy Information Administration's report Thursday that 179 billion cubic feet of gas was withdrawn from storage last week.
On the ICE Futures exchange in London, Brent crude fell 13 cents to $55.30 a barrel.