Despite a government report showing US oil stocks being their highest since July, concerns about stretched global oil supplies and possible American summertime gasoline shortages saw the high-price rollercoaster ride continue.

Oil prices eased from the near record highs recorded on Wednesday (US time) but still held above US$54 per barrel on Thursday on strong heating oil use in the wintry US Northeast and expectations of continued strong demand growth.

The weak Greenback, which hit a two-month low against the euro, also provided support, encouraging investors to stick with the soaring oil market, which has climbed 25% since the start of the year.

US light crude traded down 42 cents to US$54.35 per barrel, after coming within 2 cents of last October's all-time high of US$55.67 on Wednesday. London Brent was down 38 cents to US$53.00, after touching a record of US$54.30 on Wednesday.

Also on Wednesday the US Energy Information Administration reported another increase in US crude oil inventories, which topped 300 million barrels for the first time since July. Supplies of gasoline and distillate fuel, which includes heating oil, showed modest declines.

However, analysts said those statistics were not bearish enough to change the market’s mood. Cold weather was still hitting the North Atlantic Basin and there was also widespread betting that strong global oil demand would continue.

“It will take more than one weekly report to shift the momentum of this market,'' said Phil Flynn, vice-president of risk management with Alaron Trading Corporation in Chicago.

The EIA also this week upgraded its forecasts for oil demand this year and slashed its estimate of non-OPEC production, the latest in a string of revisions that have painted a far tighter picture for the oil market than initially expected.

The EIA said global oil demand would increase 2.5% to an average 84.7 million barrels per day during this year.

The United States said on Wednesday that it had told OPEC high oil prices were hurting the US economy, although most cartel officials have already scotched talk of any decisions to increase output being taken at their meeting in Iran next Wednesday.

Iran, Qatar, Venezuela and Algeria have come out in favour of keeping production steady and high US crude stock levels appear to back their stance that markets are well supplied. However, Nigeria has called for action to stem rising prices.

"OPEC does not have the production capacity to increase its quotas," Algeria's Energy Minister Chakib Khelil said on Thursday.

Saudi Arabia, the world's biggest oil exporter, this week informed its customers that it would be supplying the same volume of crude in April as it shipped in March.

Even a decision on March 16 to boost production would come too late to compensate for the late outburst of wintry weather in the Northern Hemisphere that is driving demand in the US Northeast, the world’s largest heating oil market.

Further support this week came when Chinese customs officials said February crude oil imports bounced back from a 14-month low the month before.

Booming Chinese demand fuelled by robust industrial activity, increasing car use and power shortages, drove crude imports up 35% last year.

While some analysts predict economic cooling measures and an easing power shortage should rein in Chinese growth, the EIA said on Tuesday that it forecast Chinese oil demand growing 33% than earlier thought. The expected drop in demand for fuel to run power generators had not materialised.

"That was the worst-case scenario for oil prices; the great hope was that China demand was going to trail off," said Alaron Trading analyst Flynn.

The rally has gathered pace as a steep fall in the Greenback has spurred big hedge funds to switch money out of foreign exchange markets and into commodities such as energy, metals and coffee.

So far there have been few concrete signs that high oil prices are denting economic growth.