Oil prices hover around 50 dollars again

Oil prices surged above 49 US dollars a barrel today – their highest levels since the end of November – amid plunging temperatures in the US and fears of supply cuts.

Adding to supply concerns, the International Energy Agency revised demand for crude upward next year.

The agency raised its estimated oil demand growth for 2005 by 100,000 barrels a day to 1.4 million – and warned that while it expected “oil demand to slow from the torrid pace of 2004,” it might be erring on the low side.

By afternoon in Europe, light sweet crude was up 98 cents to 49.36 dollars on the New York Mercantile Exchange.

Brent crude, meanwhile, was up 1.10 dollars to 46.13 on the International Petroleum Exchange.

Peter Gignoux, a London-based adviser for GDP Associates of New York, warned against putting too much weight on the IEA report, saying it was normally “subject to revision.”

“It’s the middle of January and cold weather,” he said. ”The forecast in the US is below normal, and this will reawaken the old heating oil inventory argument.”