Oil prices simmered near $55 a barrel on Friday on rising fears of a winter fuel supply crunch and robust but slowing economic growth in China, the world's number two oil user.
US light crude traded 17 cents higher at $54.64 a barrel in Asian dealings, extending a late on Thursday recovery to within $1 of Monday's all-time peak of $55.33. Prices have hit a succession of record highs over $50 for the past three weeks.
A wave of profit-taking by big-money funds cut back gains at the start of this week, but prices quickly resumed their upward march after US government data on Wednesday showed a deepening yearly deficit of heating oil inventories.
US supplies of winter fuel fell last week to stand 12 percent below this time in 2003, a worryingly wide gap that traders fear refiners will not be able to close if the heavy consuming Northeast is hit with or severe winter.
"If we start to see quite a cold winter in the Northern Hemisphere, and particularly in the US, that will drive prices in the short-term," said industry analyst Daniel Hyenas of ANZ Bank.
Federal weather forecasters said on Thursday they were still unable to predict whether the US Northeast or Midwest would have a cold, warm or normal winter, with equal chances of each.
Last month's Hurricane Ivan has hampered the normal autumn stock-build in the oil-producing Gulf of Mexico, where more than 400,000 barrels per day (bpd) of US production remains shut in, a government agency said on Thursday.
Heating oil futures were trading at $1.5820 a gallon, just 10 points away from Thursday's all-time high.
Supplies are more than 10 percent below 2003 levels in Japan, the world's third biggest user, although forecasters say normal winter temperatures should help avert major shortages there.
US distillate consumption is running 4 percent above last year's level as solid US economic growth drives diesel demand, but dealers are growing increasingly worried about the longer-term impact of high prices on import-dependent economies.
China, the engine behind this year's surge in oil demand, has moved to rein in blazing economic growth to avert a potential meltdown. Annual economic growth has slowed three quarters in a row, but at 9.1 percent the pace of expansion remains strong, third-quarter official data showed on Friday.
"China was a leading cause of the current oil price boom, so it's not surprising that economic data like that would support prices," said Hyenas. This week, data showed crude oil imports rising by a slower pace in September, but oil company officials say they are on track to expand by 10 percent next year.
A weaker dollar has helped support oil's run-up by cushioning the impact of higher prices for consumers using other currencies, particularly in Europe and Asia, but crude at $50-plus is taking some lustre out of otherwise strong economies.
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