March crude fell $0.86 and closed at $48.78 a barrel after the Energy Department said on Wednesday crude supplies rose by 3.4 million barrels to 295.6 million for the week ended Jan. 21.

 

Many traders are expecting the rise of the crude prices in the future. Talks with Nigerian oil-worker unions failed to avert a strike that is likely to begin as the conflict in Africa’s largest oil producer that supplies 2.5 million barrels of oil a day escalates.

 

"The dispute is over cutting workers benefits," said John Person, president of National Futures Advisory Service, and "if this strike goes through, we risk losing almost 500,000 barrels a day in production."

 

China’s economic growth surged to 9.5% in the 2004 fourth quarter, beating analysts’ expectations. The increase may turn out to be unwelcome for a government that seeks to cool expansion through tax policies and tight monetary controls in a nation that lived with growth rates that averaged 9.4% since China started reforms in 1978. Quicker-than-expected economic growth promises to boost demand for oil and other raw materials.

 

Violence in Iraq is expected to increase in anticipation of the January 30 elections.