Oil prices ended within dangerous proximity to the $50 mark on supply worries boosted by the fire in Louisiana, increased violence in Iraq, and speculation that OPEC might cut output. March oil rose $0.58 to $49.36 a barrel.

The U.S. government reported Wednesday a rise in crude stocks of 3.4 million barrels leaving the stockpiles at a level 9% higher than a year ago levels. Heating oil inventories lost 2.1 million barrels last week, with stocks remaining 4% lower than last year, as the consumers increased the volume of purchases.

The OPEC has sent a positive signals as Sheik Ahmad Fahd al-Ahmad al-Sabah, OPEC’s new president and Kuwait’s oil minister, said in Davos, Switzerland, that he thought oil prices to be too high. "I don’t think it’s the right time to cut" quotas, he said. But the cartel believes the oil market will suffer a drop in demand in the second quarter, the time when the oil stocks may experience an unwelcome rise.

Ali Naimi, the Saudi oil minister, has offered no comment on the country’s opinion about the global oil prices.
Worries about US demand have been soothed by the retreat of a cold front from the US Northeast.

Supply from Iraq remains a concern however as yesterday became the deadliest day for American forces since they intruded into Iraq nearly two years ago. A US military helicopter crashed in western Iraq yesterday causing the deaths of thirty one American Marines while six more lost their life in insurgent attacks.