Oil prices added to strong gains on Thursday, spurred by persistent Opec talk of a cut in supplies ahead of the second quarter that could drain healthy US stockpiles before summer. US light crude rose 13 cents to $48.46 a barrel, building on Wednesday's rally of more than 2 percent that took prices to the highest level in three weeks. Oil has rallied $3 over the past week on new forecasts for a tighter-than-expected market this year, as well as continued warnings from Opec that a slide in prices or steep build in inventories could prompt swift action to stem output.

"If the price looks to be falling now, then after winter we will propose and support a cut in production," Venezuela's Oil Minister Rafael Ramirez said on Wednesday.

Opec acting Secretary-General Adenine Shihab-Eldin told Reuters that members were leaning toward cutting output at their March 16 meeting to defend prices against a second-quarter stockbuild.

The US Energy Information Administration (EIA) said such a cut could squeeze inventories and make it difficult for refiners to meet demand in the lead up to the summer driving season.

At the moment supplies appear robust. US crude oil inventories rose 2.1 million barrels last week to stand 8.5 percent above year-ago levels, while gasoline stockpiles leapt 4.9 million barrels to a 7.4 percent surplus. But a surprisingly steep fall in heating oil stocks deepened the deficit from a year ago to over 9 percent, reviving supply worries as forecasters said an arctic air mass was poised to sweep the main US Northeast consuming region later this week.

Heating oil prices were up 0.1 cents at $1.3430 a gallon, with the premium to crude oil having surged nearly $1 from Tuesday to stand just below $8 a barrel.

An increasingly tight outlook has supported prices this year, with Opec and the International Energy Agency this month upgrading their forecasts for demand growth.

Copyright Reuters, 2005