Oil prices rose 1 percent on Monday, flirting with $56 a barrel, as production glitches in the United States kept the market edgy about a possible squeeze on gasoline supplies this summer. US light crude traded up 58 cents to $55.97 a barrel, adding to a hefty gain of $1.19, or 2.2 percent, on Friday when the contract ended at $55.39. London Brent crude was up 62 cents to $55.59 a barrel. "It started off as a gasoline-led rally. Gasoline pulled back to the break-out level ($1.47) and then exploded off that," said John Brady at ABN Amro in New York.
Crude oil prices have rallied for five straight sessions, notching up more than $4 as worries about a squeeze on gasoline sparked a flurry of buying, drawing speculative funds back into the market.
The market is within striking distance of the all-time high of $58.28 set at the start of the April. "It looks like the pull-back is over.
I see it breaking $59 in the next week," a dealer in New York said.
Dealers are increasingly anxious about US gasoline supplies ahead of the summer driving season.
A spate of refinery problems has raised fears that plants already operating near capacity may struggle to sate rising demand. Gasoline futures were trading up 1.02 cents to $1.6625 a gallon, more than 11 percent above levels one week ago.
Traders said a gasoline-making unit at a ConocoPhillips' refinery in Louisiana would be down for another week after failing to restart following maintenance, compounding other refinery problems in Texas and Kansas.
A heavy surplus of US crude oil and signs of higher Opec production have done little to calm fears of a gasoline shortfall this summer and a shortage of heating fuel at the end of the year.
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