US oil prices climbed past $59 a barrel on Tuesday, tacking more gains onto a short-covering rally that preceded the long holiday weekend. US crude oil futures added 30 cents to $59.05 a barrel in its first trading session this week, building on Friday's $2.25 surge. Those gains halted a three-day fall that had knocked prices off an all-time high of $60.95 one-week ago.
The New York Mercantile Exchange (Nymex) was shut for Independence Day on Monday, but Brent crude on London's International Petroleum Exchange (IPE) gained 46 cents to $58 a barrel, extending a $2 rise from Friday.
Brent had not yet traded on Tuesday.
"On Friday's gain was a bit overdone, and I think we will see consolidation later today," said Keiichi Sano, a manager in Japanese trader Sumitomo Corp's commodity business.
Fears of a fourth-quarter supply squeeze amid robust US oil demand thus far seemingly impervious to the impact of soaring prices has emboldened speculators to test the upper limits of what consumers can endure.
"The world crude oil market has now boiled down to one in which prices and demand are in the ultimate prize fight," said Richard King, research analyst at Canada's First Energy Capital Corp, said in a report.
Below average US inventories of distillates which include high-demand fuels such as diesel and heating oil have traders worried about refiners' ability to meet demand this winter, when consumers around the world use oil for heating.
The focus on oil products has blunted efforts by the Organisation of the Petroleum Exporting Countries (Opec) to soothe supply worries by pumping more than 30 million barrels per day (bpd), the highest in 25 years.
Opec last week suspended talk of increasing production by 500,000 bpd after prices fell, a move analysts said would have had limited impact in a market supported more by refinery bottlenecks than production policy.
US crude oil inventories are still hovering at nearly their highest level in six years, as refiners running at maximum capacities struggle to burn up crude fast enough to keep up with near-record imports.