Oil prices rallied on Tuesday, building on gains fuelled by fears that US gasoline stockpiles will continue to fall ahead of the peak summer demand season. US crude oil futures for May delivery gained 43 cents to 60.13 a barrel, while London Brent crude added 45 cents to $60.97 a barrel.
The Frontmonth US contract for April, which expires on Tuesday, rose 34 cents after resisting the complex-wide upturned a day ago. US gasoline inched 0.36 cent lower on Tuesday to $1.9545 a gallon after hitting a seven-month high on Monday. Prices have rebounded from the six-week low they touched at the end of last week as dealers zeroed in on gasoline supply in the world's top consumer, which some fear may be tight this year due to heavy refinery maintenance.
"The market is obviously concerned about the inventory data, which is expected to show a sharp fall in gasoline," said James Kim, analyst at Wooer Investment and Securities.
In a Reuters poll, industry analysts expect US government data due on Wednesday to show a 1.8 million barrel drop in gasoline, the sixth consecutive weekly draw. Heating fuel stocks were also expected to decline by 1.1 million barrels.
Crude oil inventories were seen rising by 1.2 million barrels thanks to higher imports, but Opec output curbs and the gradual recovery in refinery runs might turn the tide on stocks.
Refinery output last week likely rose by 0.6 percentage points. "As refineries come out of maintenance, draws which have mainly been in products will be transferred to crude markets, likely causing a price jump to the upside," said Lehman Brothers analysts in a research report.
Last week, Opec decided to leave production levels unchanged while the group said it would closely watch the economy. It set its next official meeting for September, which some analysts said had bullish implications as it suggested Opec was unlikely to raise output for the coming months.
Tightening supply fundamentals has helped soothe concerns over the global economic picture, which threatened to darken due to troubles in the US housing sector and China's move at the weekend to raise interest rates slightly.