Market edgy as oil prices make fresh gains

OIL prices made fresh gains yesterday as refinery problems in the United States kept the market edgy about a possible squeeze on gasoline supplies this summer.

US light crude hit a session high of $56 a barrel, before easing to $55.67, up 28 cents. London Brent crude was up 33 cents to $55.30 a barrel. Crude oil prices have rallied for five straight sessions, notching up gains of more than $4 and within striking distance of the all-time high of $58.28 set at the start of April as speculative funds surge back into the market.

"High oil prices look set to persist despite OPEC's promises of more supply and the first, tentative signs of the negative impact of high prices on oil demand growth," said London's Centre for Global Energy Studies in a report.

Traders have grown 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 0.77 cents to $1.66 a gallon, around 11% above levels one week ago.

Saudi Arabia and other members of the OPEC cartel have boosted production in recent months to try and create a stock buffer for expected strong demand at the end of the year. Saudi Arabia's de facto leader, Crown Prince Abdullah, will on Monday meet with US President George Bush, with oil prices expected to be on the agenda.