Oil prices rose more than 1 per cent on Monday to reach $56 a barrel as refinery glitches 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 $55.75, up 36 cents and adding to a hefty gain of $1.19, or 2.2 per cent, on Friday.
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. We're going to break the highs again. I see it breaking $59 in the next week," a dealer in New York said.
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 meet rising demand.
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.
Traders said US gasoline inventories, which fell unexpectedly last week, should be on the rise at this time of the year. Still, inventories in the world's biggest consumer are 5 per cent higher than a year ago.
On the supply side, oil officials said on Sunday that Iraq's northern crude exports could resume in a few days if workers repaired the damage from a new sabotage attack that had delayed oil flows.
The pipeline to Turkey's Ceyhan port handled 800,000 barrels per day of Kirkuk crude before the 2003 US-led invasion of Iraq. It has been mostly idle since then as saboteurs regularly hit oil infrastructure in the north.