A rash of refinery outages in the U.S. and Venezuela is underpinning the bullish market, analysts say, along with stronger-than-expected stock draws on crude and a perception that neither producers nor oil companies were willing to go beyond present measures to bring prices down.
Light, sweet crude for June delivery was up 26 cents at $55.65 a barrel on the New York Mercantile Exchange. It touched a high of $56 a barrel earlier.
Prices rallied last week, fueled partly by fears that escalating demand for gasoline will exceed supply. Crude futures rose $1.19, or 2.2%, to $55.39 a barrel Friday on the New York Mercantile Exchange. Oil prices rose more than 11% last week after slipping to $49.66 a barrel at the beginning of that week.
Mr. Bush has promised to press Crown Prince Abdullah during Monday's meeting in Texas to do more to help ease global oil prices. But he has acknowledged there may be little the Saudis can do to quickly bring down prices.
Mr. Bush said he will make clear Monday that it is not in Saudi Arabia's interests to keep oil prices high. "If they pinch the world economy too much, it'll affect their ability to sell crude oil in the long run," he said in a television interview last week.
Saudi Arabia, the world's top oil exporter and leading member of the Organization of Petroleum Exporting Countries, now pumps about 9.5 million barrels daily.
Victor Shum, oil analyst at Texas-headquartered Purvin & Gertz in Singapore, said the meeting will likely ease prices as "the Saudis are sending signals that they are doing their part to increase supply."
Saudi Oil Minister Ali Naimi promised1 last week to increase production capacity from the current limit of 11 million barrels a day to 12.5 million barrels by 2009 and possibly 15 million barrels after that.
Mr. Bush's agenda on Monday will also include solutions to curb terrorist acts in the Saudi kingdom, which have prompted fresh fears of a supply disruption, causing prices to surge. In Saudi Arabia, suspected militants linked to al Qaeda clashed with security forces on Thursday. Two extremists and two policemen were killed.
Crude-oil prices hit an intraday high of $58.28 at the beginning of April before falling back to about $50 per barrel in recent sessions, and then rising again. Traders are concerned that falling gasoline inventories and reported refinery outages in the U.S. could drive prices higher as the summer driving season in the Northern Hemisphere approaches.
The U.S. government weekly report showed gasoline inventories declining by 1.5 million barrels to 211.6 million barrels, or 5% above year ago levels. But Mr. Shum was confident that gasoline supplies will be enough to meet demand. "Gasoline inventories in the U.S. are higher than last year's levels, so traders shouldn't worry too much about it," he said.