U.S. crude for June rose above $60 a barrel ahead of expiry on Tuesday, extending gains from a six-month high settlement a day earlier amid supply concerns over Nigeria and a U.S. refinery.
Oil prices rose almost 5 percent on Monday after Nigerian militants threatened to blockade waterways in the Niger Delta and disrupt crude exports from Africa's top oil producer, and after they said they had blown up two oil and gas pipelines.
An explosion at Sunoco's 178,000 barrels per day Marcus Hook refinery on the U.S. East Coast set a fire and disrupted output, pushing U.S. gasoline futures to a seven-month high as the country heads into the peak summer driving season.
U.S. crude for June delivery, which expires later in the day, rose $1.18 to $60.21 a barrel by 0704 GMT (3:04 a.m. EDT), after touching on Monday its highest settlement since November 11.
July contracts for U.S. crude rose $1.28 to $60.87, while London Brent for July rose $1.11 to $59.58. Market sentiment has been quite bullish for the last few weeks ... Earlier 300 July lots were traded in one minute and drove the market up 40 cents. That probably got the ball rolling, Clarence Chu, a trader at U.S.-based Hudson Capital Energy in Singapore, said.
I think what happened is that the London guys came in and saw that crude is up and started covering their positions.
Oil prices have risen from a near five-year low of $32.40 touched in December, tracking gains in stock markets over the last few months as investors looked to equities for signs of recovery in the economy and ailing oil demand.
Asian shares climbed to their highest level in seven months on Tuesday on fresh hopes the global recession is easing.
In the United States, crude inventories probably fell last week by 700,000 barrels, while gasoline inventories fell 1.0 million barrels and distillate stocks were up 800,000 barrels, a preliminary Reuters poll ahead of weekly inventory data showed.
The American Petroleum Institute will release its inventory report later on Tuesday and the U.S. Energy Information Administration will issue its own report on Wednesday.
Traders will also look out for the weather after forecasters said a strong rain storm off the east coast of Florida had the potential to develop into the first named storm of the 2009 Atlantic hurricane season.
Powerful tropical storms and hurricanes can disrupt operations at offshore oil platforms and coastal refineries.
President Barack Obama would propose on Tuesday the most aggressive increase in U.S. auto fuel efficiency ever, a move that could affect fuel consumption in the world's top gasoline user further out.
(Editing by Ben Tan)