Crude oil for July delivery on the New York Mercantile Exchange last traded up 10 cents at $28.83 a barrel, steadying after Monday's fall of more than a dollar from recent peaks above $30.

"EPA and the Department of Energy are working together to establish those waivers," Richardson told reporters after a Capitol Hill news conference. EPA is the US environmental protection agency.His comments promised relief to a US gasoline market where a lack of fuel has prices racing near post-Gulf War highs as suppliers serving a third of the nation's drivers prepare to switch to new green fuel phase 2 reformulated gasoline (RFG 2).

Just days before the new grade goes on sale on June 1, tight supplies have forced several US cities to ask the energy department and the Environmental Protection Agency for a temporary opt-out.

Drivers at the retail pump are suffering from supply worries, with US motorists this weekend getting set to pay the highest fuel prices on record for Memorial Day.

Average US retail prices at the pump jumped by 3.4 cents last week to $1.526 a gallon, up 40 cents a gallon from a year ago the US energy department said. The price is just three-tenths of a cent below late March's all-time record.

The renewed run-up in retail prices has increased the pressure on energy secretary Richardson as he urges producer group Opec to keep an open mind on increasing output when it meets on June 21.Richardson said Tuesday he would meet with Qatar's oil minister soon to discuss conditions in the world oil market, and would not rule out travelling to Opec nations to meet with their respective oil ministers on the production issue.

Opec ministers have made it clear they intend taking no further action to adjust underlying supply quotas when the group meets in Vienna.

They have said only that they would raise or cut production if the average for Opec's basket of seven crudes over 20 business days strays outside a $22-$28 band.

That means that unless the 20-day average Opec basket, now at $25.90, moves beyond $28 the cartel is likely to leave any review of supply until its next meeting in late September.

So far the US government is allowing St. Louis, Mo. to sell reformulated gasoline that does not meet summer clean air standards. Milwaukee and Chicago reportedly have similar RFG waiver requests pending. Richardson would not confirm which cities were seeking waivers, saying only: "There are other cities. ... We are reviewing several."

The threat of local RFG shortages in the Midwest increased on news that the Milwaukee and Green Bay's main gasoline pipeline will be shut for nine days testing just as the new gasoline specifications come into force.

Among leading energy shares, oil drillers were strong with Schlumberger up 2-7/16 at 76 and the Standard and Poor's Drillers index overall up more than three percent.