The price has risen 40 percent this year and is just over a dollar below the record high of $62.10 hit on July 7.
King Fahd died in hospital on Monday and will be succeeded by Crown Prince Abdullah, his half-brother who has been the de-facto ruler of Saudi Arabia since Fahd suffered a stroke in 1995.
Abdullah is expected to adhere to Saudi Arabias long-standing oil policy aimed at ensuring global markets are well supplied, a Saudi source said on Monday. I am sure nothing will change regarding Saudi Arabias oil policy, the Saudi source told Reuters.
Analysts also saw any changes in Saudi policy as unlikely, and expected the price impact to be minimal. Its not going to have a great deal of effect because Crown Prince Abdullah has been effectively running the country for several years, said Geoff Pyne, Energy Consultant to Standard Bank. It could have a psychological effect on markets. Anything which adds uncertainty to the market could be construed as bullish in the short-term.
Before the news of Fahds death, prices had risen on Monday after a spate of refinery problems in the United States resurrected concerns about meeting strong fuel demand.
BP added to the anxiety at the weekend by shutting a gasoline-producing unit at its giant Texas City refinery the third-largest in the US and source of 3 percent of its gasoline for maintenance, a regulatory filing showed.
It was unclear whether or not the shutdown was related to a Thursday night fire in a secondary unit that BP had said reduced the plants overall gasoline production by 35,000 bpd. That fire came four months after an explosion at the plant killed 15 workers, highlighting the rising risks to operations as refiners attempt to run flat-out to satisfy rising demand.
Any instances such as the recent fires are going to really play on the markets mind, add that little bit more to a risk premium, said Gerard Burg, minerals and energy economist at National Australia Bank Ltd.
Although stockpiles of most fuels are relatively healthy for this time of year, traders fear refiners may be hard-pressed to satisfy rising summer motor fuel consumption while also stocking up enough distillate supplies to meet peak winter consumption.
Refineries have been running near full tilt all summer, hitting 98.1 percent of capacity at the beginning of July, but outages have crimped operating rates. They were running at just 93.5 percent of capacity last week.