Updated from 1:15 p.m. EDT

Oil prices jumped Friday as traders covered short positions and got ready for a three-day holiday weekend in the U.S.

The August contract closed up $2.25 to $58.75 a barrel on Nymex. Gasoline futures jumped 7 cents to $1.64 a gallon.

"People don't want to go into the weekend short," says Mike Armbruster, an energy analyst at Altavest Worldwide Trading. "They are covering their short positions because they don't want to take the risk of something extreme happening over the weekend, such as a refinery shutdown or even a terror event."

Oil prices nosedived this week after reaching an all-time closing high of $60.54 on Monday. The decline was widely attributed to hedge funds that liquidated their positions before the end of the quarter. A bearish U.S. inventory report showing a bigger-than-expected increasein crude stocks and more builds in distillates also pressured prices.

Among the major oil producers, shares slid.

Exxon Mobil

.

(XOM) - Get Report

is down 5.5% since peaking at $60.89 on June 17.

Chevron

(CVX) - Get Report

has fallen 5.7% since reaching $59.34 on June 20.

Lending support to prices Friday was an unusual comment by OPEC's president Sheikh Ahmad al-Fahd al-Sabah, who said that he supports oil at $53 a barrel,

Reuters

reported. That is higher than was expected, especially after several OPEC officials have repeated in thepast that oil above $50 was too high.

Recent chatter about an additional 500,000-barrel increase in OPEC's production ceiling has quieted down after crude prices fell about $4 this week.

Regardless of the current oil price, during the second quarter both oil prices and natural gas prices reached several record highs. Despite inventories being at the highest levels in years and a slowing in U.S. and global energy demand growth, oil and gas prices stayed above $50 a barrel and $7 per thousand cubic feet, respectively.

The oil service sector, which includes a multitude of companies that provide equipment and services needed to produce oil and gas, has especially benefited from elevated commodity prices.

"Rig count was higher than expected in June, and drilling activity was higher, which means oilfield service companies had more business in the second quarter," says Jim Wicklund, analyst at Banc of America. "These companies' chances of meeting or beating second-quarterexpectations are greater."

Wicklund also says that "commodity prices were higher than anyone had expected" and that as long as natural gas prices remain high, U.S.-based oil services companies will continue to perform well. He says 85% of U.S. drilling activity is aimed at natural gas production.

"Results will continue to improve, though at a slower rate, because there is a lot of drilling going on," he says. Out of the companies Wicklund covers, he expects

Patterson-UTI

(PTEN) - Get Report

,

Grey Wolf

( GW) and

Nabors Industries

(NBR) - Get Report

to do well in the second quarter.

Also

National Oilwell Varco

(NOV) - Get Report

will do well because of new rigs ordered in the quarter, Wicklund says.

Lastly, Wicklund said he expects a solid second-quarter performance from

Todco

( THE) and

Ensco International

(ESV)

, which contract their fleets of drilling rigs, barge rigs, jackup rigs and submersible rigs to offshore oil companies.

The Philadelphia Oil Service Sector has risen 17% since its recent low reached on May 13, and the

Oil Service HOLDRS Trust

(OIH) - Get Report

climbed 16% to $102 since its May low of $88.

Elsewhere, the U.S. House of Representatives expressed overwhelming unease in two measures about

Cnooc's

(CEO) - Get Report

bid to acquire

Unocal

( UCL). One House vote would bar the Treasury from using funds to back approval of the sale, while the secondconcerned worries a Cnooc takeover of Unocal could threaten national security.

Among the major producers shares were trading higher, pushing up the Amex Oil Index by 2%. Exxon Mobil rose 1.4%, Chevron increased 1.6%,

Royal Dutch/Shell

( RD) added 1.3%, and

BP

(BP) - Get Report

gained 1.4%.