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Crude oil prices bounced off a nearly seven-week low Monday (May 22), finding some support from a National Oceanic & Atmospheric Administration (NOAA) report warning of a particularly active 2006 hurricane season that could impact energy production in the Gulf of Mexico.
CBS MarketWatch reported that NOAA said there’s an 80% change of an above-normal hurricane season while predicting 13 to 16 named storms, eight to 10 hurricanes, and four to six major hurricanes this year.
“This prediction indicates a continuation of above-normal activity that began in 1995,” the outlook said. However, NOAA does not currently expect a repeat of last year’s record season.
Still, price gains in oil were capped by rising U.S. inventories of gasoline and falling retail prices for the fuel. That eased concerns about the summer driving season, which traditionally begins in a week.
Crude for June delivery was last up 7 cents at $68.60 a barrel on the New York Mercantile Exchange. It hit a low of $67.55 earlier, the lowest intraday price since April 5.
July crude, which will become the lead-month contract at the end of Monday’s session, was down 9 cents at $69.20.
June unleaded gas fell to a low of $2.00 a gallon, but recovered to trade at $2.046, up 0.76 cent. June heating oil traded at $1.923 a gallon, up 0.29 cent.
“Without some fresh anxiety toward Iranian sanctions, or some other international geopolitical supply threat, the market will probably continue to leak as more of the speculative air is let out of prices,” said Michael Fitzpatrick, an analyst at Fimat USA.
Crude prices fell almost 5% last week, suffering their third weekly loss in the past four weeks.
The Energy Department reported Wednesday that crude inventories fell and gasoline supplies rose to tally a three-week climb of 5.8 million barrels.
But last week’s price decline, “while considerable, is not so great when measured against a point of departure of $70,” Fitzpatrick said in a research note to clients.
“One of the influences…has been the entry of new investors, particularly endowments and pension funds into into the market,” he said.