SINGAPORE, AP – Oil prices were up slightly Tuesday after the Memorial day long weekend, with market participants watching for signals of demand as Americans entered the peak summer driving period as well as hurricane season.
“The market is really looking for direction,” said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. “It came through a lot of volatility in the past couple of weeks.”
Many traders believe gasoline demand will increase in the United States as Americans are more likely to take domestic vacations due to a weakening U.S. dollar and rising airline ticket prices, Shum said.
Light, sweet crude for July delivery rose 4 cents to $71.41 a barrel in Asian electronic trading on the New York Mercantile Exchange, mid-afternoon in Singapore. It had closed Friday at $71.32 a barrel.
July Brent crude at London’s ICE Futures exchange gained 3 cents to $70.62 a barrel.
Traders also are watching the June 1 official start of the U.S. hurricane season, which is expected to be active. They remember the damage caused by last year’s hurricane season to key oil infrastructure in the U.S. Gulf of Mexico, including Hurricane Katrina’s severe disruption of the flow of oil and natural gas from the region, and the shutdown of onshore refineries and pipelines.
The oil market is also awaiting the results of Thursday’s OPEC meeting in Caracas, Venezuela. Most expect the Organization of Petroleum Exporting Countries to keep output unchanged, although Venezuela is pushing for a cut on the grounds that the market is well supplied.
Gasoline futures, which led the previous session’s rally on news of refinery snags, rose 0.77 cents Tuesday to $2.1445 a gallon while heating oil prices increased 2.3 cents to $2.0035 a gallon.
Natural gas prices rose 7.6 cents to $6.230 per 1,000 cubic feet. Last week, data released by the U.S. Energy Department showing domestic natural gas inventories swelling by 83 billion cubic feet in the past week to 2.16 trillion cubic feet, or 50 percent above the five-year average for this time of year.
Natural gas futures are near a one-year low and some analysts say that if inventories continue to grow at this pace, the country could run out of natural-gas storage capacity before winter, a prospect which should exert downward pressure on prices.