Oil prices moved higher Tuesday as traders tried to get a handle on whether weak, short-term demand for crude could eventually push prices down. Drivers found gasoline pump prices sliding still lower after a month of declines.
Benchmark crude for July delivery rose 14 cents to $71.58 a barrel on the New York Mercantile Exchange. The contract lost 7 cents to settle at $71.44 on Monday.
"It's kind of real mess in the oil market because it doesn't know what it wants to follow," PFGBest analyst Phil Flynn said.
The European debt crisis and abundant supplies of crude and refined products in the U.S. pushed oil down from an 18-month high of $87 a barrel in the past month. European governments have announced plans to cut spending, and in the world's largest auto market — China — car sales in May grew at the slowest rate in more than a year. Both developments could curtail oil demand.
At the same time, Federal Reserve Chairman Ben Bernanke said he's hopeful that the U.S. will not fall back into recession. His comments helped support crude prices on Tuesday.
Analysts are worried about forecasts for hurricane season, which started last week, that — along with a drilling moratorium in the Gulf of Mexico — they fear could disrupt production of oil and natural gas in the Gulf and send oil prices higher this summer.
"As soon as the dollar drops, equity markets recover and the hurricanes hit the Gulf of Mexico, we could see a perfect storm for higher crude oil prices," oil analyst and trader Stephen Schork said in his daily report.
The Energy Department's Short-Term Energy Outlook released on Tuesday estimates shut-ins of oil and gas facilities during the hurricane season when storms whip through the Gulf of Mexico could cut crude production by 26 million barrels and natural gas production by 166 billion cubic feet.
The government also estimates that the six-month moratorium on deepwater drilling will reduce crude-oil production by about 26,000 barrels a day in the fourth quarter and by 70,000 barrels per day in 2011.
Prices at the gas pump fell slightly overnight. Retail gasoline prices dropped 0.6 cent to a national average of $2.718 per gallon, according to AAA, Wright Express and Oil Price Information Service. Prices have fallen 0.9 cent over the past week and 19.6 cents in the past month. They are 9.9 cents above year-ago prices.
In other Nymex trading in July contracts, heating oil fell 0.63 cent to $1.9620 a gallon, and gasoline lost 0.80 cent at $1.9869 a gallon. Natural gas was down 13.2 cents at $4.784 per 1,000 cubic feet.
Brent crude fell 21 cents to $71.91 a barrel on the ICE futures exchange.
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