Energy futures edged higher Monday as economic concerns eased and reports of scattered refinery outages surfaced over the weekend.
Energy investors were keeping one eye on stocks, which rose in early trading on news that central banks are taking steps to increase liquidity and help economies avoid fallout from the worsening subprime mortgage-related credit crunch, said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Ill.
Light, sweet crude for September delivery rose to $71.62 on the New York Mercantile Exchange.
In London, September Brent crude rose $1.42 to $71.81 a barrel on the ICE Futures exchange.
At the pump, meanwhile, the national average price of a gallon of gas fell 3.1 cents over the weekend to $2.77, according to AAA and the Oil Price Information Service. Retail gas prices, which typically lag the futures market, peaked at $3.227 in late May on concerns the refining industry would be unable to supply enough gasoline to meet demand during the peak summer driving season.
Those concerns appeared to be alleviated by weeks of increased refinery activity and growing gasoline inventories. Gasoline futures and retail prices have fallen steeply over the last month. But last week's inventory report from the Energy Department's Energy Information Administration rekindled those concerns by showing a sharp decline in both refinery activity and gas inventories.
"That cast the gasoline market back into an environment where it is going to be sensitive again to any refinery issues," Ritterbusch said.
Over the weekend, several refineries reported planned and unplanned shutdowns to perform maintenance.
In other Nymex trading, heating oil futures, which are also affected by refinery issues, rose 5.09 cents to $2.0221 a gallon while natural gas futures rose 24 cents to $7.06 per 1,000 cubic feet.
Natural gas prices have risen sharply in recent days after the EIA reported an increase in inventories that lagged expectations, and on concerns about tropical weather. The National Hurricane Center on Monday reported a low pressure center in the Eastern Atlantic "has the potential to become a tropical depression later today or on Tuesday."
Energy traders remain concerned about widening fallout from subprime mortgage problems, analysts said. Concerns that the credit crunch will spread, affecting the broader economy and thus demand for oil and gasoline, has contributed to volatile trading in recent days. Oil prices set new records two weeks ago, then fell nearly $8 a barrel over the next week and a half.
The subprime sector uncertainty is prompting energy investors to pay more attention than usual to government economic reports -- if the economy is weakening, the market believes demand for energy will follow.
"Look for macroeconomic developments to set the tone for the markets this week," wrote MF Global analyst Edward Meir in a research note.
Energy prices got an additional boost from one such piece of macroeconomic news, a Commerce Department report that retail sales grew more than expected last month.
Some believe oil has hit its highs for the year, and say data shows this year's price rally was due to record speculative buying. Now, prices are bound to keep falling as speculators liquidate those positions, these analysts say.
Others believe demand for oil is strong and growing, and think supply constraints will continue to keep prices above $70 a barrel going into the fall.