Oil analysts watch for hurricane season

Oil prices opened steady, below US$72 a barrel today, taking pause from last week's volatile ride as Tropical Storm Alberto, the first of the Atlantic hurricane season, formed off Cuba and aimed for Florida.

US light, sweet crude for July delivery edged 4 cents lower to US$71.59 a barrel by 2245 GMT, having soared US$1.28, or 2 per cent, on Friday as continuing violence in Iraq dashed hopes that the death of al Qaeda's leader there would turn the tide for the country's struggling oil sector.

Attention today turned to Tropical Storm Alberto, given a name overnight after winds picked up to nearly 45 mph (75 kph) as it hovered about 375 miles (605 km) west of Key West, Florida, according to the US National Hurricane Center.

Most computer forecast models project Alberto will move north and then east, striking the Florida peninsula on Tuesday but sparing the US oil and gas heartland along the Gulf Coast. But one model said it would move north to the Louisiana coast and the storm served a wake-up call for the six-month hurricane season.

"I don't think it's really that much of a concern right now," said John Brady, a broker at ABN Amro in New York. "All it does is tell us we really are in hurricane season." Devon Energy Corp. on Sunday evacuated workers from a deepwater platform in the Gulf of Mexico, while other operators said they were watching its progress.

Oil traders will remain on high alert until the end of the year for a repeat of the devastation wrought by hurricanes Katrina and Rita, which sent oil prices soaring to record highs.

The Gulf, source of about 25 per cent of US oil and natural gas, was hit hard last year. About 15 per cent of that production remains shut in due to lasting damage.

Iran, which last week appeared unexpectedly open to a package of proposals from Western powers meant to end its nuclear programme, on Sunday put a more negative spin on the incentives, referring for the first time to "problems".

"These proposals contain some positive points. At the same time there are problems and ambiguous points," Iran's chief nuclear negotiator, Ali Larijana, said in Cairo.

Oil products led gains on Friday, with Nymex heating oil surging ahead 3 per cent, or more than 6 cents a gallon, after Valero Energy's 275,000 bpd refinery on the Caribbean island of Aruba was shut down after a power failure.

The contract edged 0.3 per cent or 59 points lower on Monday, trading at US$2.04 a gallon, while petrol was off 3 points at US$2.1525 a gallon after climbing 5 cents on Friday.

In addition to storms, oil traders on Monday will be grappling with the launch of financially settled Nymex energy futures on the Chicago Mercantile Exchange's (CME) Globex system.

Its frontmonth crude oil contract had traded a handful of times, easing 10 cents to US$71.53 a barrel, but other contracts like RBOB petrol heating oil and Henry Hub natural gas had yet to see any activity.

Speculators on Nymex cut the net length in crude oil futures in the week to June 6, while petrol speculators built up their long position in expectation that prices will rise, regulatory data showed on Friday.

- REUTERS