Crude Oil Ends Higher

Updated from 1:02 p.m. EDT

Prices for oil futures rallied to clear $69 Monday, fueled by fears another strong hurricane season would slash production in the Gulf of Mexico.

Crude added 70 cents to close at $69.23 a barrel after touching a six-week low of $67.70. A government forecast for another strong hurricane season outweighed inflation concerns.

Energy-sector stocks rallied at the end of the day, along with other blue-chip names, but many ended Monday in the red.

A government outlook released Monday said this year's hurricane season will be "above normal," with 13 to 16 named storms and eight to 10 hurricanes. At least four of them will be "major" hurricanes of Category-3 strength or higher, which cause the most damage, according to the National Oceanic and Atmospheric Administration. The U.S. hurricane season begins June 1 and runs through November.

But the outlook fell short of last year's figure, when there were 28 storms, 15 of which became hurricanes.

Eight months after Hurricanes Katrina and Rita damaged rigs, platforms and pipelines in the Gulf of Mexico, 22% of the area's oil production and 13% of its gas output remain offline.

Until the hurricane forecast was released, oil prices were falling over concerns the Federal Reserve would continue raising interest rates to cut economic growth and quell inflation. For traders, rate hikes mean a sluggish economy and lower demand for crude.

High oil prices, which are up 13% this year, have cut into demand and forced the International Energy Agency to revise its forecast for world demand last week. OPEC officials have also said high energy prices were shaving demand.

The IEA, which advises Western and Asian countries on energy policy, lowered its outlook for world energy demand growth by 200,000 barrels to 1.25 million barrels. Global demand was reduced to 84.8 million barrels, down from 85.1 million.