Oil Slips; Analysts Watching Storm - TheStreet

Oil Slips; Analysts Watching Storm

The August delivery crude contract lost 61 cents, or 0.8%, to settle at $78.25.
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NEW YORK (

TheStreet

) -- Oil lost ground Monday as markets tried to gauge the potential impact of a tropical storm system near the production-rich Gulf region.

The August delivery crude contract lost 61 cents, or 0.8% to settle at $78.25 a barrel.

"I'm not surprised to see this market run out of gas," said Darin Newsom, senior analyst at Telvent DTN. "I can't help but think what we're seeing is headline-watching with this hurricane and we're watching the technical resistance levels. Really, we're just taking a step back until we get more news

about the hurricane."

Over the past few days, widespread reports speculated that Tropical Storm Alex, which may be upgraded to a hurricane later today or tomorrow, was on a war path to the Gulf. That news helped

drive futures higher to end last week. Though that trajectory could jeopardize productivity,

MarketWatch

reported today that the Yucatan Peninsula could be pardoned.

A strengthening dollar, which rose 0.5% against a group of currencies on the dollar index, also weighed on crude prices during Monday's session.

Energy stocks were among the day's weakest sectors along with capital goods and basic materials. The NYSE Arca Oil index shed 0.7 and the Philadelphia Oil Service Sector index lost 1.1%.

Exxon Mobil

(XOM) - Get Report

was among the

Dow's

ten weakest-performing stocks and

Chevron

(CVX) - Get Report

wasn't far off. The stocks slipped 1.1% and 0.1%, respectively. The

U.S. Oil Fund

(USO) - Get Report

ETF gave up 45 cents, or 1.3%, to settle at $35.21.

BP

(BP) - Get Report

issued an update Monday about reverberations from its oil spill in the Gulf. The firm said

response costs have climbed to $2.65 billion and counting, while over 80,000 claims have been submitted in connection with the accident. The stock, however, finished three cents higher at $27.05.

Also on the Nymex, August natural gas lost nearly 18 cents, or 3.6%, to settle at $4.73 per million British thermal units. August heating oil dropped 2 cents, or 0.8%, to settle at $2.12 a gallon, and August gasoline lost 3 cents, or 1.3%, to settle at $2.13 a gallon.

The market will receive two weekly inventory updates in as many days. Late Tuesday, the industry's own American Petroleum Institute issues its report and on Wednesday morning, the government issues its supply data. Analysts are expecting a 1.2 million-barrel decline in crude oil stockpiles in the week ended June 25. Gasoline stocks are projected to decrease by 400,000 barrels while distillates are slated to gain 1.3 million barrels.

--Written by Sung Moss and Melinda Peer in New York

.