Commodity Corner: Oil, Gas Decline As Threat from Alex Fades

August crude oil futures settled lower Monday as Tropical Storm Alex appeared to be less of a threat to U.S. oil production and refining infrastructure in the Western and Central Gulf regions.

Oil settled 61 cents lower to $78.25 a barrel after forecasts increasingly anticipate Alex's landfall south of the U.S./Mexico border. The tropical storm, packing maximum sustained winds of 60 mph at press time, was located 410 miles east-southeast of Tampico, Mexico at 4 p.m. CDT Monday and was moving in a north-northwestward direction. Based on information available Monday afternoon, the National Hurricane Center expected the storm to intensify to a Category 1 hurricane on Tuesday and make landfall south of the Rio Grande late Wednesday. Crude oil traded from $77.72 to $79.38 Monday.

The increasing likelihood that Alex would steer clear of U.S. energy interests also placed downward pressure on the front-month natural gas contract, which settled 14 cents lower to $4.72 per thousand cubic feet. The intraday range for natural gas was $4.70 to $4.84.

July gasoline futures also lost ground Monday. After trading within a range of $2.13 to $2.17, gasoline settled at $2.14 per gallon a 3-cent decrease from Friday.