The National Oceanic & Atmospheric Administration (NOAA) issued the year’s first hurricane forecast on 22 May. ‘NOAA today announced to America and its neighbours throughout the north Atlantic region that a very active hurricane season is looming,’ it said. ‘For the 2006 north Atlantic hurricane season, NOAA is predicting 13-16 named storms, with eight-10 becoming hurricanes, of which four-six could become major’ hurricanes.’

The prediction immediately pushed up prices. ‘With global upstream capacity and downstream upgrading capacity both extremely stretched, we believe that the market is even more vulnerable to a hurricane in the wrong place than it was last year,’ says Paul Horsnell of Barclays Capital. US crude and refining facilities took months to recover from the 2005 hurricane season.

The market was subsequently calmed by the latest US inventory data, which showed gasoline supplies rising by 1 per cent to 208.5 million barrels in the week to 19 May. Crude stocks fell by 0.9 per cent to 343.9 million barrels, with imports low at an average of 9.2 million barrels a day (b/d). Refinery utilisation was weak at 89.7 per cent, compared with 94 per cent at the same point last year.

All eyes are now turning to OPEC’s meeting in Venezuela on 1 June. Few expect a change in output policy, but Caracas on 22 May said that fundamentals justified a cut in the production ceiling.