The June contract for light, sweet crude, which expires Tuesday, fell 95 cents to $65.32 a barrel in midday trading on the New York Mercantile Exchange (Nymex). The July contract also dropped 92 cents to $65.95 a barrel.

July Brent crude slipped 63 cents to $69.86 a barrel on the ICE Futures exchange.

"We have a little pre-inventory report profit-taking and with the June expiration today (Monday), we"re seeing increased volatility in the market," said Phil Flynn, an energy analyst at Alaron Trading Corp. in Chicago.

Anxiety ahead of the high-demand summer driving season in the U.S. has propped up prices lately, despite expectations that a snapshot of U.S. inventories due for release today could show the third increase in gasoline stocks in as many weeks.

The Energy Information Administration said last week that domestic gasoline inventories — while increasing to 195.2 million barrels for the week ended May 12 — remain well below the average for this time of year. Vienna"s PVM Oil Associates expects a report showing another build in gasoline stocks "is unlikely to be enough to remove fears of supply shortages during this summer"s driving season."

Gasoline futures also fell ahead of the report, declining 6.87 cents to $2.3326 a gallon.

But retail gasoline prices keep rising, nearing inflation-adjusted highs. On Monday, the EIA said that the national average retail price for regular grade gasoline rose 11.5 cents to $3.218 a gallon, just shy of the inflation-adjusted high of $3.223 a gallon reached in March 1981. The nominal price in March 1981 was $1.417 a gallon. BP said it will shut down 100,000 barrels at Prudhoe Bay in Alaska for a "few days" because of a water pipeline leak. However, the temporary production loss shouldn"t dramatically affect U.S. oil production, Flynn said, "but we would like to get production here rather than elsewhere."

The market is also eyeing the government"s release of its updated hurricane outlook this week. Two leading storm experts — Philip Klotzbach, a research associate at Colorado State University, and Joe Bastardi, the chief hurricane forecaster for AccuWeather Inc. — already have predicted a more active storm cycle this year.

Weather has played an increasingly important role in oil prices in recent years. Prices surged to $70 a barrel for the first time in 2005 as Hurricane Katrina ravaged the Gulf of Mexico Coast. They broke above $78 a barrel in July 2006 on worries of another bad storm season, and then sank to $60 a barrel when those expectations were not met.

Continued violence in Nigeria before the inauguration of a new president also has underpinned oil prices. Nigeria is one of the world"s largest crude producers, and attacks on oil installations have become an almost daily occurrence following elections there last month.

PIN/AP