Crude oil falls as Dennis recedes

Dennis sparked volatility in the fuel markets

The price of oil has fallen below $59 a barrel after a hurricane that had shut down almost half the Gulf of Mexico's oil production began to weaken.

Hurricane Dennis killed 32 people in Cuba and Haiti last week before ripping through Florida on Sunday.

But its course missed rigs and refineries in the Gulf of Mexico and it has now lost most of its force.

US light, sweet crude closed 76 cents lower at $58.92 a barrel while London Brent crude dropped 76 cents to $57.44.

Earlier crude had hit session lows of $58.02 in the US.

The shutdown forced US crude prices as high as $60.70 briefly on Thursday before news of the London bombs spread through the markets.

They rose above $60 once more on Friday, before it became clear that Dennis was going to spare key oil and gas installations after it was downgraded from hurricane to tropical storm.

Price pressures

Checking facilities for damage, returning staff to their posts and restarting production is likely to take until the middle of the week.

Hurricane Dennis was the second storm to strike within days

The Gulf of Mexico provides 30% of US oil output, and damage at a time when supplies are tight and energy firms are stocking up ahead of the autumn demand for heating oil might have pushed prices even higher.

Even so, the cost of crude oil is almost 50% higher than it was a year ago, on soaring demand from India and China along with continued supply bottlenecks.

However, the highs hit by oil prices recently have fed through to the gasoline (petrol) pump in the US pushing fuel prices to record highs.

Government figures showed that gasoline prices jumped 10.2 cents in the past week to a new record of $2.33 a gallon - leaving prices up 41 cents compared to the same period last year.

The previous record of $2.28 a gallon was set in mid-April.