Oil down as hurricane fears abate

The Gulf has been battered by previous hurricanes

Oil prices have dipped as chances that Hurricane Dean would hit key supplies in the Gulf of Mexico diminished.

The hurricane battered Jamaica on Sunday and is expected to strike the northern coast of Mexico on Wednesday.

Earlier fears that the hurricane would turn into the Gulf of Mexico, which prompted some oil firms to evacuate non-essential staff, have receded.

US light, sweet crude settled 86 cents lower at $71.12 a barrel, in late trade in New York.

Meanwhiel Brent crude oil was 59 cents lower at $69.85 a barrel.

Storm pressure

Key installations in the US portion of the Gulf are expected to escape unscathed although the Bay of Campeche in Mexico, from where 70% of Mexico's oil originates, could be hit.

Analysts warned that prices were likely to rise anyway over the next few weeks as the hurricane season reaches its September peak.

I don't think prices will fall a whole lot further Victor Shum, Purvin & Gertz

"The market is reacting to the news that it doesn't look like Hurricane Dean will affect key refining facilities in the US Gulf of Mexico," said Victor Shum, an energy analyst with consultants Purvin & Gertz.

"But I don't think prices will fall a whole lot further," he added.

"Traditionally, September is the peak month for hurricanes and so the oil market faces some upward exposure going forward in the next few weeks."

Royal Dutch Shell and Chevron have removed hundreds of personnel from the Gulf of Mexico but said that production would continue as normal.

Other firms such as ExxonMobil and BP have said they are monitoring conditions.

Oil prices hit a record high above $78 a barrel last month but have eased since then on worries about a slowdown in the US economy and its impact on demand.