Oil eases as supply concerns fade

Oil prices hit record highs in July but have now fallen back

Oil has closed below $113 a barrel as concerns that oil operations in the Gulf of Mexico could be disrupted by Tropical Storm Fay have eased.

Royal Dutch Shell had removed about 360 workers from the region over the weekend as a precaution.

US light, sweet crude fell 90 cents to settle at $112.87 in New York while London Brent crude lost 61 cents to close at $111.94.

Crude prices are now 23% below the record $147 hit in early July.

Prices had risen in earlier trade on fears of disruption to supply in the Gulf of Mexico and because of military tensions in Georgia.

BP said that exports of Azeri oil by rail to Georgia had stopped because of "damage" to a railway line caused during the conflict between Russia and Georgia.

The line, which runs from the Georgian capital of Tbilisi through the town of Gori before heading to the ports of Batumi and Poti, carries between 50,000 and 70,000 barrels of Azeri oil per day.

Last week's forecast by the Opec cartel of oil-producing nations that demand would grow more slowly than previously thought in 2008 and 2009 also helped to prevent prices from rising.