Oil extended losses to below $71 a barrel today on relief that powerful Hurricane Dean would not hit US Gulf Coast oil platforms and refineries.
US crude fell 39 cents to $70.73 a barrel earlier today, nearing its lowest in a month and a half after dropping 86 cents a day ago when forecasts showed that Dean was taking a more southerly path toward Mexico, sparing the US Gulf, home to half of US refining capacity and a third of its oil production.
London Brent crude fell 35 cents to $69.50.
Although US operators have already begun restoring the small amount of production they shut in preparation for Dean, 80 per cent of Mexico's oil production was shut in as they braced for the storm to cross into the Bay of Campeche.
Dean grew into a maximum-strength Category 5 hurricane with winds of around 160 miles per hour (256 kph) on its way to the Yucatan Peninsula, the US National Hurricane Center said.
It is expected to weaken before crossing into the Bay of Campeche, where Mexico's state oil company, Pemex, has evacuated all its oil and gas wells, shutting 2.65 million bpd of oil output.
The US government said it was ready to make emergency oil loans from the nation's Strategic Petroleum Reserve to refineries, if necessary, to help offset any loss from Mexico, which supplies 13 per cent of US imports.