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SYDNEY - Oil prices tumbled 1 per cent yesterday, reversing last week's late surge as powerful Hurricane Dean appeared unlikely to plough through key production and refining centres in the US Gulf of Mexico.
US crude fell US74c to US$71.42 a barrel, giving back most of Friday's 98c gains.
London Brent crude fell US86c to US$69.58c.
Prices leaped on Friday after forecasts by some weather models that Dean posed a possible risk to offshore US natural gas and oil installations.
By yesterday, however, the National Hurricane Centre forecast Dean would remain south of the US portion of the Gulf - which accounts for about a third of US oil production - and cross the Yucatan Peninsula en route to the east coast of Mexico.
"Oil prices are falling because Hurricane Dean is heading away from the US oil centres.
"That's the main factor driving down prices," said David Moore, a commodities analyst at the Commonwealth Bank of Australia.
Hurricane Dean, a Category 4 storm packing winds of 230 km/h, pounded Jamaica's southern coast yesterday and could still strengthen into a rare and potentially catastrophic Category 5, according to the centre.
US operators who shut in only around 23,000 barrels per day of oil output and 54 million cubic feet of natural gas as a precaution expressed some relief as Dean's track changed.
"We are prepared for full evacuation if the hurricane turns, but otherwise we continue producing," a spokesman from BP said.
But Mexico's state oil company Pemex said it had begun evacuating more than 13,000 workers from gulf oil rigs in a move it said might curtail output from the world's fifth-largest producer.
A spokesman was unable to say how much output could be shut in, but Pemex pumps 70 per cent of its crude oil from offshore platforms in the Gulf of Mexico.
Oil had bounced back on Friday, recovering from its lowest close in a month and a half, after stock markets battered by the credit market squeeze rallied.
- Reuters
