Crude slid below $60 on Monday as Hurricane Wilma crashed ashore in Florida, avoiding already battered Gulf of Mexico oil-producing and -refining facilities.
Analysts said perceptions of relatively plentiful supply and revised assessments showing less damage from previous hurricanes also contributed to the downward trend.
Wilma made landfall near Cape Romano in south-west Florida, battering the area with 200kph winds and pounding waves.
The hurricane had sent large swells into the Gulf of Mexico on Friday, forcing several operators to evacuate workers and shut down platforms, and supporting a brief run-up in crude futures.
Light, sweet crude for December delivery slipped by $1,17 to $59,46 a barrel by afternoon in Europe in electronic trading on the New York Mercantile Exchange. The contract closed on Friday at $60,63 a barrel, up 61 cents.
December Brent crude futures on the International Petroleum Exchange in London also eased, falling by 84 cents to $57,64 a barrel.
There was relief on Monday that Wilma was staying out of the way of Gulf facilities, said commodity strategist David Thurtell, of the Commonwealth Bank of Australia in Sydney.
After moving slowly through the Caribbean and along the Mexico coast, Wilma picked up speed and strength.
The storm stayed on track to spare the oil and gas production platforms and rigs concentrated in the central Gulf of Mexico, but analysts warned the hurricane season’s threat to oil and gas facilities in the United States Gulf was not over.
At least four companies operating in the US Gulf evacuated nonessential workers and shut down production platforms ahead of the weekend. With the latest shutdowns, the federal Minerals Management Service said on Friday more than half of oil and gas production remains offline in the aftermath of recent hurricanes.
”The hurricane season goes on till the end of November, so we’re not out of the woods yet,” Thurtell said. ”But at least the chances of another hurricane forming are getting narrower and narrower.”
Traders also watched the approach of the northern-hemisphere winter, with some expecting big run-ups in crude prices if the winter is colder than expected.
Angus McPhail, of ING Financial Markets in Edinburgh, Scotland, said oil and related products are still ”vulnerable to supply tightness, particularly as we get into the northern-hemisphere winter”.
”This is not a [permanent] downturn,” he said.
Heating oil fell nearly four cents to $1,8275 a gallon (3,8 litres), while gasoline dropped the same amount to $1,6000.
Natural gas fell 24 cents to $12,630 per 1 000 cubic feet. — Sapa-AP
Associated Press writer Gillian Wong in Singapore contributed to this report