Oil hits six-week low as storm concern fades

Oil price falls $5 a barrel to a six-week low today

Oil prices fell $5 a barrel to a six-week low today as dealers anticipated a tropical storm moving over the Gulf of Mexico would miss most major oil and gas installations offshore.

The losses come after the biggest weekly price decline in oil's history last week which chopped $17 off the cost of a barrel as the market focused on mounting US economic troubles and sliding demand.

US crude futures fell $4.39 to $126.65 a barrel after dipping as low as $125.63 the lowest level since early June.

Oil remains nearly 30% higher than at the start of this year, and more than six times higher than in 2002, in a rally driven by startling growth in China and other developing Asian economies.

Tropical storm expected to become hurricane
Tropical Storm Dolly, which is expected to become a hurricane within two days before hitting the coast near the border of Mexico and Texas, has so far triggered only minor production shutdowns from offshore oil platforms.

Exxon Mobil Corporation and Anadarko said today they trimmed output slightly as a precaution against the high winds and seas, and other companies said they were evacuating workers in the path of the storm.

But oil traders and analysts said the overall effect of Dolly on the oil patch would likely be very light.

Hurricanes in 2005 temporarily knocked out a quarter of US crude oil production and refining capacity, sending oil prices to then-record highs.

Oil's slide has taken it about 14% below the July 11 peak of more than $147 a barrel, with traders eyeing growing stockpile levels and slumping demand for gasoline in the US in response to high prices. –Reuters