Monday, August 28, 2006 LONDON — Oil fell $2 to below $71 a barrel on Monday as Tropical Storm Ernesto was expected to miss U.S. Gulf oil installations, almost a year after they were pounded by Hurricane Katrina.
Ernesto, which had become the year's first hurricane, weakened into a tropical storm on Sunday and was expected to hit southern Florida instead of key oil and gas platforms in the Gulf of Mexico.
"The storm for now looks like it's going to have no impact on oil," said Olivier Jakob of Petromatrix in Zug, Switzerland. "It started to be discounted on Friday and now there is a continuation of that."
U.S. crude fell $1.91 to $70.60 a barrel by 1502 GMT, after on Friday paring much of the day's gain to rise 15 cents. London Brent crude slipped $1.64 to $71.06.
"The threat to oil is now fading quickly," said Tobin Gorey of the Commonwealth Bank of Australia.
As a precaution, BP (BP), Shell (RDS) and ConocoPhillips (COP) had said Sunday they were pulling non-essential workers from rigs in the U.S. Gulf.
Ernesto pelted southeastern Cuba with heavy rain but diminished winds on Monday. It could become a hurricane again over the Florida Straits, the National Hurricane Center said.
Hurricane Katrina hit New Orleans on August 29, 2005. Last year's storms toppled offshore rigs, destroyed pipelines and flooded refineries, sending oil to a then-record high.
As of the middle of this year, about 12 percent of the Gulf of Mexico's 1.5 million barrels per day of crude oil production remained offline because of the record 2005 storm season.