Oil prices fell by almost $2 yesterday after weather forecasters said that a tropical storm was likely to miss oilfields in the Gulf of Mexico.
News that tropical storm Ernesto was more likely to hit southern Florida drove US light sweet crude prices down by $1.90 to $70.61 a barrel.
In London, the price of Brent crude slipped by $1.88 to $70.82.
Several oil companies, including BP and Shell, had announced on Sunday that they were evacuating hundreds of non-essential staff from rigs on the Gulf Coast, which produces more than 25 per cent of US total oil output.
Oil prices were pushed to record highs last year after hurricanes Katrina and Rita disrupted production within the region, causing damage to undersea pipelines and offshore rigs.
Commenting on yesterday's drop in prices, Jim Ritterbusch, president of Illinois-based oil trading advisory firm, Ritterbusch and Associates, told the Reuters news agency: "There's been a huge evaporation of the storm premium attached to oil, especially now that Ernesto has been downgraded."
Oil prices have also stabilised since the implementation of the ceasefire in the Middle East and Iran's announcement that it is prepared to enter into fresh talks over its controversial nuclear programme.
However analysts said that a looming United Nations (UN) deadline demanding that the world's fourth largest oil exporter halts uranium enrichment activities helped drive oil prices slightly higher this morning.
Meanwhile, despite healthy US stockpiles and BP's announcement that production at its Alaskan oilfield Prudhoe Bay is now back above 200,000 barrels per day (bpd), US crude prices remain 17 per cent higher than last year. Analysts say that concerns about the reliability of Iran's supplies and lower production in Nigeria, where operations have been disrupted by insurgency, have helped fuel the increase.