Oil fell more than $1 today after forecasts projected Hurricane Dean would skirt to the south of the US Gulf of Mexico that is home to half of US refining capacity.
US crude was down $1.06 at $70.92 a barrel earlier this afternoon, erasing Friday's rally when the US Federal Reserve cut its discount rate to restore order to financial markets and as Dean menaced.
London Brent crude fell 68 cents to $69.76.
The US National Hurricane Center forecast Dean would remain south of the US portion of the Gulf and cross the Yucatan Peninsula en route to the east coast of Mexico.
But Mexico's Bay of Campeche, home to 70 per cent of Mexican oil output was vulnerable to the storm, Citigroup noted. There are no significant refining operations in the area under threat, however.
Hurricane Dean, a Category 4 storm packing winds of 145 miles per hour, pounded Jamaica's southern coast on Sunday and could still strengthen into Category 5.
US operators shut around 23,000 barrels per day of oil output and 54 million cubic feet of natural gas. Mexico's state oil company Pemex said it had begun evacuating more than 13,000 workers from rigs.
Mexico is among the top crude oil suppliers to US refiners, with Mexican exports to its neighbour averaging 1.469 million barrels per day this year.