Oil slipped from today's record high of $68 a barrel as a tropical storm appeared to steer away from vulnerable Gulf of Mexico rigs that serve the world's biggest market, the United States.
This afternoon US crude was down 40 cents to $66.92, after hitting $68, the highest since US crude futures started in 1983. London Brent crude was down 56 cents at $65.45, off its $66.56 high.
Dealers were concerned about a thin stock cushion after a rash of disruptions and tensions in oil-producing countries cut crude output and propelled prices to a series of record peaks.
Petrol stockpiles in the US, the world's top oil consumer, beat forecast to register a slide of 3.2 million barrels in the week to August 19th, widening the supply gap from a year ago, the US Energy Administration Agency said.
The US National Hurricane Center updated its forecast today, saying it expected tropical storm Katrina to miss the rigs in the Gulf of Mexico as it followed a path across southern Florida.
Market participants feared the storm would threaten key oil and gas producing areas in the central and eastern Gulf of Mexico, where the US derives between 20 and 25 per cent of domestic crude and natural gas production.
Refinery snags, which have remained a bane since late-July, have attracted the attention of the IMF.
"There are also constraints in the consumption countries. Refinery bottlenecks are playing an important role," said International Monetary Fund's chief Rodrigo Rato.
Output in Ecuador, which mostly supplies crude to California, is still down to around 80 per cent of its 530,000-bpd level after attacks on oil infrastructure last week.
Protesters, who have choked off oil exports, are threatening a hunger strike to pressure the government on their demands, dealing a blow to settlement talks.
The market also watched for disruption in Nigeria, where some fuel stations shut down ahead of an expected 60 per cent hike in fuel prices.