( Reuters ) - Oil prices on Monday continued a retreat from record highs after tropical storm Ingrid faded in the Atlantic over the weekend, soothing fears it could hit Gulf of Mexico crude production and refining.
U.S. crude for October fell 51 cents to $78.59 a barrel by 0311 GMT, after falling 99 cents on Friday, when it hit a fresh record of $80.36. London Brent crude for November traded 27 cents lower at $75.95 a barrel.
Ingrid, the ninth named storm of the 2007 hurricane season, was downgraded on Saturday to a tropical depression, while three refineries in Texas shut by the previous Gulf of Mexico storm were working to restore operations.
Also allaying supply concerns, Mexico's state-owned monopoly Pemex said it would resume natural gas and oil supply to its clients from Monday after attacks on several of its pipelines last week cut off flows and temporarily lifted oil prices.
Hurricane and other supply risks, together with falling U.S. inventories and fund flows into energy from poorly performing equity markets, have fueled the recent hike in oil prices. But fears of a global credit crunch have kept a lid on the rally.
"The situation in the credit markets and the fallout from that is taking a lot of focus away from more direct factors such as geopolitical concerns or storms," said Andrew Harrington, a commodities analyst at Australia and New Zealand Bank.
Investors are looking ahead to a monetary policy decision in the United States, expecting the central bank to lower rates and help ease a credit crunch that many fear could spark a recession and hit oil prices.
British mortgage lender Northern Rock is the latest casualty in the unfolding credit squeeze and last week had to turn to the country's central bank for emergency funds.