Oil tumbles below $77 as hurricane fears ease

By ALEX KENNEDY Associated Press Writer

SINGAPORE (AP) - Oil prices tumbled below $77 a barrel Tuesday in Asia on signs Tropical Storm Alex would likely miss most of the rigs in the Gulf of Mexico, leaving supplies undisrupted.

Benchmark crude for August delivery was down $1.69 to $76.56 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell 61 cents to settle at $78.25 on Monday.

Alex gained strength and appeared on track to become a hurricane Tuesday before it makes landfall very near the Mexico-U.S. border sometime late Wednesday, said the U.S. National Hurricane Center in Miami, Florida.

The tropical storm's center wasn't expected to approach BP's massive oil spill off Louisiana's coast or the other major crude installations in the area, the center said.

Crude prices jumped late last week on expectations Alex could disrupt Gulf oil supplies.

"On Friday, the storm was something of a blank canvas with nothing on it, and traders were quick to project their worst fears," Cameron Hanover said in a report. "But, by Monday, it was clear that this first storm of the 2010 Atlantic hurricane season was not going to be a major threat to the oil industry."

All major Asian stock markets fell Tuesday, which also undermined overall investor confidence.

In other Nymex trading in July contracts, heating oil fell 2.84 cents to $2.0649 a gallon, gasoline dropped 3.05 cents to $2.1071 a gallon and natural gas was down 1.8 cents at $4.715 per 1,000 cubic feet.

Brent crude was down $1.69 to $75.90 a barrel on the ICE futures exchange.