Workers for oil giants BP and Royal Dutch/Shell began returning to their platforms in the Gulf of Mexico after the onset of Dennis had led to a mass evacuation.

New York's main contract, light sweet crude for delivery in August, fell by 71 cents to close at 58.92 dollars a barrel, off a session low of 58.02 dollars.

In London, the price of Brent North Sea crude oil for delivery in August closed down 76 cents at 57.44 dollars a barrel.

"The hurricane didn't shape up to be anywhere as damaging as feared. It missed major refining assets in the Gulf as well as production assets," Fimat analyst John Kilduff said.

Dennis caused one death in southern Florida over the weekend, having killed 22 people as it crossed the Caribbean, and left hundreds of thousands of people without electricity in the southeastern United States.

But because it was a fairly compact and swift-moving storm, Dennis caused far less damage than feared in the United States compared to Hurricane Ivan 10 months ago, which killed at least 30 people and sent oil prices soaring.

"The crude (price) is retreating... as Hurricane Dennis was not as bad as people feared," Barclays Capital analyst John Xu said.

"But we are at the beginning of the hurricane season, so the sentiment is that the retreat could be temporary," he added. The Atlantic Ocean hurricane season lasts until the end of November.

Kilduff said the market was hit also by signs of flagging demand for oil in China, whose fast-growing economy has done much to drive oil prices up to new record highs.

New Chinese trade figures showed imports of refined oil products were down 20 percent and crude oil imports were up only three percent, he said.

"They're not the kind of numbers we thought we would be seeing out of China at this point. They're pretty bearish statistics," he said.

New York futures had hit a record high of 62.10 dollars on Thursday, then plunged 4.08 dollars following the fatal bomb attacks in London that day before climbing back towards 60 dollars again.

The oil market will remain volatile, said Victor Shum, a Singapore-based analyst with US energy consultancy Purvin and Gertz.

"The market will continue to be volatile and react to short-term news... I would expect the market to trade within the same range as last week," he said.

Eurozone finance ministers meanwhile gathered in Brussels on Monday to ponder the impact of high oil prices on growth rates, which are diverging in the 12-nation area, much to the concern of policymakers.

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