Oil prices slipped more than $1 a barrel Monday after Hurricane Dennis missed key Gulf of Mexico refineries and spared the market from a sudden disruption in supply at a time of high demand.

Speculators abandoned their positions after Hurricane Dennis (search) was downgraded to tropical storm status and the downward trend is expected to continue in the short run after last week's hurricane-fueled rally in prices.

Light, sweet crude contract for August delivery settled 71 cents weaker at $58.92 a barrel on the New York Mercantile Exchange (search), after sinking as low as $58.02. Heating oil fell 3.63 cents to $1.6818 a gallon, while gasoline dropped more than 3 cents to $1.7321..

On London's International Petroleum Exchange, Brent futures for August delivery shed 50 cents to $57.70 a barrel.

Hurricane Dennis caused at least 20 deaths in the Caribbean before pounding the southeastern U.S. coast over the weekend as residents fled its high winds. Traders had feared a repeat of last year's Hurricane Ivan (search), which damaged oil platforms and caused months of lost production in the Gulf of Mexico (search).

But the region's oil facilities, the source of 30 percent of U.S. output, weathered Hurricane Dennis largely unscathed.

"The market will continue to expand last Friday's sell-off given that there's minimal damage caused by the hurricane," said analyst Victor Shum of Texas-based energy consultants Purvin & Gertz in Singapore.

Adding to bearish sentiment was news that Chinese crude oil imports rose by only 3.9 percent in the first half of 2005, compared to a 39.3 percent increase in the same period last year. Beijing imported 63.4 million U.S. tons (57.5 million metric tons) from January to June, the official Xinhua News Agency reported Monday.

China is the world's second-largest consumer of crude behind the United States.

Shum said he expected prices to slip further in the short term, but said they would rise again because of a perception that supply will be tight over the long term.

"Traders remain on the bullish side given concerns about the tight supplies, especially looking ahead at the fourth quarter. These concerns have not been allayed," he said.

Global oil demand is expected to average more than 84 million barrels per day this year, leaving an estimated 1.5 million barrels per day in excess production capacity that can be tapped in the event of a supply disruption.

At the Group of Eight summit in Scotland on Friday, Russian President Vladimir Putin said his country will increase its exports.

Crude oil futures are more than 50 percent above year ago levels, though still below the inflation-adjusted high above $90 a barrel reached in 1980.