Oil falls toward $81 as U.S. Gulf output resumes

By Fayen Wong

SYDNEY (Reuters) - Oil prices fell on Monday, as oil and gas producers in the Gulf of Mexico restored more output after a mild storm triggered evacuation and production cuts.

U.S crude for November delivery lost 46 cents to $81.16 a barrel by 0502 GMT to stand nearly $3 below the all-time high set by the October-month contract on Thursday.

London Brent crude fell 50 cents to $78.80 a barrel.

About 45.8 percent, or 595,000 barrels of daily crude oil production, remained shut in the U.S. Gulf by 1630 GMT Sunday, the U.S. Minerals Management Service said, after a tropical depression passed without causing damage.

Some 62.7 percent of the Gulf's oil production has been shut in due to foul weather, the highest cut from the region since massive hurricanes in 2005 churned through the region.

As producers move to ramp up production, traders began casting a wary eye at subtropical Storm Jerry, which formed over the Atlantic Ocean on Sunday. U.S. forecasters said the storm was likely to strengthen over the next day or so.

A string of bullish factors -- including falling U.S. crude stocks, worries about inclement weather destroying oil facilities, a half-point cut in key U.S. interest rates and a weak dollar -- pushed oil to a record high last week.

The Organization of the Petroleum Exporting Countries said the surge in oil prices will shield its members, some of which peg their currencies to the U.S. dollar, from current dollar weakness, a Saudi newspaper quoted OPEC sources as saying on Saturday.