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.

But OPEC nations have no immediate plans to consult on oil prices, which have persistently traded above $80 last week, al-Riyadh newspaper reported, quoting unnamed OPEC sources.


Some analysts said the market may face further weakness this autumn before peak winter demand kicks in.

The rally above $80 could be short-lived, as 1.5 million bpd more oil from OPEC and non-OPEC reaches global markets at the same time as refinery maintenance curtails 1 million bpd of demand for crude, wrote Lehman Brothers analyst Edward Morse.

Supply jitters resurfaced in Nigeria after a powerful Nigerian armed group threatened in an e-mail to the media on Sunday that it would resume attacks on oil facilities and kidnapping of foreigners, ending a four-month ceasefire.

That follows the arrest of a factional leader of the Movement for the Emancipation of the Niger Delta (MEND), which has claimed responsibility for many of the attacks that have killed dozens of people and slashed oil output by a fifth from the world's eighth-largest exporter since last year.

Growing tensions between Iran, the world's fourth-largest oil exporter, and the West over Tehran's nuclear ambitions were also lending some support to prices.

Iran told Western powers on Saturday they would regret any attack against the country over its nuclear activities, and it rolled out a display of missiles and other military hardware to underscore the warning.

President Mahmoud Ahmadinejad said in a U.S. television interview on Sunday that Iran was not planning to build a nuclear bomb and his country was not heading for war with the United States.