LONDON, June 12: World oil prices dropped on Monday, reversing earlier gains, as the first tropical storm of the 2006 -- Atlantic Hurricane season, Alberto -- appeared on course to avoid US energy installations in the Gulf of Mexico, analysts said.

New York's main contract, light sweet crude for delivery in July, shed 73 cents to $70.90 per barrel in pit trading.

In London, Brent North Sea crude for July delivery slid $1.12 to $69.48 per barrel in electronic deals.

Earlier Monday, prices rose as Alberto roared into the US Gulf of Mexico and as traders tracked the Iranian nuclear energy crisis.

“This morning, there were some concerns about the tropical storm in the US Gulf of Mexico, but it appears to be heading northeast towards Florida, and not towards the region that produces oil and natural gas,” Calyon analyst Mike Wittner said.“The market is more concerned about the route of the storm and where it is likely to impact, which at this point is more important than how severe it is,” he added.

Energy facilities in the rig-rich Gulf Coast region account for more than one quarter of total American oil production.

Traders are fearful that this year's hurricane season -- which began on June 1 and lasts until the end of November -- could be another fierce one.

Last year, hurricanes Katrina and Rita devastated oil installations there and sent crude prices surging to then-record levels.

“With last year's devastating hurricane season still fresh in most peoples' minds and the prospect of another active season this year, all eyes will be glued to the weather report,” Sucden analyst Sam Tilley said.

Elsewhere, the market remained consumed by Iran's stand-off with the West over its disputed nuclear programme.

Iran, the world's fourth biggest producer of crude oil, said Monday that its controversial nuclear fuel work was non-negotiable, in another sign the Islamic republic was unwilling to suspend sensitive uranium enrichment work.

“Iran has achieved nuclear fuel technology. This is our absolute right, and we will not negotiate our absolute right with anyone,” Iranian government spokesman Gholam Hossein Elham told reporters.

He was responding to a question on whether Iran was willing to suspend enrichment work in line with an international proposal that offers incentives and multilateral negotiations in return.

For months, Iran's controversial nuclear programme has driven prices up on concerns that international sanctions on the Islamic republic would disrupt crude supplies.

Washington and its allies fear that Iran's nuclear energy programme is a clandestine drive to acquire nuclear weapons. Tehran however, insists that its programme is strictly for civilian purposes.

The situation in Iran underpinned oil prices, although they fluctuated “depending on the rhetoric coming from either side,” said Victor Shum, an analyst with the energy consultancy Purvin and Gertz.—AFP