- Dozens of rigs shut ahead of storm hitting U.S. Gulf coast.
- Tropical storm Gordon's impact weaker than expected, turns east.
- Typhoon hits Japan's coast, but refinery damage is limited.
- Oil markets tense ahead of U.S. oil sanctions against Iran.
- Emerging market weakness seen as risk to oil demand.
Oil prices fell on Wednesday, partly reversing a strong jump from the previous day, as the impact of a tropical storm on U.S. Gulf coast production was not as strong as initially expected.
U.S. West Texas Intermediate (WTI) crude futures were at $69.47 per barrel at 0139 GMT, down 40 cents, or 0.6 percent, from their last settlement.
International Brent crude futures fell 16 cents, or 0.2 percent, to $78.01 a barrel.
Prices jumped the previous day as dozens of U.S. oil and gas platforms in the Gulf of Mexico were shut in anticipation of tropical storm Gordon hitting the region.
But the storm was shifting eastward late on Tuesday, reducing its threat to producers on the western side of the Gulf and most Gulf Coast refineries.
Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA, said many crude futures traders were "caught long and wrong over the past 24 hours due to tropical storm buying frenzy", adding that "prices pulled back considerably as the magnitude of the storm suggests production losses will be limited."
There was also a typhoon hitting Japan's east coast overnight, with some damage to oil refineries in the Osaka region, although operator JXTG said its operations were not significantly affected.
Innes said the price outlook for crude was still bullish, in large part because of U.S. sanctions targeting Iran's oil sector from November.
"With the anticipation of up to 1.5 million barrels per day affected by the U.S. sanctions on Iran, one would expect prices to move higher in the weeks ahead."
Other voices, however, cautioned on the risks to oil demand if turmoil in emerging markets starts hitting economic growth.
"My sense is that the big issue going forward, if this emerging market crisis morphs into something more troubling, is not just (oil) demand growth but total demand," said Greg McKenna, chief market strategist at futures brokerage AxiTrader.
Emerging markets are a key driver of global oil demand growth, but several of them - especially Turkey and Argentina but also Indonesia and South Africa - have seen their currencies and stock markets come under pressure in recent months amid inflation, a strong U.S.-dollar and escalating global trade disputes.
"If emerging markets get worse ... that will impact crude markets," he said.