Oil prices dropped below 70 U.S. dollars a barrel Tuesday as Hurricane Dean weakened, making it appear that the storm will spare key oil and gas facilities in the Gulf of Mexico.

In midday trading, light, sweet crude for September delivery on the New York Mercantile Exchange fell 2.17 dollars to 68.95 a barrel.

Gasoline and natural gas prices also extended their sharp losses, with traders betting that demand is falling and supplies are safe.

The International Energy Agency said Tuesday that it was slightly concerned about the impact on local oil production when Hurricane Dean hits Mexico -- but believed its passage will not affect global oil markets.