Brent crude oil fell towards $109 a barrel on Monday as U.S. East Coast refineries shut ahead of the approach of Hurricane Sandy, reducing crude use in the world's largest oil consumer. Fifty million people from the Mid-Atlantic to Canada are in the path of the massive storm, which forecasters said could be the largest ever to hit the U.S. mainland. The second-largest refinery on the U.S. East Coast began shutting down, and three other plants cut output as the storm threatened floods and power outages across the region. Oil analysts say Sandy is likely to depress U.S. oil consumption as commuting and road transportation fall and flights to and from East Coast airports are cancelled. Brent crude futures [LCOCV1 110.20 0.65 (+0.59%) ] for December dropped $1.04 to a low of $108.51, before recovering to around $109.15. Brent posted a 0.5 percent loss last week. U.S. crude [CLCV1 85.94 -0.34 (-0.39%) ] was down 60 cents at $85.68. "With refineries cutting runs, we're likely to see a build-up in crude stocks, which could be driving bearish prices at the moment," said Michael Creed, an economist at National Australia Bank in Melbourne. Oil also came under pressure from falling stock markets as investors focused on weak corporate earnings. The FTSE Eurofirst 300 index [.FTEU3 1090.94 -6.41 (-0.58%) ] index of top European shares followed Asian markets lower, dropping 0.5 percent in early trade. The euro [EUR=X 1.2896 -0.0042 (-0.32%) ] fell 0.3 percent to $1.2890, the lower end of its recent range between $1.28 and $1.31, waiting for bailout prospects for Spain and Greece to become clear. "It is a risk-off day," said Eugen Weinberg, head of commodities research at Germany's Commerzbbank in Frankfurt. "Risk aversion is rising in all markets, and investors are increasingly focusing on slow global economic growth." Refineries Closing Hurricane Sandy was expected to slam into the East Coast on Tuesday morning. The CME [CME 55.42 0.42 (+0.76%) ] will suspend floor trading on Monday at its NYMEX world headquarters ahead of the storm, although electronic dealing will operate normally. Phillips 66 [PSX 47.50 2.47 (+5.49%) ] started shutting its 238,000 barrel per day (bpd) refinery in New Jersey, while three others cut rates. The rate cuts come after a rise of nearly 6 million barrels in U.S. crude stocks in the week to October 19. U.S. heating oil [HOCV1 3.1491 0.0513 (+1.66%) ] and RBOB gasoline [RBCV1 2.7735 0.0744 (+2.76%) ] futures and their crack spreads rose as speculators expected fuel supply to tighten and bet on wider price spreads between products and crude. "Markets will be watching for reports of damage to energy infrastructure, notably refineries, post-Sandy given the state of extremely low gasoil inventories as we move into winter season," Deutsche Bank analysts said. Expectations for a cold start to winter will further tighten gasoil supply, they said. Speculators cut their net long U.S. crude futures and options positions to the lowest level in three months in the week to October 23 as prices fell by almost 6 percent, the U.S. Commodity Futures Trading Commission said. The impending restart of Britain's largest oilfield and a quick recovery in Nigerian crude output also limited Brent's gains. The Buzzard field in the North Sea is expected to restart by Monday, and operator Nexen [NXY 23.40 -0.39 (-1.64%) ] has said it will return to full operations over the next two weeks.

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