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LONDON, Aug 3 (Reuters) Oil prices fell on Thursday after a tropical storm weakened and was no longer expected to become the first hurricane of the U.S. season.

Fears hurricane force winds could crash into oil and gas production in the U.S. Gulf of Mexico had helped to drive up prices by around a dollar on Wednesday.

London ICE Brent crude was trading 75 cents lower at $76.14 by 1420 GMT on Thursday, while U.S. light crude fell $1.01 to $74.80 a barrel.

Tropical Storm Chris' top sustained winds slowed to near 40 mph (65 kph) on Thursday, making it only barely a tropical storm and forecasters said it could dissipate over the coming days.

Hurricanes last year shut in a quarter of U.S. crude and fuel output and sent oil to then-record highs. Around 12 percent of the U.S. Gulf of Mexico's 1.5 million barrel-per-day (bpd) oil output is still offline.

But for now, traders and analysts said the oil market was well-supplied.

''There is a lot of noise about politics and geopolitics, but my sense is there is plenty of oil around,'' said Francisco Blanch of Merrill Lynch.

U.S. government data released on Wednesday showed crude oil stocks fell by a higher-than-expected 1.8 million barrels to 333.7 million barrels last week, but they were 12.8 million barrels higher than the same time a year ago.

Gasoline inventories dipped by only 100,000 barrels and were 2.4 million barrels higher than during the same week in 2005.

Supplies are tighter in Europe, however.

August supplies of North Sea benchmark crudes have fallen to record lows because of field maintenance, which helps to explain the unusual premium of Brent futures over U.S. crude futures.

The shortage of North Sea crude has been aggravated by the shut in of at least 718,000 barrels per day of similar quality, light sweet Nigerian crude, chiefly because of militant unrest.

Traders remain concerned about possible disruption of Middle Eastern supplies.

Israeli jets pounded Lebanon and troops fought Hizbollah guerrillas on Thursday as world powers struggled for a plan to end the war.

Analysts are concerned the conflict could complicate the quest for a solution to the West's dispute with oil producer Iran over its nuclear ambitions.

Iran funded and armed Hizbollah in the 1980s, but says its support now is only moral and political.

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