Oil plunged more than $4 on Monday as concerns that Hurricane Gustav would cause severe damage to the U.S. oil sector eased after the storm weakened before hitting the Louisiana coast, Reuters reported . Gustav -- which forced the shutdown of nine refineries and most U.S. offshore Gulf of Mexico oil production -- weakened to a Category 2 storm before roaring ashore near Port Fourchon, Louisiana, a key logistical port that supports 75 percent of Gulf of Mexico drilling operations. U.S. crude fell $4.51 to $110.95 a barrel by 1658 GMT as markets discounted the potential damage from the storm, which had earlier been forecast to hit the United States as a Category 4 storm. Trade in the United States was shut due to the U.S. Labor Day holiday. London Brent crude fell $4.65 to $109.40 a barrel. "It looks like Gustav is not going to be as strong a storm as the market had feared," said Phil Flynn of Alaron Trading in Chicago. "There is a belief that this storm is not going to do much damage, that we are going to be able to get through this and not miss a beat and continue our downward move." At least 12.5 percent of total U.S. refining capacity was shut down and other plants cut rates, while over 96 percent of U.S. Gulf oil production and 82 percent of natural gas production was offline. The Louisiana Offshore Oil Port, the only U.S. port capable of offloading the biggest oil tankers, halted all operations. Gustav is the biggest threat to the region -- home to a quarter of U.S. oil output and 15 percent of natural gas output -- since Hurricanes Katrina and Rita wrecked more than 100 offshore oil platforms in 2005 and closed several large refineries for months. Nearly 2 million people fled the Louisiana coast and more than 11 million residents in five U.S. states were threatened by the storm.
