Oil prices fell on Monday as U.S. refineries in Houston escaped major damage from Hurricane Rita, though plants further east in Texas and Louisiana were still hit by the storm.
Crude shed more than $2 on Friday as dealers calculated a weakening Rita would veer wide of a cluster of refineries around Houston, Texas after hitting land on Saturday. Prices jumped to a record high of $70.85 after Hurricane Katrina four weeks ago.
"Prices had already factored in a Category 5 hurricane, so when the storm lost intensity and headed further east the market sold off," said John Brady, broker at ABN AMRO in New York.
The U.S. Federal Emergency Management Agency (FEMA) said refinery damage was minimal. Texas Governor Rick Perry said his state's refineries should be back soon.
"It appears the refining industry, the oil and gas industry (sustained) a glancing blow at worst. Hopefully they'll be back in production very soon," Perry said on Sunday.
As assessments rolled in, there was damage reported at two of the three refineries in Port Arthur, east of Houston, reports Reuters.
According to the AP, recovery hinges primarily on the restoration of electricity. The area's primary utility, Entergy Corp., said 271 high-voltage transmission lines were down and 275 substations out of service, and there was no immediate timeline of when power would be restored.
"Extended U.S. refinery outages due to storm damage could create acute product shortages. Although imports can probably offset the shortfall, they will come at a price," said Energyintel analyst Peter Kemp from London.
The U.S. Minerals Management Service said Sunday that 666 platforms in the Gulf remained unstaffed, up slightly from Saturday. Oil production in the Gulf of Mexico was totally shut down, and more than 80 percent of natural gas output was off. Since Katrina hit a month ago, more than 33 million barrels of oil and 156 billion cubic feet of natural gas have been lost.