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Crude falls as Gustav fears ease Crude falls as Gustav fears ease
(30 minutes later)
Oil prices have fallen after weather forecasters said Hurricane Gustav was not strengthening as it approached the US Gulf of Mexico coast. Oil prices have fallen after weather forecasters said Hurricane Gustav was weakening as it approached the US Gulf of Mexico coast.
With Gustav due to make landfall at midday local time, it has remained a Category Three hurricane rather than intensifying to a Four or Five. With Gustav due to make landfall at midday local time, it has weakened slightly from Category Three to Two as it heads towards New Orleans.
US light crude oil was down $5 to $113.90 a barrel in afternoon trading in Europe, after earlier rising $1.54.US light crude oil was down $5 to $113.90 a barrel in afternoon trading in Europe, after earlier rising $1.54.
London's Brent crude was down 79 cents to $113.26 a barrel.London's Brent crude was down 79 cents to $113.26 a barrel.
'Katrina legacy''Katrina legacy'
Despite the relief that Gustav remains a Category Three hurricane, it is important to remember that 2005's devastating Hurricane Katrina was rated at the same strength. The US-based National Hurricane Centre said the "maximum sustained winds have decreased to near 110mph."
That hurricane badly damaged 100 of the 4,000 offshore oil and gas facilities in the US Gulf. 2005's devastating Hurricane Katrina - rated at Category Three - badly damaged 100 of the 4,000 US offshore oil and gas facilities in the Gulf of Mexico.
The track of the current storm suggests that it will veer straight into the bulk of the US offshore facilities.The track of the current storm suggests that it will veer straight into the bulk of the US offshore facilities.
The industry is much more prepared and taking things much more seriously. That's why so much has been shut down so quickly." Phil Flynn of Alaron TradingThe industry is much more prepared and taking things much more seriously. That's why so much has been shut down so quickly." Phil Flynn of Alaron Trading
Almost all oil and gas production in the region - which produces 25% of the US's crude oil and 15% of its natural gas - is now shut down ahead of Gustav.Almost all oil and gas production in the region - which produces 25% of the US's crude oil and 15% of its natural gas - is now shut down ahead of Gustav.
Hurricanes are graded from One to Five, with Five being the strongest.Hurricanes are graded from One to Five, with Five being the strongest.
Gustav is currently producing wind speeds of 115mph (185km/h). Analysts said the experience of Katrina in 2005 meant that the energy sector and other industries in the US Gulf of Mexico were now much better prepared.
Analysts said the experience of Katrina in 2005 meant that the energy sector and other industries in the US gulf were now much better prepared.
"This is Katrina's legacy," said Phil Flynn of Alaron Trading in Chicago."This is Katrina's legacy," said Phil Flynn of Alaron Trading in Chicago.
"The industry is much more prepared and taking things much more seriously. That's why so much has been shut down so quickly.""The industry is much more prepared and taking things much more seriously. That's why so much has been shut down so quickly."
New Orleans, Louisiana's main city, and surrounding areas have been evacuated ahead of Gustav.New Orleans, Louisiana's main city, and surrounding areas have been evacuated ahead of Gustav.