Commodity Online
NEW YORK : Oil prices fell to its lowest since May after Hurricane Gustav weakened, easing concern of widespread damage to drilling rigs and refineries.

Light, sweet crude for October delivery was down $4.28, or 3.7 per cent, at $111.18 a barrel on the New York Mercantile Exchange. It had earlier sunk to a fresh four-month low of $110.60.

The contract is at its lowest since April 11, having lost 25% from the record of $147.27 a barrel reached on July 11.

All trading was taking place electronically with the New York Mercantile Exchange trading floors closed for the Labour Day holiday, and prices won't settle until the end of tomorrow's trading session.

Brent crude on the UK-based ICE Futures exchange settled at $109.41 a barrel, down $4.64

Natural gas for October delivery fell 42.4 cents, or 5.3%, to $7.519 per million British thermal units, while October gasoline was down 10.32 cents at $2.7510 a gallon on the Nymex.

Gustav was downgraded to a Category 2 hurricane, the second- weakest of the five strength levels, the National Hurricane Centre in Miami said. Companies have closed 96% of offshore oil production and about 10% of US. refining capacity in preparation for the system.

The Gulf of Mexico normally produces about 1.3 million barrels of oil and an estimated 7.4 billion cubic feet of gas a day.

Two more storms are further out in the Atlantic. Hanna, which today became the fourth hurricane of the season, is near the Bahamas and is expected to move along the east coast of Florida later this week and reach land in Georgia or South Carolina.

Tropical Depression Nine formed Monday, halfway between Africa and the Leeward Islands, and could become a tropical storm later today.