'The decrease [in price] was more of a knee-jerk reaction to the blowing over of Rita. The worst seems to be over, but a true picture will emerge only after a full assessment is made of the damages caused by both the hurricanes,' says a Dubai-based oil trader. Hurricane Rita was preceded a week earlier by Hurricane Katrina, which caused extensive damages to oil installations and refineries in the East Coast.

Several refineries are yet to restart operations after suffering damage and electricity outages in key oil production areas in Texas and Louisiana. A total of 20 refineries accounting for 4.8 million barrels a day (b/d) of crude oil processing capacity, or 28 per cent of the US daily total requirements, have been shut down since mid-September. Crude oil production of 1.5 million b/d in the Gulf of Mexico also continues to be completely shut down.