NEW YORK --- Oil prices dropped more than $6.60 per barrel on Tuesday, September 2, representing the biggest drop in dollars since 1991, Reuters reported. That drop demonstrates that dealers are betting the U.S. oil industry will recovery quickly from Hurricane Gustav.
The easing fears about potential disruptions in supply allowed the market to refocus on weak bearish factors like slowing world energy demand, rising stockpiles and a rising U.S. dollar, Reuters reported.
"It would take a really major storm to change the direction in crude oil in the midst of its major correction since July, and Gustav is not it," Chris Jarvis, senior analyst at Caprock Risk Management in Hampton Falls, N.H., told Reuters.
U.S. crude fell $6.60 to $108.86 a barrel by 12:30 p.m. EDT. That brought prices down nearly $40 from the peak in mid-July, a time of concerns over slowing global energy demand. London Brent fell $1.70 to $107.71.
The drop in U.S. oil prices on Tuesday, compared against last Friday's settlement because of the U.S. holiday on Monday, was the biggest in dollar terms since the start of the first Gulf War in 1991 and the biggest in percentage terms since 2004.
Virtually all energy production in the Gulf of Mexico, which accounts for a quarter of the nation's oil output and about a third of U.S. oil refining capacity, was either shut or slowed down in the wake of the storm, Reuters reported.