With Gustav now a weaker Category 1 storm as it churns inland, energy companies were starting to assess the potential damage as they looked to restart the 1.3 million barrels per day of offshore oil production and over 2.1 million bpd of refining throughput that was shut ahead of the storm.

But some oil traders are already looking past the storm toward more bearish factors such as the rising dollar and weakening demand, hopeful that operators were better prepared than in 2005, when Katrina and Rita wrecked more than 100 offshore platforms in 2005 and shut several refineries for months.

"There is another month of peak hurricane season to go, and there will be other threats," Michael Wittner, global head of oil research at Societe Generale, said in a research note.

"However, the market reaction to Gustav has confirmed our opinion that when the disruption threats fade, the underlying factors are bearish," he said.

The Gulf is home to a quarter of U.S. oil output and more than a third of U.S. refining capacity.

SPARED?

Valero Energy Corp said an initial check of its 250,000 barrels per day (bpd) refinery at St Charles, Louisiana, refinery showed no significant structural damage from Gustav, and that the plant had electrical power. ConocoPhillips said remote sensors showed that its Magnolia platform in the Gulf of Mexico had suffered no damage from the hurricane.

Elsewhere, area sheriff offices said no flooding had been seen at the Exxon Mobil Chalmette, Murphy Meraux and ConocoPhillips Alliance refineries south and east of New Orleans.

About a dozen oil refineries representing about 15 percent of the nation’s fuel production capacity were shut and another 10 refineries cut production rates, according to company officials, trade sources and a report from the U.S. Department of Energy.

The Louisiana Offshore Oil Port, the only U.S. port capable of offloading the biggest oil tankers, also halted all operations due to high winds and waves.

Chevron Corp said production was cut at its 330,000 barrel per day (bpd) refinery in Pascagoula, Mississippi, due to the closure of the ship channel, but expected output to resume as soon as the channel opens. The channel was expected to reopen once weather from Hurricane Gustav clears.

The U.S. government has said it is ready to release crude from the nation’s 700 million barrel emergency stockpile if Gustav triggers a prolonged disruption to supply.

Louisiana Governor Bobby Jindal said on Monday that Exxon Mobil Corp would ask for crude oil from the U.S. emergency supply on Tuesday and Shell Oil Co was expected to make a similar request.

(Reporting by Chua Baizhen, Editing by Jonathan Leff)