The price of oil fell this afternoon as Hurricane Gustav swept quickly through the Gulf of Mexico's offshore oil platforms without developing into a Hurricane Katrina-sized Category 5 storm.

Crude prices jumped sharply in early trading as the storm headed into the areas where most of the Gulf's platforms are based.

But as time went on and there were no reports of major damage, markets became less jittery and the price of Brent and New York crude fell back again.

Impact assessments will not be made for some time because the platforms have been evacuated. But, contrary to earlier fears, Gustav remained at Category 3 so damage to installations at sea should be limited. However, Gustav could still cause major damage when it hits land this evening on the Louisiana coast, home to many refineries.

Neena Saith at Risk Management Solutions said: "There remain serious risks to those refineries from the effects of the storm surge."

Storm surge damage is made by the huge waves created by hurricane winds.

The term became common parlance during Katrina, where billions of dollars of property were wiped out by storm surges along the coast.

Saith said Katrina was at Category 3 by the time it hit land, the same as Gustav. However, unlike Category 3 Gustav, as it was approaching the coastline, Katrina was still raging at Category 5, whipping up massive 20 feet-30 feet waves.

The price of London Brent crude fell $1.45 a barrel to $112.60, while New York oil was down $1.71 at $113.75.

"If it's Category 3 without any major damage, $105 is possible," said Edward Meir, an analyst at MF Global.

Analysts at Calyon bank said: "United States weather forecasting has become a global preoccupation as the markets fret about potential hurricane damage to the US energy sector infrastructure in the Gulf of Mexico."