The oil price plummeted tonight and US shares shot up after Hurricane Gustav passed with no reports of major damage to refineries and platforms.

As it became clearer that the region had been spared the destruction caused by Katrina and Rita in 2005, the price of a barrel of crude plunged nearly $9 to below $107. That took it to its lowest point since April and marked one of the biggest one-day slides on record.

The Dow Jones Industrial Average jumped 223.3 points to 11,766.9. When Wall Street closed last Friday, Hurricane Gustav had looked set to be a potential catastrophe.

“The fall in the oil price trickles down to the consumer and lowers expectations of inflation,” said Scott Richter at Fifth Third Asset Management. “That's good for the market.”

Oil experts predict more falls towards $100 —- a move that would ease some of the pressure on the global economy.

Lloyd's of London and other global insurance markets face a bill from Gustav of up to $10 billion (£5.5 billion), against $41.1 billion from Katrina. Risk Management Solutions of California, sees losses on land at $3-$7 billion with damage to the offshore oil industry at $1 billion and $3 billion.

“Gustav has now become a tropical depression and slowing to a crawl across northeast Texas,” Dr Peter Dailey, director of atmospheric science at AIR Worldwide said. His firm had been predicting losses of up to $15 billion.

Not only was the storm weaker than Katrina, but oil platforms and systems have been strengthened since 2005. But it will take time to get workers back to their rigs to assess the damage.

About 1.3 million barrels a day of oil and 7.06 billion cubic feet of gas was shut down, all of the area's offshore oil output and 95% of gas production.

Risk modelling firm Eqecat says oil and natural gas offshore in the Gulf will see a reduction of about 5% capacity for the next year.

Meteorologists and insurers are now turning their attention to Hurricane Hanna, which is forecast to hit the US Southeast coast on Friday. Behind it is the potentially stronger tropical storm Ike, which is forecast to become a hurricane in the next two days.