* Gustav weakens to Category 2 as it hits Louisiana coast
* Most U.S. Gulf oil output, nine refineries shut
* Iran says $100 a barrel lowest acceptable price
(Updates prices, Gustav details throughout)
By Matthew Robinson
LONDON, Sept 1 (Reuters) - Oil plunged more than $4 on
Monday as concerns that Hurricane Gustav would cause severe
damage to the U.S. oil sector eased after the storm weakened
before hitting the Louisiana coast.
Gustav -- which forced the shutdown of nine refineries and
most U.S. offshore Gulf of Mexico oil production -- weakened to
a Category 2 storm before roaring ashore near Port Fourchon,
Louisiana, a key logistical port that supports 75 percent of
Gulf of Mexico drilling operations. []
For a graph on the projected path of Gustav, please see:
https://customers.reuters.com/d/graphics/STRM_GUSTAVU2.gif
U.S. crude <CLc1> fell $4.51 to $110.95 a barrel by 1658 GMT
as markets discounted the potential damage from the storm, which
had earlier been forecast to hit the United States as a Category
4 storm. Trade in the United States was shut due to the U.S.
Labor Day holiday.
London Brent <LCOc1> crude fell $4.65 to $109.40 a barrel.
"It looks like Gustav is not going to be as strong a storm
as the market had feared," said Phil Flynn of Alaron Trading in
Chicago. "There is a belief that this storm is not going to do
much damage, that we are going to be able to get through this
and not miss a beat and continue our downward move."
At least 12.5 percent of total U.S. refining capacity was
shut down and other plants cut rates, while over 96 percent of
U.S. Gulf oil production and 82 percent of natural gas
production was offline. The Louisiana Offshore Oil Port, the
only U.S. port capable of offloading the biggest oil tankers,
halted all operations.
Gustav is the biggest threat to the region -- home to a
quarter of U.S. oil output and 15 percent of natural gas output
-- since Hurricanes Katrina and Rita wrecked more than 100
offshore oil platforms in 2005 and closed several large
refineries for months.
Nearly 2 million people fled the Louisiana coast and more
than 11 million residents in five U.S. states were threatened by
the storm. []
The NYMEX declared force majeure on all delivery obligations
under its August and September natural gas futures after ports
and the Henry Hub delivery point were shuttered.
Oil prices have tumbled from record highs over $147 a barrel
struck in July as high fuel prices and wider economic problems
hit demand in the United States and Europe.
OPEC, RUSSIA
Iran has insisted that oil markets are oversupplied, and the
OPEC nation's oil minister said on Sunday that $100 a barrel was
the lowest acceptable price for crude.
OPEC meets in Vienna on Sept. 9 to discuss output policy,
but other member nations have backed Iran so far. Venezuela and
Ecuador said on Friday they expect the oil exporters' group to
maintain current output levels. []
The group increased oil supply for a fourth consecutive
month in August, mainly due to higher output from Iran and
smaller hikes from Nigeria and Angola, a Reuters survey showed.
Traders are also eyeing tensions between Russia and the
West, after Kremlin leader Dmitry Medvedev said on Sunday that
Russia does not want a confrontation with the West but will hit
back if attacked.
The European Union will warn Russia on Monday that Moscow's
future ties with the bloc could depend on its adhering fully to
a peace deal to end the Georgia conflict, according to a draft
statement obtained by Reuters at a summit in Brussels.
[]
(Additional reporting by Fayen Wong in Perth; editing by
Anthony Barker)
