Oil prices fell back to just over $105 a barrel today after Hurricane Gustav appeared to leave America's Gulf relatively unscathed and producers prepared to restart refineries.

Investors breathed a sigh of relief as Gustav proved less powerful than anticipated and was downgraded to a Category 2 hurricane. US crude fell by more than $5 to a five month low today, which is still above the year's low at over $86 a barrel but far below a record $147.27 on July 11.

In preparation for Hurricane Gustav, oil companies halted about 96 per cent of offshore oil production and between 10 per cent and 15 per cent of America’s refining capacity.

Gustav presented one of the biggest threats to the sector since Hurricane Katrina hit the Gulf coast in 2005, causing billions of dollars worth of damage.

However, checks by some US refiners have reported no damage so far.

Royal Dutch Shell said it will begin checks today and may restore full output in three to five days.

ConocoPhillips said there was no significant damage to a platform in the area, while ExxonMobil and Shell said they would tap emergency US crude stocks to ensure steady petrol and diesel supplies.

Yesterday, Louisiana’s governor, Bobby Jindal, said as much as 20 percent of oil and gas production that was shut may be restored by this weekend.

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