Hurricane Rita shut all US Gulf Coast crude oil production

But oil refining plants further east of the city in Port Arthur and Lake Charles were harder hit by the storm.

US light crude dropped 97 cents to $63.22 a barrel in a special Sunday trading session, after falling by more than $2 on Friday in New York.

Brent crude fell 86 cents to $61.58 a barrel in Sunday trading on the London International Petroleum Exchange.

Refineries spared

Hurricane Rita reached land on Saturday as a Category Three storm, after passing through much of the offshore oil and gas producing region of the Gulf of Mexico.

Producers along the coast had braced for the worse, after Hurricane Katrina caused widespread damage to major refineries four weeks ago - pushing crude prices to a record $70.85 a barrel.

Rita shut all Gulf crude oil production and much natural gas output.

But the US Energy Department said it was "cautiously optimistic" that the storm had largely spared refineries in Houston from serious damage.

Texas Governor Rick Perry said oil refineries in his state had suffered "a glancing blow at worst".

"Hopefully, they'll be back in production very soon," he told CNN. Governor Perry said Texas had sustained about $8bn (�4.5bn) in damages from Hurricane Rita.

Flood damage

Energy department spokesman Craig Stevens said on Saturday it could be two or three days before a proper picture emerged of the situation at two refineries at Lake Charles, Louisiana, and at one in Port Arthur.

Valero Energy Corp predicted it could take between two weeks and a month to restart its 250,000-barrel-per-day plant in Port Arthur.

"Our recovery team... reports that we have significant damage to two cooling towers and a flare stack but it does not appear that we have significant damage from flooding," said Mary Rose Brown, a company spokeswoman.

At the town of Lake Charles, where ConocoPhillips, Calcasieu Refining Co and Citgo all have refineries, 4.6-metre (15-foot) storm surges swept ashore.

Houston refiners expressed relief at their narrow escape.

"It's too soon to say but we seem to have dodged the bullet," said Chuck Dunlap, a spokesman for Pasadena Refining LLC which owns a 100,000-barrel-per-day refinery outside the city.