Gasoline futures plunged below $3 a gallon Monday, dragging down oil prices, as worries about refinery disruptions eased after authorities sought to divert flooding along the Mississippi River.

June reformulated gasoline blendstock, or RBOB, plunged 14.33 cents, or 4.7%, to settle at $2.9311 a gallon, the lowest settlement since March 16.

The Army Corps of Engineers opened the Morganza Floodway north of Baton Rouge, La., over the weekend in a bid to lower the flood-swollen Mississippi River. The move appeared to ease concerns that the flooding would disrupt gasoline production at key refineries along the Gulf Coast.

Only the 80,000-barrel-a-day Krotz Springs, La., refinery, owned by Alon USA Energy, remained in direct danger of the floodwaters. The company said it was building levees around the facility that should prevent any disruption to operations.

"The market's pretty confident that some of the worst-case-scenario fears aren't going to happen," said Phil Flynn, oil analyst at PFG Best in Chicago.

Worries that the floods would disrupt gasoline production pushed the RBOB contract as high as $3.39 a gallon last week. That sent gasoline's premium to crude-oil soaring to an all-time high above $40 a gallon.

The premium, called the "gasoline crack," has since plunged to below $26 a gallon. That means smaller profits for refiners.

Drivers, however, should see some relief. Gasoline prices at the retail level are typically 70 cents a gallon higher than at the wholesale level, according to the U.S. Energy Information Administration, meaning prices of $3.63 a gallon could be down the line once the decline makes its way to consumers.

The average retail price for a gallon of regular gasoline was $3.96 a gallon Monday, according to auto club AAA. Prices have already breached the $4-a-gallon psychological threshold in many parts of the country.

"At these prices, I think people being a little bit more conscious" about driving, said Tony Rosado, broker at GA Global Markets.

Crude-oil futures fell sharply on the back of gasoline's slump. Light, sweet crude for June delivery settled down $2.28, or 2.3%, at $97.37 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange was recently down 96 cents, or 0.8%, at $112.87 a barrel.

The disparity between the two contracts--more than $15 a barrel--hit its widest level in a month. Historically, the two contracts have traded in near-lockstep.

Production problems at the North Sea's Buzzard field has been keeping a floor under Brent prices recently, while the Nymex's West Texas Intermediate contract remains pressured by high inventories at the Cushing, Okla., delivery point.

A series of tepid economic readings have also kept crude prices under pressure in recent sessions. The uncertainty about the pace of the recovery in the U.S.--the world's largest oil consumer--prompted a selloff earlier this month that sent the Nymex price tumbling below $100 a barrel.

Underscoring the concerns, speculative traders have been liquidating their bets on higher oil prices, according to recent government data.

Money managers, including hedge funds, cut their net-long position in Nymex crude by 10% during the week ended last Tuesday, according to the most recent data from the Commodity Futures Trading Commission.

June heating oil settled down 6.78 cents, or 2.3%, at $2.8744 a gallon.