Isaac was downgraded to a tropical storm on Wednesday as it continued to batter the U.S. Gulf Coast, causing flooding and power outages but so far no discernible damage to refineries or offshore oil and gas platforms.
The National Hurricane Center downgraded Isaac from a hurricane to a tropical storm as of 3 p.m. EDT (1900 GMT). The storm center was 50 miles (80 km) to the southwest of New Orleans and maintained wind speeds as high as 70 miles (110 km) per hour.
U.S. crude oil futures dropped 84 cents to settle at $95.49 a barrel, and gasoline futures fell by around 0.7 percent on Wednesday, a sign that energy traders did not expect the region's oil and gas infrastructure to suffer major Isaac-related damages. Natural gas futures rose by less than 1 percent.
"The rigs offshore should be up in about a week," said Kenneth Medlock, an energy expert at Rice University's Baker Institute in Houston.
"The offshore facilities should be OK with regard to major damage ... I would not expect a prolonged production outage."
No damage to offshore platforms has been reported. Shell plans to begin flyover inspections of its platforms in the central Gulf of Mexico on Thursday and could begin restarting them on Friday.
BP Plc and Chevron Corp said they were waiting for weather to improve before sending crews to inspect platforms and potentially restart them.
U.S. government figures showed 95 percent of oil and 72 percent of natural gas production in the U.S. Gulf of Mexico remained shut in as of Wednesday afternoon. Platforms have been shutting down since last week as a precautionary measure.
Some 936,500 barrels per day of refining capacity, or 5.5 percent of the U.S. total, remained offline due to Isaac.
The U.S. Gulf typically accounts for 23 percent of domestic oil and 7 percent of natural gas production. The coastal region's refineries account for 45 percent of U.S. crude processing capacity.
Isaac continued to cause dangerous storm surges and flooding as it pelted coastal Louisiana with rain. More than 650,000 homes and businesses in Louisiana, Mississippi and Alabama had power outages.
PORTS AND PLANTS CUT BACK OPERATIONS
Louisiana's southernmost Plaquemines Parish reported flooding after storm waters flowed over a levee there. The 247,000-barrel-per-day Phillips 66 Alliance refinery in the parish had a power outage. The zone was evacuated and Phillips was unable to confirm whether the plant was flooded.
Utility Entergy said that the Louisiana Offshore Oil Port (LOOP) suffered a power outage due to a damaged power transmission line. The line serving LOOP is located in a marsh, which could make its repair more difficult, Entergy said.
The major crude import terminal had been closed ahead of the storm. Pipelines connect LOOP to refineries that account for around half of U.S. refining capacity.
Emergency management officials in Garyville, Louisiana, said there were no reports of flooding or damage at Marathon Petroleum Corp's 490,000 bpd refinery.
Independent refiner Valero Energy said crews were riding out the storm inside two of its shuttered Louisiana plants -- located in Meraux and Norco -- and would assess for any damages once Isaac had passed.
Louisiana typically processes around 3 million bpd in its plants, many of which are located in low-lying areas near the coast.