Less than anticipated damage to the Gulf Coast from Hurricane Gustav helped to send oil futures down $7 a barrel on Tuesday, September 2.

Other contributing factors included a stronger position for the American dollar and more concerns of lowered demand for energy due to the general economic slowdown.

Crude oil futures slated for October delivery came down $7.78 a barrel to the level of $107.68 by 9:42 a.m. Eastern Time. Earlier the price had dropped almost $10 for the settlement price of $115.46 on Friday, August 29.

Although closed for the Monday Labor Day holiday, the New York Mercantile Exchange held an electronic trading session Sunday afternoon that saw crude settle at $116.70, mainly on fears of the effects of the hurricane.

If the morning levels are indicative of the day's close, oil will stand at a five-month low with the last day below $110 a barrel being April 8 at $108.50. The record high for oil was achieved on July 11 at $147.27.

The Gulf of Mexico is responsible for a quarter of American oil production and plays host to 56 percent of its imports. Initial reports indicate only minimal damage from Gustav, a Category 2 hurricane when it hit land, although a thorough assessment has yet to be made.