US consumers are having to get used to spending more to fill up

But the price of gasoline (petrol) jumped on concerns that refineries will take time to get back to full output.

US light crude rose to $69.47 a barrel, down from Tuesday's record of $70.85. London Brent crude was at $67.72.

In New York, gasoline futures settled at $2.409 a gallon (3.8 litres), up more than 15 cents on the day.

Analysts warned that high gasoline prices could deter consumers from spending, slowing US economic growth.

Natural disaster

Hurricane Katrina powered its way across the Gulf of Mexico earlier this week, damaging much of the oil infrastructure that was in its path before coming ashore and killing hundreds of people and devastating built up areas.

The city of New Orleans is to be fully evacuated and President George W Bush called Katrina "one of the worst natural disasters" the US had seen.

Don't buy gas if you don't need it

President George W Bush

Katrina cost to top $25bn US scarred for years

President Bush said he expected Saudi Arabia, a close ally of Washington in the Middle East, to do "everything it can" to provide the US with more oil.

He also urged Americans to be prudent in their use of fuel over the coming weeks, adding: "Don't buy gas if you don't need it".

Meanwhile, the US Department of Energy said Katrina was likely to have a "more lasting impact on refinery production and the distribution system" than previous hurricanes.

It said eight refineries shut down as a result of Katrina could take many months to restart.

Oil companies are currently assessing the damage and many oil rigs and platforms are missing, while a number of major refineries have closed.

"The Gulf Coast is a prime supplier through pipelines now shut due to lack of power and ocean-going barges unable to load from ports eradicated by the storm," said David Knapp, an analyst at Energyintel.

"The loss of critical gasoline flows... will stress markets over the next few weeks," he added.

The US Minerals Management Service estimated that 95% of the Gulf of Mexico's oil output was out of service following the hurricane, as well as more than 80% of natural gas production.

'Days of reckoning'

Petrol prices keep on rising

That has raised concerns among many analysts, who now see petrol prices increasing nationwide to beat previous records.

According to the AAA motor club, gasoline costs an average of $2.62 a gallon in the US, compared with $1.86 a year ago.

"On a national average, we could hit $3.25 at the pump easily, potentially even by this weekend," said Jason Schenker, an economist at Wachovia. "This is going to cut into consumer demand."

While it is true that the US economy is still motoring - it grew at an annual rate of 3.3% in the April to June quarter - the worry is that a significant dip in consumer demand would slam the brakes on the recovery.

"Depending on what we learn in the next few days, this may be the biggest oil-supply shock since the 1970s," said Daniel Yergin, an analyst at Cambridge Energy. "We are now in the days of reckoning."