One word, Gouging!


NEW YORK (Reuters) - U.S. oil prices dropped $2 to a six-month low below $100 a barrel on Sunday as dealers bet on a swift recovery of the nation's energy production after Hurricane Ike.

The losses add to a steady downtrend since mid-July's peak of over $147 a barrel amid mounting evidence that high energy costs and a weakening economy are cutting deeply into fuel consumption.

Oil prices fell $1.88 to $99.30 a barrel by 1600 GMT (midday eastern time) after falling as low as $99.12 -- the lowest since March 20.

The New York Mercantile Exchange opened a special energy trading session on Sunday due to increased trader interest about Hurricane Ike, which slammed into the Houston energy hub Saturday leaving a quarter of U.S. oil and refined fuel production idled and millions without power.

Early reports from emergency officials and oil companies indicated little or no severe damage to infrastructure -- signaling a possible quick recovery to production in the coming days.

"The oil market is selling off because the early indications show Ike didn't do as much damage as feared," said Chris Jarvis, senior analyst at Caprock Risk Management. "That said, this sell-off could prove to be a bit premature, since it could be a while before things get back to normal."

The International Energy Agency said it was monitoring U.S. energy supplies in Ike's wake to see if a release of emergency stockpiles is required. The U.S. government has eased environmental gasoline regulations and has offered crude oil loans to refiners having trouble procuring shipments.

Even as oil prices fell Sunday, gasoline prices at the U.S. pumps shot up more than six cents to nearly $3.80 a gallon, adding to a five cent increase on Sunday, according to AAA's daily survey of more than 100,000 service stations.

"It may not be possible for us -- and other manufacturers -- to maintain normal supplies in the coming days," Chevron Corp (CVX.N) said in a statement.

(Reporting by Richard Valdmanis; Editing by Andre Grenon)