TORONTO — Fuel prices  could drop more than 5 cents a liter by tomorrow as Hurricane Gustav didn’t have the damaging impact to Gulf Coast refining facilities that was expected.

The price of oil surged slightly over the weekend as offshore rigs in the Gulf of Mexico were evacuated in anticipation of the storm. Also, oil tankers had delayed offloading of imported oil.

But Gustav lost steam as it moved towards the U.S. mainland, reportedly doing little damage to fuel facilities in the region.

The latest southern US hurricane won’t
push oil up further, but something else might.

The weaker storm combined with a reviving U.S. dollar pushed oil downward to $108.52 on the New York Mercantile Exchange today. That’s about $50 less than what it was trading for just a few months ago.

That doesn’t mean world oil prices won’t edge back up. In an industry communiqué, a MF Global Canada analyst warns that the cost per barrel could soon be pressured again as Russia renewed threats to cut off oil supply to Europe.

That would be in response to threats of economic sanctions for Russia’s military actions against Georgia.

That said, inventories of middle distillate fuels such as diesel remain healthy for this season, says MF Global’s Aaron Fennell.

Meanwhile, tropical Storm Hanna is following behind Gustav. While its path is expected to chart further north from the refining-rich territory, this fall is expected to have more tropical storms and hurricanes than usual.

It should be an interesting three months for fuel prices.