Crude oil fell significantly on Monday amid relief that the hurricane barreling over Louisiana was not as strong as feared.

Oil was down more than $4 in the electronic markets to $111 a barrel after having been up much as $117 a barrel earlier this morning. Natural gas slumped more than 6% in light trading. 

The New York Mercantile Exchange was closed for trading for the Labor Day holiday, so volume was low and volatility high in the markets on Monday.

As Gustav approached the Gulf Coast over the weekend, there was fear that the hurricane could be a devastating human and economic sequel to 2005’s Hurricane Katrina. However, the National Weather Service said Gustav had weakened overnight. It made landfall as a Category 2 hurricane and was quickly downgraded to a Category 1 by Monday afternoon. Katrina made landfall as a Category 3 hurricane in 2005.

“Gustav was just not as bad as everyone as expecting,” said Phil Flynn, senior oil market analyst with Alaron Trading and a FOX Business contributor. “Also, everyone was better prepared for this storm compared to Hurricane Katrina.”

On a technical basis, oil fell below $111.40 a barrel, below its 200-day moving average. Traders including Flynn said the decline below that critical point could be an indication that oil has much further to go. 

Flynn said that over the past two weeks, the price of oil had been dictated by the movement and fear of Gustav. Because the hurricane came in tamer than expected, oil may continue to trend downward for the rest of the week, barring any other major news.

“Oddly, a hurricane could be the event that officially moves oil from a bull market to a bear market,” Flynn said.

Oil drilling and refining remains significantly impaired while the storm passes over the critical oil-producing region. The U.S. Minerals Management Service said approximately 100% of the oil production in the Gulf has been shut in, while 95.4% of the natural gas production has been shut in.

The major oil drillers and refiners, including ExxonMobil (XOM), Royal Dutch Shell (RDS), Transocean (RIG) and Chevron (CVX), said they have begun preliminary surveys of their drilling and refining capacity, and so far things the damage appears to be minimal.

Guy Cantwell, spokesman for Transocean, said all of the company’s moored and thruster rigs “remain safe” and about 750 of the company’s personnel remain on some of their rigs located in the Gulf Coast.

Royal Dutch Shell said it has closed gasoline stations between Mobile, Ala. and Pensacola, Fla.

“Once the storm has passed, re-opening of stations will begin as soon as it is safe to do so,” the company said in a statement.