Crude oil futures (search) spiked to more than $70 a barrel for the first time Monday amid fears about Hurricane Katrina's (search) potential for damage, then retreated into the $66 range, as traders viewed the spike as a temporary phenomenon.

Light, sweet crude for October delivery climbed as much as $4.67 a barrel to hit a high of $70.80 before trading on the New York Mercantile Exchange (search), but gave up virtually all its gains. It settled at $67.20, up only $1.07.

"I'm a little surprised the oil prices haven't hurt the market more," said Giri Cherukuri, head trader at OakBrook Investments LLC, of Lisle, Illinois.

He suggested that investors viewed oil's spike as temporary in light of the storm.

"People were thinking about this all weekend, about the prices going up, and maybe some people are a bit more forward thinking," Cherukuri said.

"Nobody knows the full extent of the damage," said Marshall Steeves, analyst at Refco Group. "The speculation is that it will be worse than Ivan but we won't really know for days, until oil companies get personnel out there and survey the damage."

Click here to track Hurricane Katrina

Oil product prices also shot higher to records as the storm forced eight refineries in southeast Louisiana to shut, and two others to reduce operations. The refineries account for more than 9 percent of total U.S. refining capacity.

Gasoline soared as high as $2.1575 a gallon and heating oil rocketed past $2.00 a gallon for the first time. Natural gas prices were also up 20 percent.

Dealers feared the storm will tighten fuel supplies, which are much lower than relatively robust crude stockpiles and more difficult to replace as most refiners have been pumping flat out to meet rising demand.

"Unfortunately, I don't think $3 a gallon is a hyperbolic number in some markets anymore," said analyst Tom Kloza of Wall, N.J.-based Oil Price Information Service. He emphasized that the market reaction is a reflection of supply tightness, not shortages.

The storm, downgraded to Category 1, hit an area crucial to the U.S. energy infrastructure — offshore oil and gas production, import terminals, pipeline networks and numerous refining operations in the southern states of Louisiana and Mississippi. Oil companies evacuated workers and shut down more than 600,000 barrels of daily production in the Gulf.

The Gulf of Mexico normally produces 1.5 million barrels of crude oil a day, or about a quarter of the United States' domestic output, according to the U.S. Mineral Management Service.

Katrina quickly grew from a smallish storm threatening Florida into a menacing hurricane in just a few days.

PVM Oil Associates in Vienna, Austria, said Katrina had the potential to do more damage to southeastern Louisiana than Ivan, which damaged seven platforms, 100 underwater pipelines and shut down production at some facilities for several months.

Some analysts have said the only way to rein in surging prices would be for the United States to tap some of its petroleum reserves. A Department of Energy spokesman said the U.S. government was in touch with oil companies in the region and that a decision on whether to release oil from emergency stockpiles would likely be made in the next 24 to 48 hours.

The Louisiana Offshore Oil Port (search), the largest oil import terminal in the United States, evacuated all workers and stopped unloading ships on Saturday.

Chevron Corp. (CVX), Royal Dutch-Shell Group, BP PLC (BP) and ExxonMobil Corp. (XOM), among others, evacuated offshore workers by Saturday.Refineries capable of processing some 1.6 million barrels a day have shut down. According to Dow Jones, they include:

• Chevron's 325,000 barrel a day refinery in Pascagoula, Miss.

• ConocoPhillips' 255,000 barrel a day Alliance refinery, south of New Orleans.

• Valero Energy Corp.'s 260,000 barrel a day refinery in St. Charles.

• Murphy Oil Corp.'s 120,000 barrel a day refinery in Meraux, La.

• Exxon Mobil Corp.'s 183,000 barrel a day refinery in Chalmette, La.

• Motiva Enterprises' 225,000-barrel a day Norco refinery, and its 235,000-barrel-a-day Convent refinery.

• Marathon's 245,000 barrel a day Garyville, La. refinery.

Reuters and the Associated Press contributed to this report.