Updated from 3:04 p.m. EDT

Energy futures jumped to a record high Tuesday as traders took a pessimistic view of remediation efforts in the storm-ravaged Gulf Coast.

October crude, which took a wild ride Monday as Katrina moved through Louisiana and Mississippi, closed up $2.70 to $69.90 a barrel on Nymex after touching a record intraday high of $70.90. The contract surged to $70.80 a barrel Monday before settling up $1.07 to $67.20.

Unleaded gasoline futures closed up 41 cents, or 20%, to $2.47 a gallon, while natural gas -- which surged Monday on a postponement of Gulf Coast deliveries -- rose 52 cents, or 4.7%, to $11.66 per thousand cubic feet Tuesday.

Though reports say most of the refining facilities in the Gulf Coast were relatively unharmed, the shutdown ahead of the storm of eight plants that produce about a tenth of U.S. fuel supply, is likely to support record-high gasoline and heating oil prices in the near term, analysts say.

"Anyone who thought that yesterday's reaction was just a knee-jerk will soon find out that the pain of raging prices in the physical market will push retail gasoline to $2.75 a gallon by Monday," said Tom Kloza, chief oil analyst at the Oil Price Information Service.

On Monday, gasoline futures rose initially by more that 20 cents a gallon, but eased later in the session as the storm passed, ending about 13 cents higher.

Kloza believes that the action in the futures market did not reflect the fundamentals of the physical market, where, according to him, gasoline prices rose by 50 cents a gallon. "The cash markets were up three times higher than the futures market, and reflected real worry and desperation. We are facing a loss of hundreds of thousands of gallons for at least 30 days," Kloza said.

The closed refineries will take two to three weeks to resume operation at full capacity.

"This is the most concerning event I have seen in my entire career," Kloza said. He expects retail prices to reach $3 a gallon.

Some analysts expect fuel demand to eventually weaken in response to high gas prices at the pump, a change that could potentially trigger a landslide in energy prices.

"Over the intermediate term, we still see meaningful downside risk for oil and gas prices, partly because demand is likely to be hurt by the further spike of refined product prices," Miller Tabak analyst Kevin Simpson wrote in a research note.

U.S. authorities say roughly 92% of U.S. crude production, representing about 1.4 million barrels daily, was shut down as Katrina came ashore Monday in Louisiana with 140-mph winds. The Gulf Coast is responsible for about a quarter of the country's oil and natural gas production.

The White House is weighing the possibility of releasing oil from its strategic petroleum reserve, pending a review of the storm's damage. "The strategic petroleum reserve is there for emergency situations, and that would include natural disasters. But it's just too early to know at this point," administration spokesman Scott McClellan was quoted saying in wire reports.

Bloomberg

quoted a spokesman for OPEC saying the cartel would consider near- and intermediate-term production increases to combat rising oil prices. Oil ministers will consider adding 2 million barrels a day of output when they meet Sept. 19 in Vienna, Austria, the spokesman reportedly said.

Meanwhile, the nation's biggest oil import terminal, the Louisiana Offshore Oil Port, was closed down as Katrina intensified. The port, which processes about 1 million barrels of crude a day, remained closed Tuesday morning as experts prepared to make a damage assessment.

The key Henry Hub natural gas terminal in Louisiana was reopened with no significant damage sustained, the

Associated Press

reported.

A number of individual companies reported hardships, including

Royal Dutch/Shell

( RD), which said Monday that two drilling rigs had drifted in the storm.

Valero Energy

(VLO) - Get Report

said its St. Charles, La., refinery is without power and may need two weeks to restart.

At

Exxon Mobil's

(XOM) - Get Report

Louisiana refineries things aren't looking any better. The Chalmette refinery in St. Bernard Parish, near New Orleans, was shut down ahead of Katrina and it is unclear if it's flooded or when it could be restarted, said Betsey Eaton, Exxon's spokesperson. The Baton Rouge refinery is operating at a reduced pace, she added.

According to wire service reports,

Swift Energy

(SFY) - Get Report

closed three oil fields along the Louisiana coast Monday while

Apache

(APA) - Get Report

shut in 336 oil and gas drilling structures in the Gulf.

Transocean

(RIG) - Get Report

is monitoring a deepwater rig that started drifting in the storm.

Ensco

(ESV)

reported that a towline was cut from its deepwater semisubmersible rig while it was in transport Sunday morning. The drifting rig has been located about 120 miles south of the Louisiana coast and initial reports did not disclose any apparent damage.

Another runaway rig was reported by

Diamond Offshore Drilling

(DO) - Get Report

, which said its 300-foot Ocean Warwick rig could not be found on its drilling location during a search by an aircraft early this morning. The rig was located about 12 miles off the coast of Louisiana in about 200 feet of water. The Warwick is insured for roughly $50 million, and has a book value of some $14 million, the company said.

Diamond Offshore also said its semisubmersible drilling rig Ocean Voyager broke free from its moorings in the aftermath of hurricane Katrina and has been located 9 miles north of its pre-storm location.

And

Noble's

(NE) - Get Report

rig, contracted to Shell Exploration & Production Company, was in the main path of Hurricane Katrina and broke away from its mooring lines. It has moved roughly 17 miles north-northeast from its original location.

The Philadelphia Oil Service Sector index was recently up 1.6%, led by a 6.6% gain at

Global Industries

(GLBL)

. The marine construction company is set to profit from reconstruction and repair to oil producers' rigs and equipment. Shares of

Tidewater

(TDW) - Get Report

, which also provides offshore supply vessels and marine support services to the offshore energy industry, rose 4.7% to $41.01.

In other company news,

Premcor

(PCO)

shareholders have voted to approve the merger with Valero. Completion of the merger is subject to customary conditions and is expected to be completed on Sept. 1, 2005.