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Gustav weakened to a Category 1 hurricane Monday afternoon after earlier making landfall on the Gulf Coast of Louisiana. Although some flooding was reported in New Orleans, the city appeared to have escaped the kind of devastation it suffered from Hurricane Katrina three years ago.

At 3 p.m. EDT, Gustav's center was located near Franklin, La. and was moving toward the northwest at about 16 mph, according to the National Hurricane Center. Forecasters said the hurricane would continue in this direction over the next couple of days but that its speed would decrease. The trajectory puts Gustav in eastern Texas on Tuesday.

Crude oil was down more than $4 in very active trading on the NYMEX ClearPort electronic exchange at the noon-hour on Monday. Earlier during the long weekend, forecasters had said Gustav storm might hit land as a more-potent Category 4 hurricane, but the storm lost force before touching the coast at around 9:30 a.m. Monday. Gustav's weakening - and the assumption that the storm would have a less damaging impact on Gulf Coast oil production than originally thought - was the likely catalyst for the drop in crude prices.

In New Orleans, wind-blown water splashed over the top of the floodwall to the city's Industrial Canal, but the Army Corp of Engineers said they expected the levees would hold, according the


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. There was ankle- to knee-deep flooding on some of the streets closest to the canal Monday in the Upper Ninth Ward, the


also reported. The canal gave way during Hurricane Katrina, causing catastrophic flooding.

Gustav prompted Sen. John McCain (R., Ariz.) Sunday to cancel the first day of the Republican National Convention, which was expected to kick off Monday. In a press release, Republican officials said they wanted to focus the public's attention on hurricane relief efforts.

U.S. stock markets are closed Monday for Labor Day.

This article was written by a staff member of