It's a strong signal to the market that the U.S. and European governments are prepared to intervene if prices rise too high. Katrina led to such high prices that that they were concerned about the implications on the economy.
The crude situation is less serious and more manageable than that of refineries. It all depends on how water affected refineries in the area.
There is a substantial upside for oil prices...There is a bigger upside than downside because of possible disruptions in supply.
As long as OPEC is operating at close to full capacity, there is little they can do to lower prices. Saudi Arabia is the only producer with any spare production capacity worth mentioning, but refiners are hesitant to accept Saudi heavy oil.
With damage to crude production, releasing oil from the strategic reserve would be a real buffer and could alleviate the situation.
