New Orleans mops up after Gustav close encounter

NEW ORLEANS (Reuters) - Workers armed with rakes and brooms fanned out across New Orleans to clean up after Hurricane Gustav on Tuesday while officials eyed the city's levees warily and told hundreds of thousands of evacuees to stay away a bit longer.

Half the city swamped by Hurricane Katrina three years ago lacked power and the sewage system was damaged but Gustav's floodwaters ebbed, easing pressure on the concrete and earthen barriers that failed in 2005, flooding 80 percent of the low-lying city and stranding thousands of people.

U.S. Coast Guard crews flying over U.S. oil and gas platforms and rigs in the Gulf of Mexico said they found no major damage and no oil spills. Oil prices slid to a five-month low as supply fears eased.

Gustav, weaker than it had been as it approached, barged ashore on the Gulf Coast on Monday with 110 mile per hour (177 kph) winds. Many had feared a repeat of the destruction caused by Katrina, the costliest hurricane in U.S. history.

The New Orleans levees bent but did not break. Water surged over floodwalls and squirted through cracks and holes, pooling inches (cm) deep in surrounding streets.

"It appears the levees, the floodwalls, have maintained their structural integrity," Louisiana Gov. Bobby Jindal said.

But with debris-strewn streets and power outages affecting 1.4 million homes and businesses, officials said the 1.9 million Louisianians who evacuated as Gustav grew to a 150-mph (240-kph) monster days before it hit the Gulf Coast would not be able to return home right away.

The French Quarter, the heart of New Orleans, began coming back to life on Tuesday as proprietors swept up debris and reopened their doors.

"It's good to be back," said Gerald Covey at the Market Cafe, where he served coffee to a clientele comprised mostly of clean-up workers. "Now we just need some customers."

New Orleans Mayor Ray Nagin said much of the city lacked power and hospitals were staffed by skeleton crews.

Although it landed far enough west of New Orleans to deal the city only a glancing blow, Gustav was a crucial test for a levee system still being rebuilt after it collapsed during Katrina, which killed about 1,500 people across the U.S. Gulf Coast and caused $80 billion in damage.

CLEANUP "ANGELS"

In a virtual ghost town of 10,000 people who defied orders to flee, residents emerged from boarded up homes relieved to find only broken trees and toppled power poles and signs.

Hispanic laborers, who were instrumental in cleaning up New Orleans after Katrina, were back at work.

"I don't know if they were legal or illegal, but they are the angels. Period," said retiree Raymond Bankston as he watched a crew of Central American workers head out to clean up.

Louisiana officials reported six storm-related deaths, including an elderly couple in Baton Rouge who died when a tree fell on their home. Gustav earlier killed nearly 100 people in the Dominican Republic, Haiti and Jamaica.

In contrast to the rampant lawlessness that followed Katrina, New Orleans police said they had arrested only two people for looting during the storm.

Oil companies had shut down nearly all production in the region, which normally pumps a quarter of U.S. oil output and 15 percent of its natural gas.

But after reports showed little damage to the fragile network of refineries and pipelines along the Gulf of Mexico coast, oil prices slid nearly $9 to under $106 a barrel.

The threat to New Orleans had completely overshadowed the start of the Republican Convention to formally name John McCain as the party's candidate in the November 4 presidential election.

As Gustav lost power, politics again took center stage. But new storms approached the United States.

Tropical Storm Hanna was moving through the Bahamas and threatened the U.S. east coast from Florida to the Carolinas, and tropical storms Ike and Josephine trekked across the Atlantic toward the Caribbean.

(Additional reporting by Chris Baltimore, Bruce Nichols and Erwin Seba in Houston; Writing by Jim Loney; Editing by Mary Milliken and Frances Kerry)