Thursday, August 28, 2008

Hurricane Watch: Gustav and Hanna--and many more to come

Oil was changing hands at $115.60 -2.55 and natural gas was at $8.059 -.549*
From Wunderblog:
It's time to get familiar with the names Hanna, Josephine, Ike, and Kyle [**], because the tropical Atlantic is about to put on a rare burst of very high activity in the coming weeks.

The atmosphere pulled a major surprise last night and this morning, substantially altering the short and long-term fate of Tropical Storm Gustav. The ridge of high pressure that was forcing Gustav to the west shifted positions, and is now oriented southwest-to-northeast. This has pushed Gustav to the southwest, and pumped in some dry air into the northwest side of Gustav. As a result of this dry air, and the weakening of the circulation due to interaction with Haiti's mountains, Gustav was forced to form a new center under heavy thunderstorms on the its south side, away from the dry air and Haiti. As a result, the center of Gustav is now passing very close to Jamaica, and Gustav will pound that island today with winds near hurricane force....MORE

And from MarketBeat:
As Evacuations Begin, Energy Companies Slip
The nation’s refiners and oil producers are making preparations to protect their Gulf of Mexico facilities from Gustav — and shareholders in some of those companies are readying for the storm by unloading some of their stock.

“Like Katrina and Rita, Gustav poses twin threats to the energy complex: disruption of oil and gas production and damage to, or interruption of, refining capacity,” write analysts at FBR Research.

The largest U.S. refiner, Valero Energy was recently down 1.3%. The company said it is prepared to shut its Gulf Coast facilities if evacuations are mandated ahead of the storm. Anadarko Petroleum slipped 1.7%. Devon Energy lost 4.8% and Diamond Offshore Drilling declined by 1.4%.

About 40% of U.S. refining capacity is located along the Gulf Coast, with the bulk of activity occurring between Houston and New Orleans, where Hurricanes Katrina and Rita knocked out power for weeks in 2005. still expects the storm to hit this region early next week as a Category 3 hurricane....MORE

*From Bespoke Investment Group:
Natural Gas Inventories Continue to Rise...



Figure 3. Visible satellite image from 7:30 am EDT Thursday August 28, 2008.
A long line of impressive tropical waves is lined up over the Atlantic and Africa.
Image credit: U.S. Navy.