Wednesday, August 27, 2008

Hurricane Watch: Waiting for Gustav

Oil is trading at $117.97 up $1.70 and natural gas is trading at $8.464 +0.077. They are up $2.55 and $0.212 from our second post yesterday.
From MarketBeat:
Investors in energy markets are nervously watching the path of Gustav, the tropical storm that’s expected to hit the Gulf Coast early next week, threatening offshore oil and natural gas facilities. As Gustav, recently downgraded to a tropical storm but likely to be upgraded to hurricane status again, slowly approaches the U.S., a rally is slowly developing in the crude oil and natural gas markets.
However, unless this storm devastates the Gulf Coast in a way similar to Hurricane Katrina in 2005, analysts believe the upturn in energy prices will be short-lived. And even then, they note that after Katrina, the price of oil pulled back for a time, before resuming the uptrend that carried it to $145 a barrel earlier this year.

“We would have to wipe out a lot of refinery capability for this to sustain a rally,” says Scott Magnuson, commodity trading advisor at MF Global. “Now, markets are nervous, so it’s a reason to buy, but if there’s not much damage to the refineries, it’ll immediately be discounted and then we’ll probably fall back into a band of $115 to $120 in oil.”>>>MORE

From Wunderblog:

Gustav kills 5 in Haiti, continues to dump heavy rains

...The track forecast for Gustav
The latest 6Z (2 am EDT) model runs are in good agreement that Gustav will turn west and pass through the narrow channel between Cuba and Jamaica after leaving Haiti. Gustav is small enough that the Kingston, Jamaica airport on the south side of the island may be able to stay open Thursday as the storm passes to the north. However, the Montego Bay airport on the north side of the island is likely to close. Heavy rain will be the primary threat to Jamaica and eastern Cuba.

The trough of low pressure that was steering Gustav northwest has moved off to the east, allowing a ridge of high pressure to build in. This ridge of high pressure will force Gustav west. There is now better agreement in the longer term track of Gustav. All of the models foresee a turn to the north over western Cuba, followed by a landfall on the central U.S. Gulf Coast Sunday or Monday. The final landfall location of Gustav depends on the strength and speed of a trough of low pressure forecast to move across the Midwest U.S. late this week. While it currently appears that Louisiana is the most likely target, keep in mind that if you're in the cone of uncertainty, you're not safe. Final landfall of Gustav could occur anywhere from Texas to the Florida Panhandle. The latest GFDL model predicts landfall near New Orleans on Sunday night as a Category 3 hurricane. The HWRF model picks Mississippi on Monday morning, as a Category 3 hurricane. The NOGAPS prefers the Florida Panhandle on Sunday night, and the ECMWF targets central Louisiana on Monday morning.

The intensity forecast for Gustav
One key question controlling Gustav's short-term intensity is how close it will stay to land. Gustav will not be able to intensify much until it clears the southwest Peninsula of Haiti, which should occur late this afternoon....MORE