Tropical Storm Isaac is set to become a hurricane before making landfall in Louisiana. The storm is not expected to be a major hurricane, but there is a saying that all hurricanes are major if you and your city have to endure them. With close to 80% of the Gulf of Mexico’s oil production now shut-in, we wanted to see how the key readings were in oil and gas since much of the infrastructure and transportation system around the New Orleans area is at risk.
Crude oil is up $0.53 at $96.00 per barrel. This was at $98.00 just on Thursday when the storm looked like it posed a risk to the offshore oil and gas in the area. United States Oil (NYSEMKT: USO) is up 0.5% at $35.80, and this was at $36.40 last Thursday but bottomed out yesterday at about $35.20.
United States Gasoline (NYSEMKT: UGA) is now actually down 1.1% at $59.16 as fears are abating that the storm will intensify. This was above $60.00 just yesterday.
Lastly, United States Natural Gas (NYSEMKT: UNG) is up 0.7% at $18.09, but this was above $19.20 on last Thursday and this is the first increase we have seen today.
The big trick is simple, yet complicated (and controversial). The reality is that a lot really depends on the levees in and around the New Orleans area. In theory they are sound. Until they are tested live, it is theory.
National Hurricane Center Update at 11:00 AM EST as follows: ISAAC STILL JUST BELOW HURRICANE STRENGTH AS IT CONTINUES NORTHWESTWARD… MAXIMUM SUSTAINED WINDS 70 MPH. A HURRICANE WARNING IS IN EFFECT FOR EAST OF MORGAN CITY LOUISIANA TO THE MISSISSIPPI-ALABAMA BORDER, INCLUDING METROPOLITAN NEW ORLEANS, LAKE PONTCHARTRAIN, AND LAKE MAUREPAS.
JON C. OGG