As Bloomberg reports, Oil Prices are below $120 with the assumption that Eduardo, a tropical storm verging on a hurricane, will not damage American oil rigs and refineries along the Gulf of Mexico.
But Contango Oil & Gas have been forced to shut down and evacuate their wells, effectively retracting 2000bpd from the market. If more companies follow, oil could soon shoot up.
The Gulf of Mexico accounts for a third of America’s crude oil and 15% of its gas. The US Hurricane Centre in Miami is warning that Eduardo’s danger region spreads from Intracoastal City, in Louisiana, to Port O’Connor, Texas, which contains most of America’s refineries.
The storm has just hit landfall along Texas but, fortunately is expected to weaken as it progresses. Markets have remained steady and traders are not reacting. This confidence reflects general market stability, two weeks ago such news would have sent prices rocketing.
Right now, little damage is expected to refineries and Santiago is simply being cautious. The lesson here is probably not to panic, but if the storm worsens Oil Energy Money will keep you updated.
You can only run that hustle so many times before its worn out. They may take the men off as a safety measure, but those rigs don’t blow over with every fresh breeze.
By: Michael on August 6, 2008
at 6:08 am