Oil & Gas Forums - Worldoils

Tropical storm Fay brewing up in the Gulf of Mexico has caused the oil prices to rise.The oil prices which reached a record high at $147.27 a barrel in mid July fell to a 3 month low of $112.87 a barrel in mid august. Now, with the strengthening storm affecting production in the Gulf of Mexico, the oil prices have begun to rise.

The rise in oil is due to experiences with hurricanes in the past. In 2005,there was a release of fuel from reserves, as Hurricane Katrina wrecked platforms and refineries around New Orleans. In 2008,oil companies such as Shell, Transocean,Marathon Oil Corp have evacuated non-essential employees from their platforms.Storms also disrupt tanker traffic.

Shell in a statement has said, that if the storm continues on its current course there will be no further evacuations. Also, the Shell-operated production has not been impacted. With this assurance, it is left to see if the Oil prices remain steady over the next few days or more black clouds continue to brew over the oil horizon.

Hurricane Faye has been closely followed by Hurricane Gustav, which is packing a Category 3 punch at 115 miles an hour. Major drilling and mining companies have wrapped up evacuations and closed down the productions in the Gulf of Mexico. As expected Oil and Gasoline prices are on the rise as the hurricane has shut down three quarters of output in a region which accounts for more that 25% of US Oil Production.

According to analysts, as the International Energy Agency has committed to freeing up reserves if needed, the oil prices may remain steady and begin a slide once Hurricane Gustav has run it's course. An increase in oil prices is expected only if Gustav causes major damage.

Bob Takai, general manager at Sumitomo Corp., said in a Bloomberg television interview,"Gustav's impact may not be as big as Katrina(a Category 5 hurricane) and the market has taken it very calmly. Speculative flair surrounding the market about 12 months ago isn't there anymore'' to push prices higher.

Leaving it to you to speculate on that speculation.

Hurricane Gustav was downgraded to a Category 2 hurricane as it's speed fell to about 60 miles per hour. Early updates have reported that there has been no major damage to the onshore and offshore facilities off the Gulf of Mexico. Herbst and other energy companies have said that the oil and gas installations will remain closed for a few more days until a complete assessment of the impact of Gustav is known.

Crude oil prices fell by about $4 and the oil and gas community heaved a sigh of relief.

Meanwhile, hurricane Hannah is lashing its fury on the Bahamas and is expected to move to Southeast United States within the week. This will be followed by Hurricane Ike which is making itself felt on the open sea. The Oil Storms continue to rage on the horizon.