MARKET WATCHEnergy futures prices soar as Ivan approaches GOM

After weeks of spiraling downward, energy futures prices soared Monday as oil and gas companies shut down some offshore operations in the Gulf of Mexico in advance of Hurricane Ivan, one of the most powerful storms ever to threaten that region.

Sept. 14, 2004

3 min read

Sam Fletcher
Senior Writer

HOUSTON, Sept. 14 -- After weeks of spiraling downward, energy futures prices soared Monday as oil and gas companies shut down some offshore operations in the Gulf of Mexico in advance of Hurricane Ivan, one of the most powerful storms ever to threaten that region.

Early Tuesday, Iran was 545 miles south of Pensacola, Fla., moving northwest at 9 mph with sustained winds of 160 mph. As of Monday, the US Minerals Management Service in New Orleans reported 54 platforms and 15 offshore rigs were evacuated because of the storm. It said 99,529 b/d of oil and more than 266 MMcfd of natural gas production had been shut in. Operations in the gulf normally produce 1.7 million b/d of oil and 12.3 bcfd of gas. The number of installations evacuated and the amount of shut-in oil and gas were likely to increase Tuesday.

Ivan also could impact refining operations along the Gulf Coast, as residents from the Florida Panhandle through Louisiana began evacuation. Residents in New Orleans are among those who were advised by government officials to seek higher ground. Forecasters said the killer storm may come ashore in the US as early as Wednesday, but as yet they are uncertain where it may make landfall.

Two recent hurricanes, Frances and Charley, failed to affect energy prices as they swung well clear of the highly productive central gulf to hit the Florida peninsula. However, traders fear that, if Ivan tears through the numerous rigs and production platforms off Louisiana, its powerful winds could cause substantial damage, and it might take some time to restore production.

Energy prices
The October contract for US benchmark light, sweet crudes jumped by $1.06 to $43.87/bbl Monday on the New York Mercantile Exchange, with the November position advanced by 99¢ to $43.83/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., also shot up by $1.06, to $43.88/bbl.

Heating oil for October delivery escalated by 4.1¢ to $1.21/gal Monday on NYMEX. Gasoline for the same month was up by 3.72¢ to $1.20/gal. The October natural gas contract soared by 28¢ to $4.85/Mcf.

In London, the October contract for North Sea Brent crude increased by 86¢ to $41.06/bbl Monday on the International Petroleum Exchange. Gas oil for October delivery was unchanged at $385.25/tonne. The October natural gas contract shot up by 18.7¢ to the equivalent of $5.17/Mcf on IPE.

The average price of the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes lost 52¢ to $38.30/bbl Monday.

Contact Sam Fletcher at [email protected]