Commodity Daily News

A Threat from the Sea.

The hurricane highlighted the fact that threats to U.S. energy security need not come from abroad. With a quarter of the nation's crude oil production coming from the Gulf's waters, the United States has drilled offshore to sustain domestic output but made itself more vulnerable to the vagaries of the weather.

Crude oil prices tumbled yesterday as Gustav weakened more than expected and appeared to have caused little damage in New Orleans and surrounding areas. Oil prices hovered around $111 a barrel by the end of yesterday's trading session and are trading near 108 today!
There was some disruption to oil supplies as oil companies shut down production and evacuated facilities ahead of the storm. Altogether, about 2.4M barrels of refining capacity had been halted, roughly 15% of the U.S. total. The Gulf Coast is home to nearly half of U.S. refining capacity.

While a weaker-than-expected Gustav, which was downgraded to a tropical storm, is loosing its power, traders turn their attention to other storms brewing in the region.