Hurricane Gustav aims for U.S. Gulf oil facilities
NEW YORK (Reuters) - Oil companies began early storm preparations on Tuesday as forecasters predicted Hurricane Gustav will enter the U.S. Gulf of Mexico as a major storm by the weekend.
Royal Dutch Shell Plc, one of the largest oil and gas producers in the region, said it would begin evacuating nonessential personnel from offshore facilities on Wednesday as energy prices jumped on the threat.
Other companies operating in the Gulf, home to about 25 percent of U.S. oil production and 15 percent of U.S. natural gas output, were monitoring the progress of Gustav, which was churning off the coast of Haiti as a Category 1 hurricane on Tuesday.
Hurricane forecasters were predicting on Tuesday that Gustav would skirt the western coast of Cuba and enter the Gulf of Mexico as a powerful Category 3 hurricane with winds in excess of 100 miles per hour by Sunday.
"The entire Gulf energy infrastructure is now threatened," wrote Jim Rouiller of forecaster Planalytics, who noted two major hurricane forecasting models predicted the storm making landfall somewhere between Houston and New Orleans, which is home to nearly half of U.S. oil refining capacity.
Prices for refined products rose sharply on cash markets. U.S. natural gas futures jumped more than 5 percent while oil futures erased early losses of $2.75 a barrel and jumped more than $2 to trade above $117 a barrel.
"There's the possibility of a Category 3 to Category 5 hurricane in the Gulf on Sunday. There's major change in the track just since yesterday, and I'm sure there's going to be more, but that's what has everyone's attention right now. If we get a major hurricane in the Gulf there's going to be a lot more short-covering," said Commercial Brokerage Corp's Ed Kennedy.
Powerful hurricanes Katrina and Rita knocked out a quarter of U.S. fuel production in 2005, wrecking production platforms and offshore pipelines and battering several major oil refineries, which sent energy prices soaring.
Repairs to damaged facilities took months and helped to spur oil's rally in 2006.
(Reporting by Robert Campbell, Eileen Moustakis, Robert Gibbons, Richard Valdmanis, Rebekah Kebede and Richard Valdmanis in New York and Erwin Seba and Bruce Nichols in Houston. editing by Jim Marshall)
