Not quite a Hurricane Isaac move slowly towards US energy Infrastructure towards the Big Easy as traders remain surprisingly calm. Despite the fact that 78% of all Gulf Oil production was shut down oil closed lower. The marker sold off on word of refinery closures and rumors that there would be a release from the US Strategic Petroleum Reserves. As the US is less dependent on Gulf oil and gas production I guess traders can afford to calm.
Yet that does not mean that we will get off easy at the gas pump. Cash wholesale gas prices soared as he storm caused panic buying in many markets as the storm has shut 1.3 million barrels a day of refining capacity which is close to 8% of the country's total capacity. According to Dow Jones gasoline prices rose in all three major spot-market trading hubs east of the Rocky Mountains on Gulf of Mexico production shut-ins and refinery closures in Mississippi and Louisiana. Even in the Chicago Market prices soared raising suspicions that the BP Whiting refinery is having more issues. Reports of a pipeline running at less than capacity coming from Cushing Oklahoma and the impending storm could be tightening their oil supply. Dow reports that Chicago's spot conventional-blendstock for oxygenate blending, or CBOB, for first-cycle September shipment traded at least 30 cents over Friday's get-done level, at a premium of 42 cents a gallon to October Nymex RBOB, and was reported done up to 44.5 cents over.
The Hurricane Center reports that Isaac's center was about 125 miles (201 kilometers) southeast of the mouth of the Mississippi River with top winds of 70 miles per hour, the National Hurricane Center said in an advisory at 5 a.m. New York time. That's 4 mph less than hurricane strength. Its moving northwest at 12 mph on a track to reach the Louisiana coast today or early tomorrow. How that storm develops could mean a lot when it comes to the markets. Traders must be assuming that perhaps the odds of this storm doing major damage are less than some of the weather models suggest. Perhaps they think that New Orleans can take a direct hit from a Cat 2 or maybe they believe that it will only be a category 1. Whatever they think it is very possible they are underestimating the danger.
And oil is gaining on another disruption as reports that s crude oil flow from Kirkuk oil fields to the Mediterranean port of Ceyhan was still on hold Tuesday. Dow quotes ay because of power failure at pumping stations inside Turkey, an Iraqi oil ministry spokesman said. Meantime, Turkish Energy Minister Taner Yildiz said in a press release that the flow resumed Tuesday using an alternative pipeline after a blast on the main pipeline in Turkish territories Monday. "We have tried to pump oil in the pipeline earlier today (Tuesday) but power failure at pumping stations in Turkey deemed our attempts a failure," Assem Jihad told Dow Jones Newswires. A shipping agent in the Ceyhan port, however, said that the flow was resumed at earlier Tuesday but was stopped again after a short time. He gave no reason why the flow was suspended. Before the incident, blamed on the outlawed Kurdistan Workers' Party, known as PKK and listed as a terrorist group by Turkey, Iraq was pumping some 20,000 barrels an hour or 480,000 barrels a day, according to a Middle East shipping agent in Ceyhan. My Concern is flooding. We saw refineries flood during Gustav and Katrina.
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