Asian Markets Trade Lower

At mid-day trading in Singapore oil prices were trading above $70 per barrel dragging down stocks across all eleven exchanges in Asia. Indonesia was down 3.3%, South Korea was down 2.09%, India was down 0.94% and Japan was down 1.3% at mid-day trading.

Oil Prices are Trending Higher

Oil prices are 54 per cent higher than a year ago and have risen 30 per cent in the past three months on concern refiners would strain to meet summer gasoline demand and store heating fuel for the Northern Hemisphere winter.
If the current run of oil price of $4 a gallon is added then oil prices are up 61% from a year ago.

In the Path of Katrina

Katrina, the fourth hurricane in a season of eleven Atlantic coast tropical activities, is on its way as Category 5 hurricane to somewhere close to New Orleans, Louisiana. Katrina, hurricane category one, managed to destroy power lines, trees, and flood much of South Florida and caused nine deaths.

Category one hurricane Katrina, after leaving more than 1.5 million people without electricity for more than a day, is on its way as category 4/5 hurricane to Port Fourchon, Louisiana. The second landfall of this year’s fourth hurricane is expected to directly reach oil and gas infrastructure in the Gulf of Mexico.

According to National Hurricane Center, Katrina strengthened to Category 5 early this morning. The fall of hurricane is predicted to be anywhere between western Louisiana to Panama City, Florida.

Gulf of Mexico Cyclone Activity


The month of August has witnessed so far five storms including tropical storms Harvey and Jose, tropical depression Ten, and two hurricanes Irene and Katrina.

The month of July saw unprecedented tropical cyclone activity in the Atlantic basin with the development of five storms tropical storms including two hurricanes. Tropical storms Cindy, Franklin and Gert were joined by hurricane Dennis and Emily.

According to the NHC, the previous record for named storms that formed in July was four. The two major hurricanes that developed during the month tied a record set in 1916. The July activity follows an unusually active month of June.

The predicted seasonal totals include the considerable activity that has already occurred prior to this update (7 tropical storms and 2 major hurricanes). Therefore, for the remainder of the season, NHC expects additional 11-14 tropical storms, with 7-9 becoming hurricanes, and 3-5 of these becoming major hurricanes.

What is so Special about Gulf of Mexico?

According to U.S. Minerals and Management Services, the region of Gulf of Mexico accounts for daily crude oil production between 1.5 million barrels of oil and 10 and 11 billion cubic feet of natural gas. The region has seen intense level of activity in the last three years in search of energy using deep water drilling technology.

Port Fourchon is important oil and gas city for the nation’s domestic and import oil activities. About 13% of U.S. oil import flows through the port and 27% of domestic production flows through the pipeline hub located in the city according to MMS.

A sustained shut-down has the potential to send shock waves through the national economy. Some analysts predict lost access to Port Fourchon could choke the nation’s energy supply, sending gasoline prices higher by 30 to 40 cents per gallon and natural gas price up by 40 to 50 cent per MBTU.

Port Fourchon, LA
Port Fourchon currently services all of the Gulf of Mexico's deepwater projects, which accounts for over 75% of the Gulf's deepwater oil production. MMS Projects Port Fourchon will service 44% of pending future deepwater projects.

In addition to is huge domestic hydrocarbon significance, Port Fourchon, is the land base for LOOP, which handles 13-15% of the nation's foreign oil and is connected to 30% of US refining capacity.

Port Fourchon plays a stragetic role in supporting transporting and securing 16-18% of the entire United States energy supply.