Just a few things to add to memories of this decade's hurricanes.
1. Katrina messed up grains and other commodity exports which were headed down the Mississippi. This caused an inflation scare. If you think a 'cane is going to hit the mouth or the river, then the commodity implications as we go into harvest are broader.
2. No matter where Gustav hits, as long as it's somewhere in the US with a large enough population to evacuate, we will see a hit on gasoline prices, because gasoline inventories are so low that any evacuations will hit supply. So just in terms of gasoline, Gustav doesn't need to hit a refinery. Let's say Gustav pulled a right hook and headed towards Florida again, missing any rigs or refineries. You could see zillions of cars getting into action.
3. From a pure oil perspective, one has to be careful trying to trade these things. Personally, I hate the hurricane's and how they mess up the S/D balance. Anyway, the greatest risk is often to the downside because if Gustav mashes enough of our oil supply, that usually gives the President an excuse to release oil from the SPR.
4. This is why the safer trade remains in NG. And of course, if Gustav hits and affects NG production, it will initially lift all boats. However, separation eventually takes place and the pure land based plays like XEC, the trusts like SJT or HGT, and stuff like CHK, XTO, and EOG--those are the names that keep going after the hurricane is gone.
5. The name of the service that updates shut-ins each week after the hurricane is the MMS. As many will recall, the MMS info post-hurricane becomes it's own little trading catalyst, as we learn each week that either "alot" or "not enough" production came back on line.
I hate these hurricanes. I hate how they ramp the complex, and dicker with the flow of regular S/D. I'd much prefer that energy prices stabilize here at these lower levels, which would then be the set-up for the Winter run higher. That said, I will never forget how long all the Gassers stayed elevated into October, November of 2005 as the complex strained and struggled. Wrt to NG, a hurricane in late August has a way of making all storage questions crystal clear.
Best to all,
G |
