Gustav, about 260 miles (415 kilometers) south-southeast of New Orleans, will make landfall along the Louisiana coast later today as a ``major'' hurricane, according to the U.S. National Hurricane Center. Wind and sea conditions have reduced the chances of ``significant intensification,'' the center said.
Crude oil for October delivery rose $1.55, or 1.3 percent, to $117.01 a barrel in after-hours electronic trading on the New York Mercantile Exchange at 8:40 a.m. in Singapore. Prices, which dropped 7 percent in August, are up 22 percent this year.
Gulf Coast refineries have cut at least 1.56 million barrels a day of production, about 9.8 percent of the U.S. total. Eight refineries have announced shutdowns, while another five have reduced capacity.
Personnel from more than 70 percent of the platforms and rigs in the Gulf have been evacuated as the storm approaches, the U.S. Minerals Management Service said in a statement on its Web site yesterday. About 1.25 million barrels a day of oil and 6.09 billion cubic feet of gas have been shut, or more than 96 percent of offshore oil output and 82 percent of gas production.
Gasoline for October delivery gained 7.18 cents, or 2.5 percent, to $2.9260 a gallon on the exchange. Electronic transactions started early to allow market participants to respond to Gustav. Trades will be dated Sept. 2 because of today's Labor Day holiday in the U.S.
Brent crude oil for October settlement rose $1.35, or 1.2 percent, to $115.40 a barrel on the ICE Futures Europe Exchange today.
The Gulf of Mexico accounts for 26 percent of U.S. oil production and 14 percent of natural-gas output. The Gulf normally produces about 1.3 million barrels of oil and an estimated 7.4 billion cubic feet of gas a day, according to the agency, part of the U.S. Interior Department.
Natural gas for October delivery fell 17.1 cents, or 2.2 percent, to $7.772 per million British thermal units.
Chevron's Sabine Pipe Line LLC began to shut its pipelines and the Henry Hub natural gas connection point in Louisiana as mandatory evacuations were declared. Henry Hub, in Erath, Louisiana, is the pricing point for Nymex natural-gas futures.
Hurricane Katrina struck the U.S. Gulf coast on Aug. 29, 2005, with winds near 130 miles-an-hour, flooding 80 percent of New Orleans, killing 1,800 people in Louisiana and Mississippi and causing more than $80 billion in damage. The storm reached Category 5 status, the strongest type of hurricane, before hitting land. Oil rose as much as 5.4 percent on Aug. 30 to a then-record $70.85 a barrel after Katrina closed 95 percent of offshore output in the Gulf of Mexico.
Oil futures have fallen 20 percent from the record $147.27 a barrel reached on July 11 as the rising U.S. dollar reduced the appeal of commodity investments and on signs of slowing global economic growth.
Prices reached a three-month low of $111.34 a barrel on Aug. 15 before rising as diplomatic tensions increased over Russia's occupation of parts of Georgia.