Hurricane Nate takes down Oil Production, may strengthen

Oil refinery

The majority of Floridians have breathed a sigh of relief now that Hurricane Nate has shifted its course to the west. Unfortunately for those in the western panhandle along the Florida/Alabama border and residents of Louisiana, the storm is expected to intensify before impacting the U.S.

29 Florida counties, as well as Alabama, Louisiana and Mississippi fell under a state of emergency. The National Hurricane Center reports the storm’s maximum sustained winds at 80 miles per hour as the hurricane was about 345 miles south-southeast of the Mississippi river and expected to strengthen before making landfall.

Mitch Landrieu, Mayor of New Orleans said Nate’s winds could cause significant power outages. Storm surges are projected to be six to nine feet high. The storm was moving┬ánorth-northwest at 22 miles per hour according to the NHC’s most recent update.

A hurricane watch was issued from Grand Isle, Louisiana to the Alabama-Florida border.

Ahead of the storm, nearly three-quarters of all U.S. Gulf of Mexico oil production was taken offline. More oil companies ceased operations on Friday. The shutdown affects production of more than 1 million barrels of oil per day.

The Financial Times reported that the price of crude oil was driven down on Friday due in large to Nate’s strengthening and its forecast to hit the US Gulf of Mexico coast on Saturday night. The predictions prompted traders to anticipate disruption to gulf oil refineries.

The gulf is home to about one-fifth of the U.S. oil output. Hurricane Harvey interrupted the area, causing production to fall behind. But drillers who pump crude from offshore platforms have rebounded to produce at record-breaking levels of more than 1.7 million barrels a day.

Although the trajectory of Hurricane Nate brings it right through the heart of the U.S. Gulf of Mexico oil and gas producing region, officials are hoping the preemptive measures will help insure the lowest impact on oil production and prices.

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