The Weather Research Center, a 22 year old non-profit organization, has released their predictions for the 2009 Hurricane season.  This is interesting news as the Oil production community tends to rely on the WRC’s information to help gauge/predict potential impact on production for the coming year.  Obviously, not an exact science, but still something to pay attention…

So, what does the WRC predict for 2009?

• Number of Named Storms: 7
• Number intensifying into Hurricanes: 4
• Number of Hurricane Days: 7
• Number of Tropical Storm Days: 47
• US Landfalls: 3
• Cat 3 or Higher Storms in the Atlantic: 50%

The WCR suggests the highest risk of landfall for a Tropical Storm or Hurricane is from Louisiana to Alabama with a 70% Chance.  Mighty close to the oil production centers in the Gulf of Mexico.

When Hurricane Ike pushed through the Gulf of Mexico in 2008, the price of oil continued the previously established downward pattern.  Now that oil is range bound from $35 to $45 dollars, and OPEC has cut output drastically, what would happen to the price of oil if a major storm hit production centers in the Gulf?

Ike slammed into the Bahamas causing serious damage, hurt the relief efforts already underway in already suffering Haiti, and just went ashore in Cuba roughly an hour ago.  The storm is now a Category 3 Hurricane, down froma 4, and is expected to come in to the Gulf of Mexico on Tuesday or Wednesday.

The current storm track can be found here and here.  Storm models show Ike drifting east or west of New Orleans, which can give the city a break but can mean trouble for Houston, Mississippi or Alabama.

Something to keep in mind: the price of oil.  NYMEX Crude and Nymex Henry Hub Futures (Natural Gas) are both up 2.26 and 3.0% respectively.  If the storm causes a shutdown of oil / gas production and OPEC cuts oil output expect the prices to rise.

Update: Oil Price Coverage

• WSJ – Energy sector Hums Again
• Reuters – Oil rises over $2 to top $108 on hurricane threat

  From the Reuters article…

Hurricane Ike is expected to enter the Gulf of Mexico as a severe Category 4 storm, a U.S. Federal Emergency Management Agency official said on Sunday. It may threaten Gulf energy rigs that account for a quarter of U.S. oil output and 15 percent of natural gas production.

• AP – Gulf oil and gas producers give Ike a serious look

With nearly 88 percent of crude-oil and 74 percent of natural-gas output shut due to Hurricane Gustav, it is easy to see how Ike could shut down all production once again.