Hurricane Gustav Raises Oil Prices As It Heads To The Gulf of Mexico

The news is not only that the Hurricane Gustav is making its way to the Gulf, but the news is that the tropical storm has resulted in the increase of oil prices. The increase in the oil prices was witnessed on Tuesday when the tropical storm posed as a threat to the major oil operations in the Gulf of Mexico.

The New York Mercantile Exchange registered a $5 swing in the crude oil prices when an increased price of $117.44 a barrel was observed as against the previous figure of $112 per barrel. The ICE Futures exchange in London witnessed the rise of October Brent Crude by 1 cent to amount to $114.51 a barrel. Throughout Tuesday, the fluctuation of the oil prices was mainly attributed to the dollar swings.

As a matter of fact, there is a rise in the oil prices when the dollar falls and when the investors take recourse to hedging as a means of protection against inflation and the weakness in the US currency. Dollar lost some ground to Euro and the Japanese Yen during the session. In the beginning, Euro fell below $1.46 before it scaled up to $1.4635.

On Tuesday, the tropical storm Gustav transformed it to a hurricane during its way to the southern coast of Haiti. Hurricane is now heading towards Cuba. Tuesday morning observed winds with higher gusts at a velocity of 90 mph. Forecasters are of the opinion that this has the possibility to develop into a Category II hurricane before reaching Haiti.

Warning signals have been sent to the Haitians to ask them to prepare for evacuations on Monday itself when the storm was formed. Recently, the storm warnings have been replaced with the warnings of a possible hurricane! Forecasters are of the opinion that the storm preparations should be completed as soon as possible before the southern peninsula is attacked by floods and landslides.

There was a great deal of worries for the traders as they suspected the movement of the hurricane towards the gulf which has many oil drilling platforms. There is also a fear that the tension in the west caused by the breakaway of the Georgian provinces of Abkhazia and South Ossetia would lead to a disruption in the oil and natural gas supplies to Europe. hurricane Gustav