Everyone from the President of Venezuela to one of the big oil think tanks believes that oil could spike well above $70 and remain there. The elements that would contribute to a big rise include lack of supply from OPEC and interruptions of drilling in Nigeria, the Middle East, or South America. And then there are Acts of God. Hurricanes probably fell into this final category.
According to the FT, "Mexico on Sunday started to evacuate 13,360 workers from its Gulf of Mexico oil rigs as the powerful Hurricane Dean neared, Pemex, the state oil company, said."
As Hurricane Dean makes it ways across the Gulf of Mexico, watch some of the other big deep-water drillers to shut down rigs. After crossing the Yucatan Peninsula, it may move on to Texas. Not good for the refineries based there near the coast.
Part of the reaction to the storm will probably be unwarranted. It seems that issues driving oil prices up often are. But, the price of oil will move up early in the week, and, if the storm is more damaging than predicted, look for a move toward $100.
Traders will keep their eyes on the Atlantic. There are almost certain to be more storms coming.
Douglas A. McIntyre
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