Natural Gas Gains as Hurricane Ike Moves Toward Gulf of Mexico

By Aaron Clark

Sept. 8 (Bloomberg) -- Natural gas futures rose for a fourth day as Hurricane Ike moved toward the Gulf of Mexico, a region that produces about 14 percent of U.S. supplies.

Ike is over Cuba on a course that would take it into the Gulf within two days, U.S. government forecasters said. About 70 percent of offshore gas production is still shut because of Hurricane Gustav, which made landfall in Louisiana last week.

``The main driver this morning is Ike,'' said Michael Rose, trading director at Angus Jackson Inc. in Fort Lauderdale, Florida. ``In fact, it may be the only driver this morning.''

Natural gas for October delivery rose 12.6 cents, or 1.7 percent, to $7.575 per million British thermal units at 10:08 a.m. on the New York Mercantile Exchange.

Crude oil for October delivery gained 84 cents, or 0.8 percent, to $107.07 a barrel on the exchange.

Ike was a Category 2 storm on the 5 step Saffir-Simpson scale of intensity, with sustained winds of 100 miles (160 kilometers) per hour, the Miami-based National Hurricane Center said on its Web site at 8 a.m. The storm weakened earlier today from Category 3 and may weaken further while over land, the forecasters said.

The hurricane is on a track toward ``the richest natural-gas and crude-areas that we have,'' Rose said.

Energy companies that were in the process of restoring production after Gustav now are taking precautions for Ike, the U.S. Minerals Management Service said. Hurricanes Katrina and Rita in 2005 damaged energy production and pipelines, sending gas futures to a record $15.78 per million Btu on Dec. 13, 2005.

``You still have a lot of stuff shut in the Gulf of Mexico due to Gustav,'' said Scott Hanold, an analyst at RBC Capital Markets in Minneapolis. ``Inventories are looking much more bullish than they were just two weeks ago.''

To contact the reporter on this story: Aaron Clark in New York at aclark27@bloomberg.net