Crude oil production in the Gulf of Mexico paralyzed, WTI up over 2%

• WTI is trading higher on the day as the threat of storms on the Gulf of Mexico forced the shutdowns of producers.
• Laura forecast to make landfall as a major hurricane tomorrow.

Reuters has reported that the Hurricane Laura could make a direct hit on Houston this week and hundreds of thousands of people living on the Gulf Coast should evacuate immediately, officials in Texas warned on Tuesday.

Crude oil production in the Gulf of Mexico has been paralyzed as companies batten down operations.

The report explains that output cuts are nearing 90%, a level not seen since Hurricane Katrina in 2005.

Lina Hidalgo, the top executive for Harris County, which encompasses Houston, warned of deadly winds and a destructive storm surge after Laura makes landfall late Wednesday or early Thursday.

She said that put millions of lives at risk as Laura moved westward and took aim at the fourth-biggest city in the United States.

"This storm certainly can cause unprecedented devastation," Hidalgo said at a news conference. "We truly have to say: Prepare for the worst."

The hurricane was packing winds of 75 miles per hour (120 km per hour) as it moved across the Gulf of Mexico, qualifying it as a Category 1 hurricane on the five-step Saffir-Simpson scale for measuring hurricane intensity. Laura was forecast to become a "major" hurricane of Category 3 or higher by Wednesday night as it approaches the U.S. coast, according to the National Hurricane Center (NHC).

Market implications

Gulf oil prices will be higher as Laura is forecast to hit just to the east of Port Arthur and Beaumont, a huge refining hub.

and the general market is higher with The Bureau of Safety and Environmental Enforcement saying that 1.56 million barrels per day. or 84% of gulf production, has been shut in as platforms were evacuated in advance of the arrival of Laura.

West Texas Intermediate crude for October delivery settled up US$0.73 to US$43.35 per barrel, spot trades at $43.31, 2% higher on the day so far.

WTI levels