The futures market spiked higher Monday in response to thethreat to natural gas supplies in the Gulf of Mexico posed byHurricane Mitch. There was an early buying surge as non-commericaltraders struggled to close out short positions ahead of the rally.However, once the market started its momentum, buying came from allsegments of the market. The November contract settled up 13.4 centsto $2.298.

As of 4 PM EST yesterday, Mitch was a class 5 hurricane locatedin the central Caribbean about 100 miles north of Honduras andmoving to the west-northwest near 8 mph. Maximum sustained windshave increased to nearly 180 mph, and while some fluctuation ofintensity may occur over the next 24 hours, Mitch is expected toremain an extremely dangerous hurricane capable of causingcatastrophic damage, the National Weather Service (NWS) said.

The slow-moving nature of the storm is making it difficult forforecasters to predict if and when it will reach gas sensitiveproduction areas in the Gulf. The 72-hour forecast from the NWScalls for a gradual turn to the north which would put the eye about150 miles south-southeast of Cancun, Mexico Thursday. Due to thenumber of variables, forecasts greater than three days out aredifficult.

A Gulf Coast marketer said that unless Mitch misses the GulfCoast altogether, shut-ins are almost a certainty for most Gulfproduction. “With 180 mph winds, shutting down and evacuating isnot a difficult decision for producers to make. If this thing doesmake it into the Gulf without much weakening it will be one of themost intense storms since Camille.” Hurricane Camille smashed intoPass Christian, MS. in August of 1969 with winds gusting to 200mph.

©Copyright 1998 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press,Inc.