Tropical Depression Raises Hurricane Threat for U.S. Gulf Coast

By Brian K. Sullivan and Marvin G. Perez
(Bloomberg) — A tropical depression that could grow into a
hurricane is forecast to strike the U.S. Gulf Coast late Sunday,
potentially shutting down offshore oil and natural gas rigs and
dealing another blow to citrus growers.
The system off the Nicaraguan coast is expected to
strengthen into a tropical storm later Wednesday and reach
hurricane strength with winds of 80 miles (129 kilometers) per
hour Sunday as it nears the U.S. coastline between Louisiana and
Florida, according to the U.S. National Hurricane Center in
Miami. Storm warnings have been issued for Honduras and
Thirteen storms have formed across the Atlantic so far this
season, killing hundreds of people in the U.S., Mexico and the
Caribbean and causing an estimated $300 billion in damage. In
August, Hurricane Harvey temporarily shut down about 25 percent
of oil and natural gas production in the Gulf and as much as 20
percent of U.S. refining capacity and a few weeks later
Hurricane Irma devastated Florida citrus groves.
The storm “could affect portions of the northern Gulf Coast
as a hurricane this weekend, with direct impacts from wind,
storm surge, and heavy rainfall,” Eric Blake, a hurricane
specialist at the center, wrote in a forecast analysis.
“Residents along the Gulf Coast from Louisiana to Florida should
monitor the progress of this system for the next several days.”
Orange juice futures rose as much as 2.5 percent to $1.5925
a pound on ICE Futures U.S. in New York. Florida is the world’s
second-largest orange juice producer.
“There’s been already plenty of damage; having another
storm, even it’s a Category 1, is not going to help the crop,”
Jack Scoville, vice president for Price Futures Group in
Chicago, said in telephone interview. “People are kind of
The system “definitely” poses a risk to U.S. cotton areas
as well, particularly western portions of the southeast,
including Alabama and Georgia, the second-largest cotton grower
after Texas, Donald Keeney, meteorologist with MDA Weather
Services in Gaithersburg, Maryland, said in a telephone

Category 1

Cotton futures rose as much as 1.5 percent in New York.
As it nears the U.S. coastline the storm, which would be
named Nate, could strengthen to a Category 1 hurricane on the
five-step Saffir-Simpson scale, the hurricane center said. There
is about a 30 percent chance it will disrupt U.S. offshore
energy operations, as companies may evacuate some personnel,
said Matt Rogers, president of the Commodity Weather Group LLC
in Bethesda, Maryland.
Offshore rigs and platforms in the Gulf of Mexico account
for about 17 percent of U.S. crude oil output and 4.1 percent of
gas production. About 45 percent of petroleum refining capacity
and 51 percent of gas processing is along the coastline.
As the storm moves over warm water, it will grow and
intensity, but by Thursday, it should cross over Honduras and
Nicaragua robbing it of strength, Rogers said. Later this
weekend, it could encounter wind shear that can tear storms
apart in the Gulf of Mexico.
“That is going to be the trick, getting the intensity
figured out,” Rogers said.
The good news is that the storm should be falling apart by