US crude oil futures retreated on Friday and briefly dipped below $100 a barrel for the first time since April 2, until Hurricane Ike's threat to the Gulf coast provided a temporary floor.
Fourteen refineries -- 22 percent of total U.S. refining capacity -- have been shut ahead the storm. That means, nearly all of the crude oil and natural gas production in the Gulf of Mexico is idled due to the weather.
But not all refiners have rigs in the Gulf. “Tesoro , Western and Holly all moved higher on Friday because they don’t have exposure ,” explains Addison Armstrong of Tradition Energy. “If the storm is severe they can keep selling when others can’t.”
But more often than not damage is not severe. And analysts say the market is mixed, at best, over how long the industry would remain hobbled after the storm, particularly after Hurricane Gustav caused only minor damage to oil facilities earlier this month.
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Refiners might not be the best way to make money in the space right now. For his favorite trade Armstrong says, “I’m cautiously bullish on natural gas. We have a lot of production shut in. I think it could get a nice bounce here.”
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