Oil Touches $84.10; 27.5% Of GOM Oil Output, 16.7% Of Gas Already Shut In By Projected TS Jerry

SAN FRANCISCO (MarketWatch) -- Crude-oil futures closed above $83 a barrel Thursday, sending the expiring benchmark contract further into uncharted territory on news that oil facilities in the Gulf of Mexico shut down 28% of production ahead of what's expected to become the tenth named storm of the Atlantic hurricane season. Crude oil for October delivery briefly climbed as high as $84.10 a barrel in electronic trading, a level never before seen by a front-month contract. It closed up $1.39, or 1.7%, at $83.32 after reaching $83.90 during the regular trading session on the New York Mercantile Exchange. Watch a video interview on commodities.

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An area of low pressure has entered the Gulf of Mexico and could become a tropical depression in the next 12 to 24 hours, Accuweather.com reported Thursday afternoon. The system could become Tropical Storm Jerry on Friday, it said. The system is expected to move toward Texas or Louisiana over the weekend, threatening gas and oil fields as well as refineries in the northwest Gulf and nearby coastal areas, it said. "Traders are taking this very seriously," said Flynn. They "learned a lesson from Hurricane Humberto that these things can develop quickly. Producers in the Gulf aren't taking any chances and shutting down production."

Oil and gas operations in the Gulf have started to evacuate platforms and rigs in the path of what's currently called Tropical Area of Investigation 93 L, according to the U.S. Minerals Management Service.

MMS estimates that about 27.5% of oil production in the Gulf has been shut in, or roughly 360,169 barrels of oil per day. It points out that estimate oil output from the Gulf as of April 2007 was 1.3 million barrels of oil per day. Also, about 16.7% of natural-gas production in the Gulf has been shut-in, MMS said.

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http://www.marketwatch.com/News/Story/Story.aspx?column=Futures+Movers

They saw an opportunity to pump the prices up and they took it.

Much better to blame shortages on anything but the words no one will say...

Refining capacity shortages, tropical storms, pipeline accidents and sabatoge, etc., etc. I'm expencting the incidence of all these things to rise. Nobody's gonna admit they can't deliver if they can blame it on something else.

It would be nicer if it was simply greedy corporations stealing money, but we're pretty damned screwed if that's our optimistic scenario. It's probably just another excuse. They'd rather be seen as robbers than confess they can't deliver.

seriously