By Duncan Sutherland – Exclusive to Crude Investing News

Market news

Oil prices are being pushed upwards by the impending arrival of tropical storm ‘Gustav’ in the Gulf of Mexico.

‘Gustav’ is projected to become “the largest hurricane in the Gulf of Mexico since ‘Katrina’”. Workers are already being evacuated from oil and gas rigs in the area, which has pushed up NYMEX oil futures past US$117. Forecasts suggest that the storm should reach Category 3 hurricane status, and is likely to cross the intensive production areas in the gulf before making landfall in Louisiana or Texas. Refineries may also be in danger, depending on whether the storm veers westward as it intensifies.

Authorities have already confirmed that the US Strategic Petroleum Reserve will be tapped if ‘Gustav’ does significant damage to Gulf production or refining. Benchmark will continue to follow this storm as it approaches the US.

No oil, no flight

Zoom airlines has cancelled all flights and begun mothballing its planes, saying that the sky-high costs of aviation fuel hamstrung its business. Though this news doesn’t directly affect oil companies, it is a good example of how energy prices this high ripple through the entire economy and can hurt other parts of your portfolio.

Company news

Dana Petroleum (LSE:DNX) has declared a doubling of first half profit over last year’s results. Profits of US$111 million were bolstered largely by the company’s expanded production and the high oil prices.

Similarly, Tullow Oil (LSE:TLW) the Africa-focused exploration company also had a company record H1 profit. Profits of US$229 million were also driven by the astronomical barrel prices. Tullow’s report also outlines some looming problems for producers, as it had to cut its production target for the year due to delays in equipment procurement and the steep drop in production from mature fields.

Saxon Oil (TSX.V:SXN) a much smaller company, also had good Q2 results, with revenue of almost US$1.4 million, up from $426,000 during Q2 last year. Production and prices were the reasons for the boost.

International news

Russian Energy Minister Sergey Shmatko has stated that “we are doing everything we can so Druzhba [oil pipeline] can keep working stably and supply European consumers with enough oil”. Russia’s conflict with Georgia has set the pundits and wags to speculating about a new cold war fought over and with energy resources. The statement from Shmatko is certainly reassuring, but it is hard to discern how much weight it carries.

A black eye for the oil industry in Brazil as hundreds of penguins have been killed by an oil spill in the states of Santa Catarina and Rio Grande do Sul, south of that country. The ship and location of the spill remain to be discerned, so cleanup has not yet begun. This particular spill is a true public relations disaster, as it achieves the trifecta of beautiful scenery, a local tourist industry and adorable animals as the primary victims.

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