As of 3:00 pm, Monday, August 29 --SEE MOST RECENT--

According to the Minerals Management Service (MMS), Gulf of Mexico oil production was reduced by about 1.4 million barrels per day as a result of Hurricane Katrina. The MMS also reported that 8.3 billion cubic feet per day of natural gas production was shut in.

The Louisiana Offshore Oil Port (LOOP) stopped making shipments to onshore facilities as of Saturday, and was supplying its customers with oil stored onshore. However, even these operations were stopped on Sunday in order to give employees time to evacuate. Typically, about 1 million barrels per day goes through the LOOP.

As of the close of trading on Monday, the WTI futures price was $67.20, up $1.07 per barrel from Friday's closing price, while gasoline and heating oil futures prices were up 14.4 and 7.2 cents respectively from Friday's closing prices.

The natural gas futures price was up $1.06, to reach $10.85 per million Btu as of the close of trading on Monday. Spot trading was suspended at the Henry Hub today. In trading on the Intercontinental Exchange for other market locations across the Gulf region, price increases averaged $1.42 per MMBtu with a range from $0.34 to $3.23 per MMBtu. The overall average increase was $1.33 per MMBtu.

With product prices up substantially more than crude oil prices, it appears that there is more concern about the potential impact from the loss of refinery capacity. With prices already significantly higher than they were when Hurricane Ivan hit September 2004, there is concern that prices could jump significantly higher if the damage to petroleum infrastructure from Hurricane Katrina is at least as much as experienced following Hurricane Ivan.

As of August 19 (the most recent data available), U.S. commercial crude oil inventories were well above the average range for this time of year. However, gasoline inventories were at the lower end of the average range, and with demand growing at a 1.6 percent rate over the most recent 4-week period, in terms of the amount of days gasoline inventories would supply, they are very low. Distillate inventories remain above the average range for this time of year. Inventory data as of August 26 will be available at 10:30 am ET on Wednesday, August 31.

As far as the impacts on the projections for the upcoming Short-Term Energy Outlook it is still too early to say as the length of the disruption, size and composition (i.e. types of crude oil and specific refinery outages) will make a large difference. Near term price movements may or may not translate into significant projection differences over the upcoming winter.