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Oil, natural gas prices level off as Chris downgrades

Agriculture.com Staff 08/03/2006 @ 2:45pm

It appears the Gulf of Mexico coastal region -- and the area's petroleum refining resources -- have dodged a bullet with today's announcement by the National Weather Service (NWS) that Hurricane Chris has been downgraded to a tropical storm.

As a result, natural gas and crude oil prices that surged ahead of the storm's arrival closed lower today as fears about the storm began to subside.

The NWS National Hurricane Center Tropical Prediction Center today indicated Chris, the first named storm of the season some analysts expect to be equal or greater in severity to 2005, had not only been downgraded from hurricane to tropical storm-strength, but would likely be dropped to tropical depression status "fairly soon.

"Data from the last aerial reconnaissance mission suggested that Chris may have already dropped below tropical storm intensity. If it has not, it will likely do so very soon unless some deep convection redevelops near the center," according to today's Tropical Prediction Center report. "The forecast retains the system as a depression through the forecast period. This is a precaution that allows for the possibility of regeneration.

"However, if present trends continue, Chris could dissipate as a tropical cyclone fairly soon."

The news of Chris' weakening caused a leveling in crude oil and natural gas markets. Light sweet crude oil for September delivery closed the trading day on the New York Mercantile Exchange (NYMEX) at $75.05 per barrel, down 76 cents from yesterday. Similarly, natural gas prices were down today almost $0.45 per 1,000 cubic feet, to $7.350. Both prices were previously expected to continue rising as Chris made landfall at tropical storm or hurricane strength.

Gasoline futures and heating oil futures also fell slightly in NYMEX trading today, dropping to $2.2740 and $2.0980 respectively.

It appears the Gulf of Mexico coastal region -- and the area's petroleum refining resources -- have dodged a bullet with today's announcement by the National Weather Service (NWS) that Hurricane Chris has been downgraded to a tropical storm.

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