The National Hurricane Center has noted that Tropical Storm Gordon could become a Hurricane as it goes through the Gulf of Mexico.

Source: NOAA

It is possible that Gordon could peak as a Category 1 hurricane after 36 hours, just before landfall occurs,” Senior Hurricane Specialist Stacy Stewart wrote in his forecast. “Gordon is expected to bring life-threatening storm surge to portions of the central Gulf Coast.” Source National Hurricane Center

“The Gulf of Mexico area, both onshore and offshore, is one of the most important regions for energy resources and infrastructure. Gulf of Mexico federal offshore oil production accounts for 17% of total U.S. crude oil production and federal offshore natural gas production in the Gulf accounts for 5% of total U.S. dry production. Over 45% of total U.S. petroleum refining capacity is located along the Gulf coast, as well as 51% of total U.S. natural gas processing plant capacity”  according to U.S. Energy Information Administration  

Various oil and gas companies have operations. For example Chevron (CVX US) refinery in Pascagoula, Mississippi produces 352,000 barrels per day (bpd). Royal Dutch Shell (RDSA LN), Norco, Louisiana, produces 218, 000 bpd. Valero Energy (VLO US) Meraux, Louisiana refinery produces 125,000 bdp.

All these companies and others with exposure are companies to monitor over the next couple of days as the storm moves west. Don’t forget watching the XLE US as well.

XLE US stuck in the negative channel.

Source: Bloomberg