Most U.S. Gulf oil output shut as Gustav threatens the region

Hurricane Gustav, now a dangerous Category 4 storm, roared toward the Cuban mainland on Saturday with 150-mph (240-kph) winds on its way to the oil-rich Gulf of Mexico after a deadly pass through the Caribbean.Â

According to the U.S. Minerals Management Service, 76.8 percent of the Gulf's crude oil production and 37 percent of its natural gas output was closed.

Forecasters predicted Gustav would cross the Gulf of Mexico and hit central Louisiana on late Monday or early Tuesday with a force similar to that of Hurricane Katrina in 2005.

"This storm will be more dangerous than Katrina," said Planalytics analyst Jim Roullier. "I think this storm will prove to be a worse-case scenario for the production region."

Catastrophe risk experts Risk Management Solutions said damage to offshore energy facilities during Gustav could reach the level seen during the 2005 storms.

If Tropical Storm Hanna, now in the Atlantic, follows Gustav into the offshore production areas, crude oil prices could soar.

"You'll get all this money that will come back into the energy markets again," said Planalytics analyst Paul Corby. Gustav could add $10 a barrel to oil prices, Corby said.

U.S. crude oil fell from a record high $147.27 a barrel in July to close at $115.46 on Friday.

The New York Mercantile Exchange on Saturday moved up Sunday's start time for electronic trading of energy contracts to 2:30 p.m. EDT (1830 GMT) from 6 p.m. EDT (2200 GMT).

Katrina and Hurricane Rita that followed on its heels destroyed 124 offshore platforms, temporarily shuttered about 30 percent of U.S. refining capacity and left nearly a quarter of offshore Gulf oil production shut up to nine months later.

The Gulf provides a quarter of U.S. oil output and 15 percent of natural gas production.

Shell, the region's largest producer at 370,000 barrels of oil equivalent per day, was shutting all offshore oil and natural gas production on Saturday.

BP said it was also shutting its Gulf production on Saturday, while Exxon Mobil Corp said 5,000 barrels of oil output and 50 million cubic feet per day in natural gas production was shut by Saturday morning.

PRODUCTION CUTS

Four Louisiana refineries that process 862,000 barrels per day of crude oil -- 5 percent of U.S. refining capacity -- were closing down for the storm, while a total of 11.3 percent of U.S. refining capacity had been affected in someway.

Mississippi River traffic was to close at 6 p.m. CDT (2300 GMT). Ship channels into Lake Charles in west Louisiana and Beaumont and Port Arthur in east Texas planned to shut by Sunday night, cutting off crude oil shipments to refineries.

The Louisiana Offshore Oil Port, the only U.S. deepwater port capable of offloading giant oil tankers, stopped taking crude from ships on Saturday, a spokeswoman said, but continued to supply refiners from onshore crude oil tanks.