UpdateGustav may approach Katrina, Rita strength

As of 7:00 Houston time (12:00 GMT), Gustav had wind speeds of only 65 miles/hour, making it a tropical storm, the centre said.

However, Gustav was still near Jamaica at the time. Meteorologists expect Gustav to remain in water for most of its journey towards Louisiana.

Traders recalled Hurricane Katrina in 2005, which pushed oil prices to record highs and also disrupted petrochemical production in the US and major shipping routes. 

Spot benzene in Europe had shot up as much as $180/tonne in the week ending 2 September 2005 on the back of surging oil prices and spot values in the US. 

With as much as 25,000 tonnes of benzene making its way to the US from Europe on an arbitrage window which had been open earlier in August, the storm could disrupt supplies to an already tight US market, said one aromatics trader.

Fertilizer market participants, meanwhile, discussed the “massive disruption” seen in their markets as US production was severely impacted for several months after Katrina.

One chemical shipping trader said there would be delays in the region but should the hurricane prove to be a category four or five then a repeat of Hurricane Katrina was a possibility.

“We haven’t been advised of anything yet as there is still some time before the hurricane hits the US Gulf but if it is as strong as experts are speculating then it could be a disaster all over again.”

Another chemical shipping broker was concerned of potential disruption to ports in the region.

“The port of New Orleans will experience delays but if the hurricane covers the whole of the US Gulf then it will disrupt all positions,” the broker said.

In 2005, Katrina and Rita destroyed 109 oil platforms and five drilling rigs.

Oil and chemicals companies they were preparing for the possibility that Gustav could hit installations and plants in the next couple of days.

Both hurricanes Katrina and Rita had wind speeds that exceeded 155 miles/hour. They weakened before making landfall at the Gulf coast in 2005.