Tropical Storm Fay Heads to Florida, Ups Oil Prices

Despite a weakened demand for energy owing to sluggish economic growth around the world which caused steep declines in oil prices last week, global oil prices rose on Monday as the sixth storm of the 2008 Atlantic season headed towards the Gulf of Mexico and its energy facilities.  According to an Associated Press release, light sweet crude for September delivery was documented at over $114 a barrel. London’s Brent North Sea crude for October increased by 43 cents to $112.98.

The Associated Press reported that Tropical Storm Fay gathered hurricane strength on Monday as it made landfall in Cuba and pushed onward toward the Florida Keys, northern-bound at near 12 mph. Maximum sustained wind speeds were near 50 mph.

The U.S. National Hurricane Center predicted that Fay would veer away from offshore production areas in the Gulf and instead land in Florida on either Tuesday or Wednesday.

Heeding precautionary measures, Royal Dutch Shell said over the weekend that the Company had evacuated 425 personnel from its Gulf of Mexico platforms in an effort to "reduce offshore staffing levels" should Fay decide to switch its course and target the region.

Shell added that the precautionary evacuation has not affected its operated production.

The Shell Hurricane Incident Command Team, which continues to monitor the storm, noted that forecasts indicate that Fay will not impact Shell Gulf of Mexico assets, and has therefore concluded evacuations at this time.