Isaac Weakens, Oil Prices Drop image

After it caused significant damage in the Gulf Coast, Tropical Storm Isaac is expected to weaken as it heads north.

Although yesterday the storm reached the level of a Category One Hurricane and meteorologists feared that it might become as destructive as Hurricane Katrina 7 years ago, now the storm is expected to weaken. The danger has not yet passed, as the storm could still bring floods and heavy rain.

Starting today, August 30th, as the storm move away from the Gulf Coats, oil prices began to drop. Benchmark oil for October delivery decreased 47 cents to $95.02 per barrel on the New York Mercantile Exchange and 84 cents to $95.49 per barrel on the Nymex. Traders were watching for reports as everyone expected Storm Isaac’s heavy winds to produce extensive damage to refinery operations and oil production as it passed over the oil facilities.

“Although a lot of the production capacity was closed down, it was a precautionary measure and we’re not hearing any reports of significant damage,” said Nick Trevethan, senior commodities strategist at ANZ Research in Singapore. “There have been some power outages that may interfere with the restart of some onshore facilities.”