The talk of the day has been Isaac. This massive system is still disorganized, perhaps because of its size, but conditions are conducive for its development and for strengthening: low shear winds (5-10 knots) and warm ocean temperatures (29 degrees C). The system will have some land interaction as it makes its way through Cuba, so Isaac should continue to be a Tropical Storm until it regains strength as it makes its way to the Gulf of Mexico over warmer water temperatures (~32 degrees C).
It is expected that Isaac will be upgraded to a CAT1 hurricane on Tuesday, 8/28, and current models expect that the eye will touch close to Pensacola. It is still early to tell if this will be the case in light of the wide cone that is currently projected. Therefore, at this time, it seems that Isaac has the potential to disrupt supply operations in the Gulf of Mexico, at least on a preemptive basis.
NG Futures are currently down, as the market is currently discounting the effect of the system on supply. For now we still see the front month trading within the $2.66/MMBtu -$3.00/MMBtu range.
Below is a picture of the latest track.
