Futures Market News
Hurricane projections give commodity prices a boost
May 29, 2010 03:00 AM
Commodity prices, especially those involving energy, reportedly jumped Thursday in response to U.S. government predictions that this summer will feature a highly active hurricane season.
This is understandable because the hurricane-prone Gulf of Mexico is one of the main oil and gas production areas in the United States, and is also home to many of the nation's refineries. The coming season could also be particularly sensitive because cleanup efforts will still be underway from the current massive oil spill affecting the region.
A report in London's Financial Times newspaper said that hurricanes tend to produce considerable swings in the commodities markets, with major storms in recent years impacting everything from the Florida orange crop to energy production.
In fact, the newspaper noted that in 2005, orange juice futures hit a record high because of the damage caused in Florida by Hurricane Wilma. The projections from the government that this season could feature as many as 23 named storms reportedly sent oil and gas futures much higher.
The hurricane season will be getting underway within two months. With that in mind, commodities investors may be wise to keep track of these trends.
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