As we navigate through peak hurricane season, market participants are glued to their weather consoles watching, waiting, anxiously for every update to the two weather disturbances, two hurricanes and a tropical storm churning in the Atlantic and Gulf Coast.
The only certainty is Hurricane Florence directly hitting the Carolina's as a major hurricane. The energy sector has built a premium on prices surrounding the uncertainty of the outcome of Hurricane Florence (potentially knocking out power for millions and colonial pipeline disruption) and the paths and outcomes of the remaining storms or disturbances. WTI for October delivery is on track to settle up about 2.72% and above a technical resistance level of $69.13. RBOB is up 2.75% or $0.0542 a gallon and HO is up 1.61% or $0.0359 a gallon. Some 1 million people have been ordered to evacuate their homes with anticipation of ‘days upon days’ of rain and potentially deadly flooding to the southeast coast. Hurricane Florence is threatening to hit the Carolina's with 130 mph winds coupled with massive waves as high as 12 feet when it makes landfall on Friday. With all headlines and focus on the current weather disturbances, we can outline the stages involved in the development of a tropical cyclone (hurricane) below:
When the water vapor from the warm ocean condenses to form clouds, it releases its heat to the air. The warmed air rises and is pulled into the column of clouds. Evaporation and condensation continue, building the cloud columns higher and larger. A pattern develops, with the wind circulating around a center (like water going down a drain). As the moving column of air encounters more clouds, it becomes a cluster of thunderstorm clouds, called a tropical disturbance.
As the thunderstorm grows higher and larger, the air at the top of the cloud column is cooling and becoming unstable. As the heat energy is released from the cooling water vapor, the air at the top of the clouds becomes warmer, making the air pressure higher and causing winds to move outward away from the high pressure area. This movement and warming causes pressures at the surface to drop. Then air at the surface moves toward the lower pressure area, rises, and creates more thunderstorms. Winds in the storm cloud column spin faster and faster, whipping around in a circular motion. When the winds reach between 25 and 38 mph, the storm is called a tropical depression.
When the wind speeds reach 39 mph, the tropical depression becomes a tropical storm. This is also when the storm gets a name. The winds blow faster and begin twisting and turning around the eye, or calm center, of the storm. Wind direction is counterclockwise (west to east) in the northern hemisphere and clockwise (east to west) in the southern hemisphere. This phenomenon is known as the Coriolis effect.
When the wind speeds reach 74 mph, the storm is officially a tropical cyclone. The storm is at least 50,000 feet high and around 125 miles across. The eye is around 5 to 30 miles wide. The trade winds (which blow from east to west) push the tropical cyclone toward the west—toward the Caribbean, the Gulf of Mexico, or the southeastern coast of the U.S. The winds and the low air pressure also cause a huge mound of ocean water to pile up near the eye of the tropical cyclone, which can cause monster storm surges when all this water reaches land.
Tropical cyclone categories:
For now, we can only digest the upcoming APIs and DOEs and hope for the best and prepare for the worst.