Updated Oct. 5, 2017 - 11 a.m. EST
(Bloomberg) -- Tropical Storm Nate has formed off of Nicaragua, and could grow into a hurricane that is forecast to strike the U.S. Gulf Coast late Sunday, potentially shutting down offshore oil and natural gas rigs and dealing another blow to citrus growers.
Nate was about 10 miles (16 kilometers) south of Puerto Cabezas, Nicaragua, with top winds of 40 miles per hour, the U.S. National Hurricane Center said an advisory at 8 a.m. New York time. The storm’s forecast track has it scraping the eastern edge of Mexico’s Yucatan Peninsula before becoming a hurricane south of Louisiana on Sunday. Nate could come ashore anywhere from Louisiana to Florida’s Panhandle.
“Little change in strength is expected today as the center of Nate moves across northeastern Nicaragua and eastern Honduras,” Jack Beven, a senior hurricane specialist at the center in Miami, wrote in the advisory. “Strengthening is likely over the northwestern Caribbean Sea tonight and Friday.”
Fourteen storms have formed across the Atlantic so far this season, killing hundreds of people in the U.S., Mexico and the Caribbean and causing an estimated $300 billion in damage. In August, Hurricane Harvey temporarily shut down about 25% of oil and natural gas production in the Gulf and as much as 20% of U.S. refining capacity and a few weeks later Hurricane Irma devastated Florida citrus groves.
|Wind, storm surge, heavy rainfall
The storm “could affect portions of the northern Gulf Coast as a hurricane this weekend, with direct impacts from wind, storm surge, and heavy rainfall,” Eric Blake, a hurricane specialist at the center, wrote in a forecast analysis. “Residents along the Gulf Coast from Louisiana to Florida should monitor the progress of this system for the next several days.”
Orange juice futures rose as much as 2.5% to $1.5925 a pound on ICE Futures U.S. in New York. Florida is the world’s second-largest orange juice producer.
“There’s been already plenty of damage; having another storm, even it’s a Category 1, is not going to help the crop,” Jack Scoville, vice president for Price Futures Group in Chicago, said in telephone interview. “People are kind of jumpy.”
The system “definitely” poses a risk to U.S. cotton areas as well, particularly western portions of the southeast, including Alabama and Georgia, the second-largest cotton grower after Texas, Donald Keeney, meteorologist with MDA Weather Services in Gaithersburg, Maryland, said in a telephone interview.
|Could strengthen to Category 2
As it nears the U.S. coastline the storm, Nate could strengthen to a Category 1 hurricane on the five-step Saffir-Simpson scale, the hurricane center said. There’s even a chance it could be a Category 2 storm if it passes over a patch of particularly warm water in Gulf of Mexico called the Loop Current, said Jeff Masters, co-founder of Weather Underground in Ann Arbor, Michigan.
“If it goes over the Loop eddy that would give it a lot of fuel for intensification,” Masters said.
|Yucatan Peninsula
In addition, how the storm interacts with the Yucatan Peninsula will also have a big impact on its ultimate strength, said Todd Crawford, chief meteorologist at The Weather Company in Andover, Massachusetts.
“If the storm shoots the gap between the Yucatan and Cuba, there will be limited weakening due to land interaction before the storm emerges into the Gulf,” Crawford said. “This would increase the chances of rapid intensification and would be a more dire situation for the eastern Gulf Coast.”
There’s about a 30%t chance it will disrupt U.S. offshore energy operations, as companies may evacuate some personnel, said Matt Rogers, president of the Commodity Weather Group LLC in Bethesda, Maryland.
Offshore rigs and platforms in the Gulf of Mexico account for about 17% of U.S. crude oil output and 4.1% of gas production. About 45% of petroleum refining capacity and 51% of gas processing is along the coastline.
|Likely to cross over Honduras & Nicaragua Thursday
As the storm moves over warm water, it will grow in intensity, but by Thursday, it should cross over Honduras and Nicaragua robbing it of strength, Rogers said. Later this weekend, it could encounter wind shear that can tear storms apart in the Gulf of Mexico.
“That is going to be the trick, getting the intensity figured out,” Rogers said.
Royal Dutch Shell Plc is minimizing staff in the eastern Gulf and taking steps to secure facilities, the company said in a statement. BP Plc is evacuating nonessential staff from its Thunder Horse and Na Kika crude and gas production platforms.
|Threat of life-threatening mudslides
The storm will bring as much as 20 inches (51 centimeters) of rain to Nicaragua, with some areas getting as much as 30 inches, and lesser amounts to Costa Rica, Panama and Honduras. The heavy rain could cause life-threatening mudslides throughout the region.
Its location in the western Caribbean means it can draw moisture from both the Atlantic and Pacific oceans, which will make the flooding worse, Masters said.
The good news is that the storm should be falling apart by late Sunday, “so it will be short-lived,” Rogers said.
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