[DantesPeak]

Even before Hurricane Gustav has entered the Gulf of Mexico, futures exchanges on Saturday have invoked special trading rules. The last time this occurred, in the wake of Hurricane Rita in 2005, it caused a frenzy among energy traders.

8/30/2008 9:22:00 AM Nymex Adds Energy Trading Hours Sunday In Response To Hurricane
NEW YORK (Dow Jones)--The scheduled Sunday restart of energy futures trading on the New York Mercantile Exchange was switched to an earlier time in anticipation of Hurricane Gustav, the exchange parent said.

Nymex owner CME Group Inc. (CME) said Friday that all energy products trading on the Globex electronic platform will open for trading at 2:30 p.m. EDT Sunday "in response to concerns about Hurricane Gustav." The products, which include benchmark crude oil, gasoline and natural gas futures, were originally scheduled to start trading at 6 p.m. Sunday.

The U.S.'s National Hurricane Center said Gustav regained hurricane wind speeds Friday and could reach the Gulf of Mexico late Saturday. The U.S. Gulf Coast is home to a quarter of the nation's crude output and 11% of its natural gas capacity and concerns about Gustav's impact have preoccupied energy traders in the past week. Nymex's over-the-counter ClearPort clearing and trading will also now reopen at 2:30 p.m. EDT Sunday, CME said.

Dow Jones/Cattle Network

Sabine Declares Henry Hub Force Majeure For Gustav
August 30, 2008: 04:47 PM EST
NEW YORK -(Dow Jones)- Chevron Corp. (CVX) unit Sabine Pipe Line LLC has declared force majeure at Henry Hub, a major natural gas interconnection point in Louisiana, as Hurricane Gustav barrels toward the Gulf of Mexico.

The force majeure will take effect at 6 a.m. on Sunday. A mandatory evacuation of Vermilion Parish, effective as of 4 p.m. EDT on Saturday, has forced the shut-in, Sabine said.

"Hurricane Gustav is now projected to make landfall near Vermilion Bay, Louisiana," Sabine said in a posting on its Web site. "As projected, Hurricane Gustav has a strong likelihood of impacting facilities and operations at the Henry Hub and the Sabine Pipe Line system."

Henry Hub is the pricing point for all natural gas futures contracts traded on the New York Mercantile Exchange. The hub is in Erath, Louisiana, and interconnects with nine interstate and four intrastate pipelines. It has a transportation capacity of 1.8 billion cubic feet a day.

Dow Jones/CNN

[DantesPeak]

Can someone explain?

"We wanted to provide our customers with the opportunity to respond to the storm's potential impact to energy markets as quickly as possible," said CME Group Chief Operating Officer Bryan Durkin. "The ability to trade both our exchange-listed and over-the-counter energy products during this period will be a significant benefit for global energy market participants."

CME

[Micki]

I don't see the sense in extending the hours either.
If anything, an emergency measure should keep the exchanges closed until we know what damage actually is done. Opening early just encourages panic trading.
Also, if information about these adjustments to trading hours don't reach all traders, then those who didn't hear about it will be left behind.

Furthermore it is hard to see who would go short on this trade now, the ones who already have short positions should have difficulty covering.

If I may wear the tinfoil hat for a little while again, this could be a way for the big players to drop the price based on paper trades, trigger of lots of automatic stoploss orders and then cover on these, similarly to what they have done with gold on the illiquid access market so many times.
If this happens, it is very blatant market manipulation, but the regulators have shown time after time that they aren't really interested sa long as the manipulation is carried out by the big commericals (banks).

[the48thronin]

Thanks for the information, DantesPeak. I don't understand why they would add extra hours in response to Gustav. Can someone explain? Thanks in advance. It will certainly give us something else to watch tomorrow afternoon.

They admit openly it is to allow speculators to protect themselves ..LOL

link

Pit trading on the floor of the Nymex is closed Sunday and Monday for the Labor Day holiday. The shift in electronic trading hours gives investors greater time to hedge their bets ahead of Gustav.

I don't see the sense in extending the hours either.
If anything, an emergency measure should keep the exchanges closed until we know what damage actually is done. Opening early just encourages panic trading.

same article linked above

Light, sweet crude futures for October delivery were up $2.84. or 2.4%, at $118.30 a barrel, off a session high of $118.39.
Trade appeared to be light and the modest nature of the move underscored a reluctance to act until Gustav has made landfall and the extent of any long term damage to Gulf Coast energy infrastructure becomes apparent.
Overriding concerns about the state of U.S. energy demand are also limiting moves higher in oil prices.
"I don't know if the market is more concerned about softening in demand than they are for a lack of production," said Phil Flynn, analyst at Alaron Trading Corp. in Chicago. "Now we're getting closer to the event and so there may be a little bit more nervousness."

[Niagara]

I don't see the sense in extending the hours either.
If anything, an emergency measure should keep the exchanges closed until we know what damage actually is done. Opening early just encourages panic trading.

I totally agree and think this is senseless.

Imagine this, there is fear of an imminent bank collapse and a possible run. So the bank opens their doors on Sunday as an "emergency measure" to allow customers access to their money. Gee, that would calm things down.

[Carlhole]

I don't see the sense in extending the hours either. If anything, an emergency measure should keep the exchanges closed until we know what damage actually is done. Opening early just encourages panic trading.

I totally agree and think this is senseless. Imagine this, there is fear of an imminent bank collapse and a possible run. So the bank opens their doors on Sunday as an "emergency measure" to allow customers access to their money. Gee, that would calm things down.

Crude is trading overseas now and it is not panicking. link

As I type this, it has declined by 60 cents. The market did not rise appreciably on Friday either. The market must have discounted the storm season already -- which means that, if there were no storm season, it would be trading much lower.

[Rubin_Flagg]

Tuesday will be "Black Tuesday" I expect everything to melt down for the little guy. As for the big banks they are already trading in Asia. This is going to be a bloodbath.

[Micki]

I don't see the sense in extending the hours either. If anything, an emergency measure should keep the exchanges closed until we know what damage actually is done. Opening early just encourages panic trading.

I totally agree and think this is senseless. Imagine this, there is fear of an imminent bank collapse and a possible run. So the bank opens their doors on Sunday as an "emergency measure" to allow customers access to their money. Gee, that would calm things down.

Crude is trading overseas now and it is not panicking. link As I type this, it has declined by 60 cents. The market did not rise appreciably on Friday either. The market must have discounted the storm season already -- which means that, if there were no storm season, it would be trading much lower.

October contracts are currently up 80 cents. A bit down from having been up $2.

The problem I see with extending the hours is this; if not everyone is trading, you get an illiquid market and therefore easily magnify moves using small quantities.
This can be used both in a manipulative way or casue larger then necessary damage if panic occurs.
For serious trading there is little advantage as the market is illiquid so less takers on the oposite side of the trade.

Looks like the effect is benign. I think traders are having a hard time dermining the damage and figuring out what, if any, premium is already built into the price. But comparing with past, it would be reasonable to expect damages to 100+ rigs even if it stays at CAT3 all the way to landfall. So I see more upside than downside risk at these price levels.

[smallpoxgirl]

Apparently no one is that excited about it. After 7 hours of trading, oil's up $1 and natural gas is down about $0.20.

[PeakingAroundtheCorner]

Apparently no one is that excited about it. After 7 hours of trading, oil's up $1 and natural gas is down about $0.20.

UPDATE 10:00 CDT: Oil down $5 and has broken through the 200dma.

I don't get it. Why is it going down?

Tuesday will be "Black Tuesday" I expect everything to melt down for the little guy. As for the big banks they are already trading in Asia. This is going to be a bloodbath.

Can someone PLEASE spell this out for me? I just do not get it.

[smallpoxgirl]

I don't get it. Why is it going down?

People were afraid Gustav would come ashore as a cat 4. That fear was built into Friday's trading. Instead Gustav came ashore as a cat 2.

[DantesPeak]

Here we go again:

Nymex Energy Trading To Have Early Sun Start On Hurricane Ike

DOW JONES NEWSWIRES
September 10, 2008 7:34 p.m.

Electronic trading in oil, natural gas and other energy futures on the New York Mercantile Exchange will restart earlier than usual Sunday on concerns about Hurricane Ike, the exchange's parent said Wednesday.

All Nymex energy products will start trading at 1400 GMT (10 a.m. EDT) Sunday on the Globex and ClearPort electronic platforms, CME Group Inc. (CME) said. The contracts normally resume trading at 2200 GMT (6 p.m. EDT) on Sunday after a weekend break.

The schedule change comes as Hurricane Ike approaches the U.S. Gulf Coast, a center for oil and natural gas production and processing.

WSJ

[DantesPeak]

Nymex Declares Force Majeure On Aug, Sept Gas Contracts

DOW JONES NEWSWIRES
September 13, 2008 11:17 a.m.

NEW YORK (Dow Jones)--The New York Mercantile Exchange has declared force majeure on the delivery of all August and September natural gas contracts, after the Henry Hub shut down ahead of Hurricane Ike.

Sabine Pipe Line LLC, a Chevron Corp. (CVX) unit, declared force majeure effective Friday night, the Nymex said in a statement. Nymex is owned by CME Group Inc. (CME) Force majeure is a contract clause releasing one or both parties from obligations due to a natural disaster or other uncontrollable event.

Henry Hub, in Erath, La., is the pricing point for all natural gas futures contracts traded on Nymex. The hub's closure is problematic for the market, as owners of expiring contracts would have no way to make or take delivery.

WSJ