UPDATED: Gustav unexpectedly stalled just offshore of Haiti last night. Thus, that country is getting owned right now with heavy rain that is likely causing severe flooding, but the storm has also weakened rather dramatically to, in my opinion, a generous 60 mph. Officially, nothing has really changed. The NHC still makes Gustav a Cat 3 in the Gulf and computer model guidance for the most part remains on course. However, I believe that the future intensity forecasts may need to be reduced slightly. Gustav will still be transversing very warm water ripe for rapid intensification and I would almost say it is probable that it will rapidly intensify at some point. Already, it appears that it is trying to reorganize with convection re-developing near the center. Nevertheless, with NG up another 7% this morning, I will be looking to take some profits on my UNG and APA positions, each for 10-15%.

Now that the entire world has become aware of Gustav, there is not too much more to say that can’t be found on CNN. That being said, here is the latest. Gustav made landfall this afternoon on the south coast of Haiti as a 90 mph hurricane. As of 5pm, it had weakened to 75 mph and further weakening is possible. Gustav has also begun its anticipated westerly turn that should allow it to avoid Cuba. The storm will likely emerge back into the Caribbean by 11pm this evening, probably as a tropical storm, and will then promptly begin re-intensifying. It will probably take about 24 hours for it to regain its former strength (90 mph)

Image: Latest infrared of Gustav

Atmospheric conditions remain favorable and the forecast calls for Gustav to reach Category Three status (115 mph) while south of Cuba. The forecast track threads Gustav through Jamaica and Cuba and into the Gulf.

Image: NHC forecast track overlaid on a map of the rig density in the Gulf, showing the storm heading towards a very energy-rich region.

This track spares the islands, but leaves the storm over very warm water favorable for rapid intensification. Assuming Gustav maintains itself over Haiti and misses south Cuba, I would not be surprised to see it reach Category 4 status (winds >130 mph) and I give this a 30% chance of occuring. Of course, should Gustav go over either Cuba or Jamaic, it will be siginficantly weaker than currently forecast. All in all, it appears that Gustav has booked a one way ticket to the Gulf of Mexico.

Once it reaches the Gulf, Gustav’s intensity will be dictated by eddy currents that break off from the Gulf Stream moving through the Florida Straits. These are very warm, deep pools of water that can cause storms to intensify extremely rapidly. Opal ‘95, Katrina ‘05, and Rita ‘05 both passed directly over an eddy and quickly strengthened to strong Cat 4s or Cat 5s.

Image: SST map from 2005 showing Katrina’s rapid intensification upon passing over a warm water eddy (WE) in the Gulf. Upon passing over the eddy, it intensified from a Cat 3 to a Cat 5 in less than 24 hours. The eddy in 2005 is of comparable strength to the one this year.

As shown below, there is a large eddy in Gustav’s path and should the storm pass over it, rapid intensification is likely, given the otherwise favorable upper level patterns.

Image: Current TCHP in the Gulf showing a very prominent eddy in Gustav’s path.

As for the track in the Gulf, it now appears that an approaching trough will be strong enough to lift Gustav northward once it enters the Gulf. Only one model, the ECWF, is still calling for a Mexico landfall. In fact, the guidance has shifted slightly eastward today, increasing the threat to the Florida Panhandle. Oddly, the normally reliable GFS model actually dissipates the storm once it reaches the Gulf. Those living anywhere from Houston to Appalachicola should closely monitor the progress of this storm.

Right now, New Orleans is in the middle of the forecast path, and people living in that city should pay particular attention to Gustav. One thing to note: should the storm take a more eastern track towards the Florida panhandle, it will probably not get as strong as if it takes a more western track. Fay’s very slow motion over the past two weeks mixed up colder water from depth that will take a month to reach pre-Fay temperatures. This can be seen on the TCHP map above.

Frankly, I was surprised by how little oil was up today. 1.16? This morning, I thought $4 easy. Granted, it is very early and there will probably be followthrough in the next three days as the forecast path becomes more refined. Personally, I had a fantastic day. UNG was up big on NG’s surge, with CHK piggy-backing. RIG and APA were up comfortably as well. I added a small position in NOV at 75.10 based on Cajun’s reccomendation, but did not make significant alterations. The eastward shift amongst some of the models and supply data due out tomorrow at 10:35am made me pause. Should commodities continue to rise tomorrow, I may look to begin selling some of my more profitable positions, beginning with APA. However, unless the track or intensity shift dramatically, I see no reason for oil/NG not to continue to rise over the next three days. Rigs will have to begin announcing evacuations either tomorrow or Thursday.

Should Gustav remain on track and continue to intensify, the hype will be unbelievable, with this being the first significant Gulf storm since 2005. While I believe that the storm has the potential to do severe damage and encourage all of those in its path to plan for the worst, I do not believe that it will match the hype. Things rarely do. Thus, I plan to sell into the panic buying, closing out several positions heading into the weekend. On Friday, I might even hedge my remaining longs with DUG.

Lastly, while we should give Gustav the most attention, there are two areas in the Atlantic that could become Hanna and Ike in the next 2-5 days. One is located north of the Leeward Islands and could threaten the Carolinas or northeast in a week’s time and another off the coast of Africa, which is over a week away from land.

Disclaimer: Do not make life or death decisions based on this blog. If you live in the path of the storm, listen to your local news and emergency management officials. The storm is 5-7 days away so there is plenty of time to prepare.