Hurricane Season Blows Beyond the Gulf

This column was originally published on RealMoney on June 9 at 12:04 p.m. EDT. It's being republished as a bonus for TheStreet.com readers. For energy investors, its time to watch the weather.

Though energy stocks have been beaten up right along with the broader market in the past week, there are signs of life this Friday as traders work to balance their books ahead of the weekend.

The reason: weather.

There are plenty of other items on investors' checklists but, beginning today, weather will likely trump them all. Earnings, acceleration of drilling costs and a large supply of natural gas in storage all matter, but weather is about to become more important.

Many investors have short memories, and the anomalies of yesterday are always more important than the slow, steady trends of the last decade. That is why weather will become more important.

A Strong Wind Blows

The impact of hurricanes Katrina and Rita still lingers from last year. The U.S. Minerals Management Service -- the organization that tracks oil and gas production -- noted earlier this month that Katrina and Rita are responsible for nearly 15% of oil production and 12% of natural gas production still being off line in the Gulf of Mexico.

Companies that provide energy services in the Gulf of Mexico -- from Hornbeck Offshore(HOS Quote) to Superior Energy Services(SPN Quote) -- continue to suggest they have at least six months of work left just to return the Gulf of Mexico to pre-storm form.

Given the current nature of the Katrina and Rita saga, it's not surprising that traders are on edge for the first named storm of the 2006 hurricane season. As a result, when Alberto -- this year's "A" storm -- is formed, watch for a rally in energy names.

That could happen soon. According to my pal Joe Bastardi at Accuweather, the stage has been set for a hurricane season opener in the coming days. "A broad area of low pressure over the northwest Caribbean has some potential for slow development over the next few days," Accuweather says. "Computer models are showing various ideas on this and just about every model now shows some kind of low pressure area near the Yucatan by the end of this weekend. Our current feeling is that if the shear can drop off enough we could have a developing tropical system by the end of the weekend or early next week."