Energy futures exchange traded funds (ETFs) are a flurry of activity today. Investors’ increased trade activity comes from the concern that Tropical Storm Dean could hit and damage the Gulf of Mexico, which has many oil and gas installations, according to John Wilen for the Associated Press. The Gulf of Mexico accounts for about 27% of U.S. oil production and 15% of gas output, reports Kelly Riddell for Bloomberg. Fuel prices rose to new highs after Hurricane Katrina knocked out platforms and pipelines in 2005.

Although Dean is a tropical storm currently, it is expected to turn into a hurricane by Thursday and reach the outer Caribbean Islands by Friday. While energy futures were down, they gained after reports were released that Dean could miss the region entirely. In addition to Dean, Tropical Storm Erin is also expected to hit the same region tomorrow but without as much of an impact. If Dean becomes a large hurricane and does hit the Gulf of Mexico, it could affect these ETFs:

• Energy Select SPDR (XLE) – down about 2% for today
• iShares Dow Jones U.S. Energy (IYE) – down around 2% for the day
• United States Oil (USO) – up almost 2% today

Tags: Energy, Oil, USO