Bullish gasoline stats/weather push market higher

A surprise gasoline draw helped push the market higher today, yet product cracks were not overly bullish. Crude was up as high as $117.46 by midday and those who took advantage of low cost options strategies and short covers rejoiced. There is some model information pointing to weather risk coming out in the next week or two, which contributed to the NG rally that subsided late in the day (NG up only 15 cents). This weather may also affect crude supply, so be advised.

Call strategies still remain our recommendation for hedgers that remain low on inventory. The September American/Euro style crude options will expire next Wednesday, so look to the September Asian or October American/Euro for near term hedges. Volatility is still firm.

Longer term, the Q4 120-140 Asian WTI call spread is offered at $4.00. This still looks like a good buying opportunity.

NY: CT (3PM EST)