Commodities liquidation

New York, 17h00 Monday Aug 4.

Many commodities experienced a sell off today including energies. Energy equities also experienced a steep single day sell off, potentially foreshadowing weakening market confidence. Although ending the day $4 lower with range of $6.5 / bbl, this could be considered a normal day. The September crude straddle valued at $9 on Friday was fairly valued given these ranges. NG was off 7% with an rumor off a major fund liquidating. CL vols were a little bid and HO vols were a little weak.

An early rumor of a conciliatory letter expected from Iran Tues and hurricane Eduardo being a non event were reasons cited for the CL selloff. While real demand destruction is being witnessed in North America, we cannot yet confirm the post Olympics shift in demand from China and related markets. We are seeing lower demand from Chinese importers, which may reverse post Olympic restrictions on industrial manufacturing.