Gustav downplayed

Early market action in London sent crude down as low as $105.65 as traders sold on news of lower than expected damage from hurricane Gustav. However, we have yet to see enough data regarding production lost from the shutdowns in the Gulf of Mexico over the last week. Additionally, delays in the Houston ship channel cannot be overlooked. The market did rebound over $110. NG showed very little resilience, ending down close to 70 cents / MMBTU. Consumers had a window of opportunity earlier today. Although some traders are calling for $100 crude, we may not have near term bear market conditions until the weather risk has subsided. The Q4 zero cost collar in WTI (Asian style) is now 100 put vs. 125 call. For the same period, a low cost call spread such as the 115-125 is offered at $3.25