Crude volatility remains high, heat/diesel hedgers active

Monday's late day floor trading action bid up crude volatility over 70%. This level subsided today to the mid 60s% for November American options which expire next week. The markets remain torn between fundamental directional hedges and the pure play asset sell-off experienced across global markets. Though led by the financial sector, the lack of liquidity in equity and bond markets have created a down draft seeking the next bid. We have not seen a sell-off in crude as one might expect. Major players may be sitting on the sidelines if not forced to liquidate. Although demand destruction in refined products (especially gasoline) is now well documented, the low inventory positions and refinery turnaround schedule should compensate. Negative RB cracks form November and December have reached $-2.15 per bbl. Heating oil remains firm with winter cracks above $21/bbl. Consumer hedgers have been active buying the heating oil upside calls.