Sentiment Watch: Shade of red known as "de-leveraging". The energy groups for the last couple of days have looked like they want to pick themselves up off the floor but, at the end of the day, have been unable to shake off the swooning broader market. We’ve gone from window-dressing-end-of-quarter concerns about having "energy" names in the ownership column to panic about holding any names but cash (and that may not even be safe). In short, fund managers are worried about having jobs next month. And so the flight to commodities has begun. Gold, black gold, even lowly natural gas have caught a wave. I remain extremely cautious and will trade infrequently with shorter than normal holding periods until further notice.

In Today’s Post:

1. Holdings Watch
2. Commodity Watch
3. Gas Inventory Preview - Street Sees 61 Bcf Injection
4. Oil Inventory Review
5. Stuff We Care About Today - Quick Sector Wraps
6. Odds & Ends

Holdings Watch: No changes yesterday but expect to be a little busier today, likely taking the DIG calls off the table and potentially salvaging some beaten up September positions.

Commodity Watch:

Crude Oil rallied hard in the morning, paused after the EIA inventory press release (see review below) and then shot higher on the day as commodities turned into something of a safe have while the dollar started to look weaker. Oil closed up $6.01 at $97.16, its biggest one day rally since June. Long overdue. It was not fundamentals but a flight to commodities that inspired the rally. The EIA inventory report was in line with if not a bit more bearish than expectations on the products side (see the slide show below) but investors flocked to gold, natural gas, loaves a bread or anything else that did not resemble an investment bank yesterday. This morning oil is back above $100 as the dollar continues to weaken.

Natural Gas soared 8.5% on the day to close at $7.91. Traders will no doubt overshoot the mark here but the contract is wildly net short so this could take a quick trip to the high $8s which should help with my DIG call exit. This morning gas is trading up $0.25+ and like oil, back over a key psychological level ($8).

• (WMT) To Go CNG? Pickens is out with a press release saying WalMart is investigating using compressed natural gas to run its truck fleet. 8,500 trucks running CNG would be a good further step in WMT’s greening process and would likely lead other fleets to follow suit. It would also make a noticeble bump in natural gas demanded for transportation. 
• IAEA Worries Over Global Natural Gas Supply. The group says "investment uncertainties, cost increases, and delays continue to be a major problem in most gas markets and are continuing to constitue a threat to long-term security of supply." We assume they don’t mean in the U.S.

MMS Ike/Gustave Impact:

• Oil: 96% of Gulf shuttered.
• Natural gas 82% shuttered.
• Damage from Ike continues to appear to be minimal (28 platforms destroyed in the shallow water, some damage to deepwater topsides and a rising toll of onshore damage which has yet to be quantified in terms of production loss)

Natural Gas Inventory Preview & Storage Thoughts: Welcome to the second shoulder season of the year, not too hot, not too cold, and as always, not too great for gas demand.

My Number: 65 Bcf Injection

• Last Week: 58 Bcf
• Year Ago: 63 Bcf
• 5 Year Avg: 88 Bcf
• Imports: rose from the prior week by 0.7 Bcfgpd or about 5Bcf for the week.