We get both EIA inventory reports today; first gas at the regularly scheduled time (10:35 EST) followed by oil at 11:00 am EST. Neither should have much in the way of production impacts from Gustav in them as that was really a this week event however you might see a pickup in gasoline demand prior to the storm that would have made it into the end of last week’s numbers. I think the gas number could disappoint which may provide an entry point for UNG calls.

Sentiment Watch: Red except for the refining group who continue to yo-yo in true bottoming fashion. I think the rest of groups get a modest bounce soon as a handfull of prominent traders / investors have announced they are tentatively fishing in the stocks and I don’t just mean Cramer.

In Today’s Post:

1. Holdings Watch
2. Commodity Watch
3. Oil & Gas Report Previews
4. Stuff We Care About Today
5. Odds & Ends

Holdings Watch:

• DUG Calls - In and out in an hour for a 40% gain as the group opened green against a red backdrop of commodities.
• TSO - Added TSO October $20 Calls for $1.14 average price.
• HK   - Took some HK Calls for a quick trade. HK September $30 calls for $1.55 as oil and natural get a little intraday bounce. Stock at $28.25 on execution. This is the 4th trip in the last month into these and again, a quick trade and small.

Commodity Watch:

Crude Oil fell $0.36 to $109.35 yesterday following through on weakness from Tuesday and a slightly stronger dollar. This morning oil is trading up $0.50 to $0.60.

• OPEC Watch: Venezuela and Iran to argue for production cuts at next week’s meeting, Ecuador to argue against them. Meanwhile Brazil continues to mull an offer to join the Cartel.
• Tropics Watch:
  • Hanna - strictly an east coast event.
  • Ike - Now a Cat 4 hurricane in the middle of the Atlantic and aimed at Florida or Cuba or Hispaniola.
  • Josephine - a tropical storm just behind Ike and headed west.
• Refiner Watch:  Marathon has requested oil from the SPR to cover Gustav related disruptions while Citgo has withdrawn its request. 11 gulf coast refineries remained offline this morning due to power grid issues; three of these are in the process of restarting…the offline sites represent about 2.5 mm bopd of capacity and this will dent coming week’s production as the restrart process will take at least a couple of weeks to get all that capacity back up.

Natural Gas closed flat at $7.26 yesterday after making a run on $7 early in the session; gas fell to just under $7.03 early in the session before finding buyers who noticed that most of the Gulf of Mexico still is not back on line and that the hurricane season is just getting geared up.