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The oil markets were concentrating on the development of the storm Isaac, which is destined to hit New Orleans on Wednesday night. While the winds of the storm are not uncommonly strong, rain and tidal surge are a growing source of anxiety. There have been other cases in the past where strong tropical storms dumped so much rain in such a short period of time that refineries became inundated. Aside from this, there is already 8M b/d of refinery capacity shut in due to the storm. We feel that the weakness in RBOB will be reversed at least for a corrective rally.

On the geopolitical front, Iran is considering a plan to let visiting diplomats go to the Parchin Military Base,which IEAE inspectors wished to check over. The diplomats are attending the summit of non aligned nations. It is likely that if Iran is agreeing to this, they have already moved incriminating evidence. France’s Finance Minister repeated a call Tuesday for the release of SPR. Also, in a surprise move Mario Draghi informed the Fed that he will not be attending the Jackson Hole Summit of central bankers. This is a big shock insofar as the market was expecting him to announce his golden plan to save the euro zone. Economists have yet to figure out what this action means for Europe and risk assets. It should be noted, however, that the euro was positive on the day.

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