•Global crude futures drifted sideways in early Tuesday trading, calming down after Monday's volatile session, which was driven by a mix of bullish and bearish news amid relatively low volumes due a public holiday in the UK.

•On Monday, NYMEX RBOB futures rallied as supportive fundamentals--with gasoline supply/demand balances tightening--put a floor on prices last week. Last Wednesday, the Energy Information Administration reported a 5.7 million barrel decline in US gasoline inventories amid record implied demand of 9.672 million b/d. With balances so tight ahead of the US refinery maintenance season, the market remains hypersensitive to refinery issues.

•These bullish factors overpowered a further weakening in the equity markets and a slight strengthening of the US dollar against other currencies. The weakening of the equity markets due to issues in the US sub-prime mortgage sector has had a major influence on energy prices over the past few weeks.

Updated: August 28, 2007