London (Platts)--1Sep2008

Global crude futures were down in European morning trading on Monday, as
Hurricane Gustav moved closer to making landfall on the US' southern coast yet
failed to support the crude oil complex.

At 11:19 GMT, the front-month NYMEX WTI contract changed hands at
$113.86/barrel, losing $1.60 from Friday's settle. Front-month ICE Brent
futures traded at $112.59/b, a $1.46 loss from Friday's close.

Despite the imminent arrival of Hurricane Gustav, crude oil futures have
failed to fully respond during the morning session, market sources said.

"There was certainly a premium in the these prices and right now it seems
that premium, with Gustav at a Category 3, was overdone," a London-broker he
added.

"The key will be the height and and ferocity of the pending storm surge;
it's touch and go whether the levees will hold," energy analyst Robert
Laughlin said. "Risks of damage from water far outweigh the damage from wind
with respect to oil refining."

Nearly all US Gulf of Mexico oil production was shut Sunday in
preparation for the storm, with 96.26% of oil output and 82.3% of gas
production lost as of midday Sunday, the US Minerals Management Service said.

Estimated current oil production from the Gulf of Mexico under normal
conditions is 1.3 million b/d, while gas production is estimated at 7.4
billion cubic feet/d.

The choppy nature of the crude futures was further exacerbated by the
fact that the British pound dropped to its lowest level against the dollar in
two years, following an announcement by UK finance minister Alistair Darling
that the economy would face its worst downturn in 60 years.

In product markets, front-month ICE gasoil traded at $1,010.75/mt, down
$19.50 from Friday's settle. Front-month NYMEX contracts for heating oil (at
$3.1645/gal) and RBOB (at $2.8392/gal) were down from Friday's settle by 2.74
cents and 1.5 cents, respectively.