The energy complex is pressing the lowest prices of the summer as skepticism mounts on recovery, economic policy to achieve it and the eventual impact on fuel demand. Beginning with housing data tomorrow and Wednesday, extending through the weekly unemployment claims on Thursday, there will be scant evidence to reverse sentiment as Q3 enters its final month.

Speculative interests have continued their retreat, particularly in gasoline, as the concluding driving season proves a bust. American motorists drove only 1.3% more than a year earlier, but 1.8% fewer than the high mark of August 2007, before the recession took hold. The discussion has turned increasingly to record supply levels.

Oil stocks are at their highest levels, collectively, in the 27 years that the DOE has been keeping track of inventories. Consequently, prices have fallen in 11 out of the last 13 sessions, losing almost $10 from the highs reached on August 4th.  Crude oil has yet to breach Friday’s low of 73.19 though as a Tropical Storm Danielle is on track to potentially threaten oil production regions in the Gulf of Mexico.

In the final analysis, the real story is the waning confidence that investors are now showing towards hard assets, which had been among the star performers off the Q1 2009 market lows. It looks as if this trend may continue into Q4 2010 absent evidence of an economic turn around.

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