Fed to Consider Dropping Key Interest Rate to 1 Percent

The Federal Reserve may lower its benchmark interest rate to 1 percent today and one expert said eventually, zero percent is not out of the question.

Steve Matthews of Bloomberg writes:

Tumbling commodities prices and weaker consumer spending are slowing inflation, which officials described as a ``significant concern'' at their last scheduled meeting in September. Tomorrow, the Commerce Department will probably report that the economy shrank at a 0.5 percent annual rate in the third quarter, the most since the 2001 recession, economists predict.

The Fed ``will be very aggressive,'' said Mark Gertler, a New York University economist and research co-author with Fed Chairman Ben S. Bernanke. ``Inflation risks are off the table'' and ``the issue now is how bad the recession will be.''

He predicted the benchmark rate will be cut by half a point today, matching the median forecast of economists surveyed by Bloomberg News. Bernanke and his team could push borrowing costs to zero by June if the credit crunch intensifies, Gertler said.

``The predominant concern will be inadequate growth,'' said former Fed Governor Lyle Gramley, now a Washington-based senior economic adviser for Stanford Group Co., a wealth-management firm. ``If the economy shows additional signs of a deepening recession, I think the Fed will decide that the floor is not 1 percent.''

Gramley predicts that policy makers will again cut the main rate by 0.5 percentage point at their next scheduled meeting in December, pushing it toward levels last seen in 1958. ``Zero is a possibility,'' he said.

The dollar fell for a second day against the euro on bets the Fed will lower interest rates more than economists predict. Futures on the Chicago Board of Trade show a 38 percent chance the benchmark rate will be cut to 0.75 percent from 1.5 percent. The odds increased from 34 percent a day before.

European Central Bank President Jean-Claude Trichet said Oct. 27 he may reduce interest rates next week, citing ebbing inflation and ``weakening demand.'' The ECB, Fed and four other central banks trimmed rates by a half point on Oct. 8 in an unprecedented coordinated move.

After the emergency cut, the Fed signaled it may ease again, citing ``weakening of economic activity and a reduction in inflationary pressures.''

The Fed's announcement is scheduled to come at 2:15 p.m. Eastern today.

Dow Up More Than 400 Points at Opening Bell

The Dow Jones Industrial Average continued its roaring rebound this morning, opening 409.71 points in the first 15 minutes of trading today. The S&P 500 jumped up 52.79 points in that time as well.

Bloomberg's market chart is here.

"The ban on the short sales is what's having the immediate impact on the market. That should calm the market down," Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vt., told Reuters. "Anybody who has been shorting these financial stocks is going to get burnt in here. What authorities are trying to do is just buy enough time for the market to settle down and for the details of the Paulson plan to be understood, how long it would take to implement and what it means for the banks."

Stocks Soar 617 Points From Day's Low on Paulson's Resolution Trust Corp. Plan

Stock traders were euphoric yesterday after a CNBC reported late Thursday afternoon that that Treasury Secretary Henry Paulson is considering creating an entity like the Resolution Trust Corp., which was formed after the failure of savings and loan banks in the 1980s, to stabilize the financial markets. Stocks immediately rallied, posting the largest gain in six years.

Elizabeth Stanton of Bloomberg reported tonight:

Traders erupted into cheers on the floor of the New York Stock Exchange as the Dow Jones Industrial Average jumped 617 points from its low of the day after Senator Charles Schumer proposed a new agency to pump capital into financial companies. The Standard & Poor's 500 Index climbed 4.3 percent as 68 companies in the gauge rose more than 10 percent.

Wachovia Corp. soared 59 percent, Citigroup Inc. added 19 percent and Bank of America Corp. jumped 12 percent, sending the KBW Bank Index to its biggest gain since July. Morgan Stanley erased a 46 percent tumble and Goldman Sachs Group Inc. recovered most of a 25 percent slide after the nation's three largest pension funds stopped loaning shares of the brokerages to investors betting on their declines.

"Any actions regulators or other entities or players take to try to slow down the bear raids will be received positively," said David Katz, chief investment officer of Matrix Asset Advisors in New York, which manages $1.4 billion. "There's no reason a Goldman Sachs or a Morgan Stanley should be forced to sell themselves in a shotgun wedding if they've got economic models that work, and they do."

The S&P 500 advanced 50.12 points to 1,206.51, recovering most of yesterday's 4.7 percent tumble. The Dow surged 410.03, or 3.9 percent, to 11,019.69. Both the S&P 500 and Dow posted their biggest percentage gains since October 2002. The Nasdaq Composite Index jumped 100.25, or 4.8 percent, to 2,199.1. Seven stocks climbed for each that fell on the NYSE, its broadest rally since April.

The Chicago Tribune described a resolution trust corporation this way:

The best solution appears to be the creation of a new Resolution Trust Corporation. This was the mechanism used to resolve the savings and loans crisis approximately 15 years ago. The trust could either buy selected distressed assets through fair and transparent prices or create an orderly market for the disposition of assets from failed institutions. This would hopefully stabilize the market for mortgages and distressed assets. It would be designed to stop the current fire sales of assets which have a snowball effect as relatively healthy institutions mark their assets to lower and lower levels pushing more financial companies to the point of bankruptcy. Badly needed confidence would be restored.

Richard Cowan and Kevin Drawbaugh of Reuters elaborated on the Paulson proposal, and one by Sen. Charles Schumer (D-NY) :

A possible federal plan to calm financial markets and address the housing crisis began to take shape on Thursday, with rival proposals from U.S. Treasury Secretary Henry Paulson and Sen. Charles Schumer.

Paulson has been talking with congressional leaders about possibly setting up a federal agency to deal with the broken mortgage debt instruments that are choking global capital markets, said a congressional aide and a lobbyist.

"It's a modernized version of the Resolution Trust Corporation (RTC), which was used after the S&L crisis," said the aide, declining to be further identified.

Schumer offered a different idea in a speech urging that future federal capital infusions for banks be conditioned on their making loan modifications and other terms.

The New York Democrat proposed setting up a federal agency that would "provide capital to struggling financial institutions in exchange for an equity stake in the banks," similar to the Depression-era Reconstruction Finance Corp (RFC).

Dow Regaining Ground; Oil Tops $100 a Barrel, Then Slides Back

Wall Street is fighting back after yesterday's nearly 450 point loss in the Dow Jones Industrial Average. At 2:27 p.m. Eastern, the Dow was up 35.99 points, or 0.34 percent, to 10,645.65 from today's opening bell. The Dow was up more than 150 points earlier in the day. The S&P 500 is posting a similar gain of 3.51 points, or 0.30 percent, to 1,159.90.

Oil is making a rebound. Light, sweet crude for October delivery was up above $100 a barrel earlier today, but has settled down to about $96. Overall, it has been creeping upward in the past couple days.

There are a few key reasons for the increased prices in oil. First, the shaky financial markets around the globe will push oil higher as investors shy away from equities and look at commodities. Then there was Hurricane Ike, which temporarily shut down oil production facilities in the Gulf of Mexico and in the Houston area.

Jad Mouawad of The New York Times writes this afternoon:

Caught in wild and gyrating markets, crude oil prices briefly returned into the triple-digit territory on Thursday morning, but pared all of their gains by mid-morning to fall back below $100 a barrel.

Crude oil futures jumped above $102 after trading opened on the New York Mercantile Exchange, but then dropped to around $96.50 a barrel. The fall followed a 6.6 percent jump on Wednesday when panicky investors fled the stock market to seek shelter in the perceived safety of commodities.

After six months in the triple-digits, oil prices had slumped earlier in the week because of concerns that the financial turmoil on Wall Street would slow economic growth and hurt oil demand. Prices, which had fallen to $91.51 a barrel on Tuesday, have since made up some of their losses.

The Associated Press reports this morning:

"Oil is not viewed as safe a haven as gold, but investors consider it safer than equities," said Victor Shum, an energy analyst with consultancy Gertz & Purvin in Singapore. "If these financial troubles lead to a world recession however, that's going to affect demand big-time."

Finally, there is another news story that is affecting the price of oil. An oil war has started in the past week in Nigeria. Given the recent high-profile events, this has seen little play in the media. But Karl Maier and Dulue Mbachu of Bloomberg are on top of the current situation in that African country in a report filed this morning:

Nigeria's main militant group in the Niger River delta intensified its "oil war" for a fifth day, claiming to have destroyed an oil-pumping station and a pipeline operated by a unit of Royal Dutch Shell Plc.

The Movement for the Emancipation of the Niger Delta, in an e-mailed statement today, said it attacked the Orubiri pumping station in Rivers state at 10 p.m. yesterday. A Nigerian military spokesman confirmed the raid. MEND later said it destroyed an oil pipeline at Rumuekpe, also in Rivers state.

"The political mood in the capital Abuja is shifting away from negotiation and dialogue towards a tough military response," Antony Goldman, an independent analyst specializing in Nigeria, said by phone from London. "If militants can take the violence beyond Rivers, it will represent a setback for what appears to be the military's new strategy."

Attacks by armed groups in the Niger delta region have cut more than 20 percent of Nigeria's crude exports since 2006. Nigeria was Africa's top oil producer last month.

Biden and Wife Average $369 a Year in Charitable Giving

Democrat vice presidential candidate Sen. Joe Biden and his wife reported giving a fraction of 1 percent of their income to charity during the past decade, below the national average, Bloomberg reports. A Biden spokesman said the couple has given more to charity than they claimed on their taxes.

Ryan J. Donmoyer of Bloomberg writes:

Biden and his wife, Jill, earned $319,853 in adjusted gross income and paid $72,787 in federal taxes last year, including $2,721 in alternative minimum taxes. They claimed $995 in deductions for charitable giving, about triple what they deducted in any of the nine previous years. Over the past decade they reported giving an average of $369 to charity.

Their deductions for charitable giving -- about two-tenths of 1 percent of their income -- is lower than the national average of about 3.1 percent, according to JustGive.org, a nonprofit organization that connects donors with charities.

"That lack of charitable giving at that level of income would definitely be outside the range of what we say is normal," said Russell James, a professor at the University of Georgia who researches charitable giving.

Fed Leaves Key Interest Rate Unchanged; Dow Continues to Drops

UPDATE 2:45 p.m. Eastern

The Federal Reserve decided this afternoon to keep its federal funds rate unchanged at 2 percent despite the struggling global financial markets.

Scott Lanman and Craig Torres of Bloomberg reports:

"Downside risks to growth and the upside risk to inflation are both of significant concern," the Federal Open Market Committee said in a statement in Washington. "The committee will monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability."

Chairman Ben S. Bernanke and his colleagues signaled they will continue to address market turmoil with emergency lending and aim monetary policy at a longer-term economic forecast that may still show the economy skirting a recession. Stocks fell after the decision, while the dollar gained and Treasuries remained higher.

"Tight credit conditions, the ongoing housing contraction, and some slowing in export growth are likely to weigh on economic growth over the next few quarters," the statement said. "Over time, the substantial easing of monetary policy combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth."

The decision was unanimous, the first such agreement in a year.

The markets and the dollar had turned higher in today's trading as investors were anticipating the Fed would cut interest rates to calm worries related to AIG's financial problems. The Dow Jones Industrial Average was up 19.46 points to 10,936.97 at 2:12 p.m. Eastern. The S&P 500 was up slightly by 0.8 to 1,193.50 at the same time.

But the markets reacted to the Fed's announcement immediately. The Dow fell to 10,826.57 at 2:27 p.m., a 90.94 drop from the opening bell. The S&P 500 fell to 1,180.88 at the same time, a drop of 11.82 from the start of the day.

Dow Down 504 Points, Worst Day Since 9/11 Terrorist Attacks

The Dow Jones Industrial Average took its worst beating in almost seven years after Lehman Brothers Holdings Inc. filed for Chapter 11 bankruptcy and insurance giant American International Group Inc. scurried to raise capital even as its market value was axed by distraught investors. It was the worst day on Wall Street since the 9/11 attacks.

The Dow was in complete free fall on Monday as it plunged 504.48 points, or 4.4 percent, to 10,917.51. The S&P 500 gave away 57.89 points, or 4.6 percent, to 1,193.81. The Nasdaq Composite dropped 81.36 points, or 3.6 percent, to 2,179.91.

Nick Perry, writing on his Trading Floor blog, talks about being nervous:

As it stands now, the Dow Jones Industrial Average (DJIA), S&P 500 (SPX), and Nasdaq Composite (COMP) are flirting with the July lows. Earlier I said I thought it was a good sign that the indices were holding here amid the news. However, I think I now have to temper my enthusiasm a bit as I have seen those same thoughts echoed on television and in print. The fact that this is a seemingly widespread view makes me nervous that too many are watching (and hoping) for the same thing. That sets the stage for a lot of pent up selling if we do see a break of the lows.

With that that in mind, I am wondering if we do in fact need to see a break of the July lows. From a chart perspective that would extend the downtrend that has been in place since October 2007 but it could finally allow us to hit that capitulation point where the weak hands finally throw in the towel. I know it seems counter-intuitive to "want" to see a breakdown, and maybe I am dead wrong about it, but I think we need to break this pattern of slow bleeds. A sharp sell off could help achieve that.

"Fear is in charge," money manager Henry Herrmann, president and chief executive officer of Waddell & Reed Financial Inc. in Overland Park, Kansas, told Bloomberg. "This blows another hole in the banking system's ability to extend credit."

Lehman, Listing $613 Billion in Debt, Files Biggest Chapter 11 Bankruptcy Ever; Global Markets Plummet

Lehman Brothers Holdings Inc., the fourth-largest U.S. investment bank, succumbed to the subprime mortgage crisis it helped create in the biggest bankruptcy filing in history, writes Yalman Onaran and Christopher Scinta of Bloomberg this morning.

The 158-year-old firm, which survived railroad bankruptcies of the 1800s, the Great Depression in the 1930s and the collapse of Long-Term Capital Management a decade ago, filed a Chapter 11 petition with U.S. Bankruptcy Court in Manhattan today. The collapse of Lehman, which listed more than $613 billion of debt, dwarfs WorldCom Inc.'s insolvency in 2002 and Drexel Burnham Lambert's failure in 1990.

Lehman was forced into bankruptcy after Barclays Plc and Bank of America Corp. abandoned takeover talks yesterday and the company lost 94 percent of its market value this year. Chief Executive Officer Richard Fuld, who turned the New York-based firm into the biggest underwriter of mortgage-backed securities at the top of the U.S. real estate market, joins his counterparts at Bear Stearns Cos., Merrill Lynch & Co. and more than 10 banks that couldn't survive this year's credit crunch.

"There is likely to be a domino effect as other firms and individuals who relied on Lehman for financing feel the effects of its meltdown," said Charles "Chuck" Tatelbaum, a bankruptcy lawyer with Lauderdale, Florida-based Adorno & Yoss and former editor of the American Bankruptcy Institute Journal. "The whole thing is frankly frightening for the U.S. economy."

Lehman shares dropped 81 percent in Frankfurt trading to 75 cents from their $3.65 close in New York on Friday. UBS AG, HBOS Plc, and Axa SA led a decline of more than 3 percent for European stock markets on speculation a forced sale of Lehman's assets could lead to further writedowns at other banks.

Shares in U.S. banks trading in Frankfurt tumbled, with Lehman plunging 80 percent and Morgan Stanley, Citigroup and others all in retreat. Frankfurt-listed shares in AIG fell almost 30 percent, Reuters reported.

Merrill's shares offered a rare bright spot and its Frankfurt-based shares jumped 36 percent. Bank of America said it had agreed to buy Merrill in an all-share deal for the equivalent of $50 billion, or $29 a share, almost $12 a share above Friday's closing price.

Wall Street Braces for Lehman Brothers Bankruptcy

The federal government showed no signs of stepping in to prevent a potential Lehman Brothers Holdings Inc. bankruptcy after Bank of America Corp. and Barclays Plc pulled out of talks to buy it, Craig Torres and Shannon Harrington of Bloomberg reported today.

Their report says:

Banks and brokers today held a session for netting derivatives transactions with Lehman, or canceling trades that offset each other, in case the New York-based firm files for bankruptcy before midnight.

"The purpose of this session is to reduce risk associated with a potential Lehman" bankruptcy, the International Swaps and Derivatives Association said in a statement today. The ISDA includes 218 banks, brokerages, insurance companies and other financial institutions from the U.S. and abroad.

The step indicates Wall Street lacks confidence that three days of talks to find a buyer for Lehman, held at the Federal Reserve Bank of New York, will be successful. Treasury Secretary Henry Paulson, who has led the talks with New York Fed President Timothy Geithner, was adamant two days ago against using taxpayer funds to help a purchaser take Lehman over.

U.S. regulators are betting that the financial system will be able to withstand the failure of a large institution without severe disruptions to an already weak economy.

Obama, McCain Call Truce on 9/11 at Ground Zero

Sens. Barack Obama and John McCain will put their political campaigning aside for a day as the nation remembers the fallen heroes of Sept. 11th. They will make an unprecedented joint appearance at a Ground Zero commemoration and lay a wreath, without making any speeches.

Afterward, they will separately appear at a public form on civic engagement at Columbia University. Several cable news outlets plan to televise the forum live at 8 p.m. Eastern.

"Both parties have used it [9/11] for their own political benefits, but it is risky," Trent Duffy, a former aide to President George W. Bush and a partner at the Washington communications firm HDMK, told Julianna Goldman of Bloomberg. The candidates "realize that the best statesmanship, and hence the best political move, is to not play politics on 9/11."

Richard Stengel, managing editor of Time magazine and a co-moderator of the forum, told Politico.com's Mike Allen that he will encourage the candidates to be “both eloquent and intimate about their beliefs in this area.”

“I hope they will be able to blend the personal with the political on this subject, so that they can talk about what is it in their own lives that made them believe and care about this, as opposed to just saying, ‘Here’s my policy,’

“Their lives have revolved around service. Both men, from an early age, had the idea of service built into their own view of their lives and what they would do with their lives. I think whoever is president will make service a big part of their administration.”

Ike Forecast: Most Likely Target Is Texas

Hurricane Ike seems to most likely be heading for the Texas Gulf coast, Kyle Peveto and Blair Dedrick Ortmann of the Beaumont (Texas) Enterprise are writing for Tuesday's paper.

Texas Gov. Rick Perry has already declared the state a disaster area in order to start the deployment of resources to the 88 counties that might be affected by the storm.

The National Hurricane Center said at 11 p.m. Eastern Monday that the center of the hurricane was near latitude 21.8 north and longitude 89.8 west, or about 20 miles southeast of Playa Giron on the southern coast of west-central Cuba, and about 140 miles southeast of Havana.

Ike is moving west-northwest near 13 mph. It should enter the southeastern Gulf of Mexico on Tuesday. Maximum sustained winds are about 80 mph, making the storm a category 1. The minimum central pressure is 967 mb. The storm is expected to gain strength as it enters the Gulf.

Reuters reported Monday night that state-run Cuban media says eastern portions of the island have experienced widespread damage, including toppled trees, destroyed homes, downed power lines and flooded towns. The area had up to 10 inches of rain, flooding and a surging sea.

The wire service also reported that Cuban television said four people died, including two men who were electrocuted when they tried to take down an antenna that fell into an electric line, a woman who was killed when her house collapsed and a man who was crushed when a tree blew over onto his home.

Brian K. Sullivan and Camilla Hall of Bloomberg reported Monday night that personnel from 10 rigs and 202 production platforms in the Gulf have been evacuated, the Minerals Management Service said yesterday on its Web site. There are about 717 manned production platforms in the Gulf. The report said the price of crude oil for October delivery dropped 60 cents, or 0.6 percent, to $105.63 a barrel as of 12 p.m. on the New York Mercantile Exchange. Prices are up 38 percent from a year ago.

6-Year-Old Web Story Reposted, Causes UAL Stock to Plunge 75 Percent

A nearly six-year-old Tribune news story discussing United's plans for bankruptcy was reposted on the South Florida Sun-Sentinel and headlined on Bloomberg this morning, causing United Airlines stock to plunge 75 percent in minutes.

David Greising of the Chicago Tribune reports:

The stock, which had closed Friday at $12.30 a share, hit a low of $3 a share before the confusion was cleared up. The stock was trading recently at $8.97, down $3.03 for the day.

After being alerted to the issue Monday morning, the Chicago Tribune removed the story from its online archives which are also accessed by other Tribune Co. newspapers. The South Florida Sun-Sentinel's version of the story was the one that was cited by Bloomberg. The story did not appear on the Web site of the Chicago Tribune.

The original story, published Dec. 10, 2002, appeared the day after United Airlines filed for Chapter 11 bankruptcy, and discussed the company's strategy for emerging from bankruptcy. Though the text of the story appeared on the Sun-Sentinel Web site Monday, the date on the story had been changed to Sep. 6, 2008, according to Joseph Schwerdt, deputy managing editor-interactive for the Sun-Sentinel.

United Airlines officials were obviously angry, and demanded a retraction. "United continues to execute its previously announced business plan to successfully navigate through an environment marked by volatile fuel prices and continues to have strong liquidity," United Airlines said in a statement.

The story was posted at 10:53 a.m. It is not clear how it made its way onto the web with a posting date of Sept. 6, 2008.

James Abels and Tom Van Riper of Forbes reported on the chaos in the newsroom caused by the botched posting:

Micheal Lev, business editor ot the Chicago Tribune, said his staff was scrambling to figure out what was going on with United's stock. He said at the time that he had not heard of the CNBC report that a six-year-old story about United filing for bankruptcy had run on the his paper's Web site. "We've written nothing on United Airlines today," said Lev.

According to news aggregation site SmartBrief.com, the South Florida Sun-Sentinel, a Tribune paper, was the first to run the old story about United. It was posted to its Web site at roughly 1 p.m. Sunday.

Sun-Sentinel Online Editor Joe Schwerdt pulled the story off his site shortly before noon this morning, in response to a call Tribune made to Sun-Sentinel editor Earl Maucker.

"I literally just got word a couple minutes ago that there was problem," says Schwerdt. He says he did not know how the old story was posted as new and was unsure if any other Tribune papers ran it. He declined to discuss details about how his paper publishes stories on weekends. ...

It was unclear whether the old story appeared on the front of the Tribune's site, as some initial reports indicated. Tribune says it did not. Regardless, investors who found the story would have a hard time knowing it was six years old. No date of original publication is listed on the story page on either chicagotribune.com or sunsentinel.com. The only date on the pages was today's: Sept. 8, 2008

On Romenesko's journalism blog, Maucker says reports that an United Airlines bankruptcy story resurfaced on his paper's website on Sunday are wrong. "We never posted the story. We never did anything." A research firm apparently found the old story through a Google search and then posted it to Bloomberg, which caused UAL investors to panic, Romenesko says.

Mary Schlangenstein of Bloomberg reports the news report was posted online by the Sun-Sentinel and was picked up by Income Securities Advisors Inc., said Richard Lehmann, president of the Miami Lakes, Florida-based research firm. Income Securities Advisors distributed the report on the Bloomberg terminal before retracting it and issuing a correction. Bloomberg News also ran a headline citing the Tribune story after the Income Securities Advisors report.

Officials Lift Ike Evacuation for Florida Keys

An evacuation of the Florida Keys was canceled beacause of the latest forecast that Hurricane Ike has changed course this afternoon.

An evacuation of the islands started over the weekend but new forecasts show the storm veering south and west of the islands.

Mark Shenk of Bloomberg is reporting this afternoon that oil companies are starting to remove its crews from platforms in the Gulf:

Royal Dutch Shell Plc and BP Plc evacuated workers from Gulf platforms in preparation for the storm. About 80 percent of the region's oil output and 70 percent of its gas production remained shut yesterday because of Hurricane Gustav, according to the U.S. Minerals Management Service.

``All eyes are on Ike and how strong he might be,'' said Rick Mueller, director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts. ``Rather than return workers to platforms and then evacuate them again within days, oil companies will probably leave production shut-in longer than would be the norm after a storm with the strength of Gustav.''

Crude oil for October delivery rose 75 cents, or 0.7 percent, to $106.98 a barrel at 10:04 a.m. on the New York Mercantile Exchange. Prices are up 40 percent from a year ago.

Gasoline for October delivery increased 7.42 cents, or 2.8 percent, to $2.7603 a gallon in New York. Heating oil rose 4.19 cents, or 1.4 percent, to $3.0247 a gallon.

Ike's eventual path is still a mystery, as forecast models have its landfall on the southern U.S. coastline anywhere from Louisiana to Texas.

Crude Oil Futures Up as Gustav Hits Offshore Rigs

Crude oil for October delivery rose $1.55, or 1.3 percent, to $117.01 a barrel in after-hours electronic trading on the New York Mercantile Exchange at 8:40 a.m. in Singapore, Gavin Evans and Margot Habiby of Bloomberg reported early Monday. Prices, which dropped 7 percent in August, are up 22 percent this year.

Personnel from more than 70 percent of the platforms and rigs in the Gulf have been evacuated as the storm approaches, the U.S. Minerals Management Service said in a statement on its Web site yesterday. About 1.25 million barrels a day of oil and 6.09 billion cubic feet of gas have been shut, or more than 96 percent of offshore oil output and 82 percent of gas production.

Gasoline for October delivery gained 7.18 cents, or 2.5 percent, to $2.9260 a gallon on the exchange. Electronic transactions started early to allow market participants to respond to Gustav. Trades will be dated Sept. 2 because of today's Labor Day holiday in the U.S.

``We're more prepared for this storm than we ever have been for any hurricane that I remember,'' said Phil Flynn, senior trader at Alaron Trading Corp. in Chicago. ``We're better prepared, and demand isn't that strong anyway, so I'm about as optimistic as I can be in this type of disastrous situation.''

Brent crude oil for October settlement rose $1.35, or 1.2 percent, to $115.40 a barrel on the ICE Futures Europe Exchange today.

The Gulf of Mexico accounts for 26 percent of U.S. oil production and 14 percent of natural-gas output. The Gulf normally produces about 1.3 million barrels of oil and an estimated 7.4 billion cubic feet of gas a day, according to the agency, part of the U.S. Interior Department.

CNNMoney.com examined Gustav's overall impact on consumers and the oil industry. David Goldman reports:

Much offshore oil production has already been shut down and experts say it could get worse. It could damage gasoline refineries, which could send the price of oil and gas back up near record highs.

"Production will be shut down in the path of the storm," said Cathy Landry, a spokeswoman for the American Petroleum Institute. "Not every rig will be in the storm's path, but the oil companies tend to be very cautious."

Obama Scores Big at Invesco

There's a lot of high praise for Obama and his speech tonight. It was well delivered, as we all knew it would.

The Associated Press' Nedra Pickler wrote the copy that will appear in most newspapers in America tomorrow morning:

An enthusiastic crowd of 84,000 — unprecedented for a political convention — literally shook the stadium at Invesco Field at Mile High with their stomping feet, every participant equipped by organizers with an American flag. More important was the audience of millions of Americans watching on television, a tougher crowd, as Obama spoke before a backdrop of columns reminiscent of the White House portico.

Carl P. Leubsdorf of the Dallas Morning News had this opinion in his blog tonight about the use of patriotism in the campaign:

Barack Obama challenged John McCain's efforts to corner the political market on patriotism. But he made clear he won't echo his Republican rival by accusing him of taking position for political purposes.

"Because one of the things that we have to change in our politics is the idea that people cannot disagree without challenging each other's character and their patriotism," he said.

Bloomberg's Kristin Jensen and Julianna Goldman touched on the fact that it is the anniversary of another famous speech:

Obama spoke 45 years to the day after Martin Luther King Jr. delivered his ``I Have a Dream'' speech, and he drew on that historic legacy. His parents, a Kenyan and a white woman from Kansas, ``shared a belief that in America, their son could achieve whatever he put his mind to,'' Obama said.

Democrats had high expectations for tonight's speech; it was Obama's keynote address to the Democratic National Convention in 2004 that propelled him to national prominence. He used the address to tell Americans more about himself, while arguing that he is a better candidate to lead the country than presumed Republican nominee John McCain.

And John Farmer of the Newark Star-Ledger had this thought about what's next:

Secondly, [the Obama campaign] had to move beyond the party's internal problems. Important as unity might be, it matters little to most rank-and-file voters -- especially members of the middle class, hard-pressed by rising consumer and education costs, job losses, stagnant wages and out-of-reach health care. They want answers to these troubles.

That was the task Obama took on last night in formally accepting the nomination at an outdoor speech (a la John F. Kennedy in 1960) at Invesco Field, home of the Denver Broncos football team. He planned to go beyond generalizations about "change" to talk about bread-and-butter issues, like how to create jobs and end the nation's dependence on oil.

It was a pitch to the army of miffed middle-class voters, mostly white, blue-collar workers, many of them in small towns and rural areas. They resisted Obama's appeal during the long primary campaign and are considered a key to victory in such major battleground states as Pennsylvania, Ohio, Michigan and West Virginia.

Winning them over is the second part of the Obama camp's two-horse parlay.

Steve Jobs Is Alive, No Exaggeration!

Steve Jobs had a W.C. Fields moment today as reports of his death are exaggerated. Bloomberg prematurely (and quickly deleted) his obituary while a reporter was writing a routine update. Gawker.com has the obit, and the retraction.

The Bloomberg financial newswire decided to update its 17-page Steve Jobs obituary today — and inadvertently published it in the process. Some investors were undoubtedly rattled to see, as our tipster did late this afternoon, the Apple CEO's obit cross the wire and then suddenly disappear. Jobs's battle with pancreatic cancer, and speculation over his health, jarred Wall Street earlier this year and continues to be the subject of speculation.

Eye on Gustav

All of a sudden there is concern that tropical storm Gustav (satellite image above) could develop into a hurricane and make landfall near New Orleans. Reuters reports that officials in New Orleans will consider an evacuation if there are indications that it could become a Category 3 storm:

Not since Katrina and Hurricane Rita, which followed in its wake, have residents faced government orders to evacuate their homes and businesses. Many are still struggling to rebuild their lives in a city famed for its jazz clubs and Mardi Gras festival.

On Wednesday, two days before the third anniversary of Katrina's Aug. 29, 2005, landfall, Gustav drifted away from Haiti and the Dominican Republic after killing 22 people. It could hit the U.S. Gulf Coast around Monday.

Here is the National Hurricane Center's bulletin:

http://www.nhc.noaa.gov/text/refresh/MIATCPAT2+shtml/271147.shtml

The storm has already affected our pocketbooks as the price of sweet crude oil edged up to $118.28 a barrel, settling there after reaching $120 during trading today. The storm is threatening U.S. oil platforms in the gulf, Bloomberg reports:.

Energy producers will evacuate ``several thousand'' employees from offshore rigs yesterday because of the storm, said Ted Falgout, the director of Louisiana's Port Fourchon. Almost 20,000 workers are on offshore platforms, about one-quarter of which are needed to maintain output, Falgout said in an interview.