U.S. crude futures are holding near $108 a barrel, as U.S. data shows that refinery utilization dropped to the lowest on record last week in the wake of Hurricane Ike.  Crude stocks dipped by less than expected thanks to the lower demand from refineries.

“The EIA data shows you that demand looks abysmal. The crude import numbers are surprising. Going forward, I see inventories rising,” said Kyle Cooper, director of research at IAF Advisors.

Elsewhere, solar power stocks are rallying after the U.S. Senate voted to extend tax credits worth $18 billion for renewable energy sources.  Also, Energy Sec. Bodman is slated to speak at GridWeek Conference in DC.

Tuesday, Venezuelan President Hugo Chavez (pictured) paid tribute to China’s autocratic late leader Mao Zedong minutes after stepping onto Chinese soil, and said he hoped to build a joint tanker fleet and nearly double oil exports to the world’s number two consumer next year.

The stronger dollar takes the air out an historic surge in crude futures Monday; gold too is off this morning. The spotlight on commodities trading trends continues; the Commodity Futures Trading Commission is reviewing the spike in oil on Monday.

Analysts say the wild swings in commodities prices don’t appear to be the work solely of investment funds, Rene Pastor reports today. “I have no problem with how the markets have acted and continue to act. That is not to say I always like what I see or do not feel the stress of the volatility, I sure do,” Jack Scoville, vice president of brokers the Price Group in Chicago, tells us.

On the plate today:

• Senate Energy Committee hearing on high cost of diesel fuel, witnesses include EIA administrator Howard Gruenspecht and National Petrochemical and Refiners Association President Charlie Drevna
• Senate to vote on legislation extending renewable energy tax credits
• Thin ethanol supplies for the interharvest period in Brazil. Local ethanol prices started to rise.
• Federal prosecutors are looking into possible price-fixing by egg companies and California tomato processors, the Wall Street Journal reports.

 (Pictured: Mukesh Ambani, Chairman of Reliance Industries, holds a jar containing the first crude oil produced from their company’s KG-D6 block in the country’s east coast at a news conference in Mumbai September 21, 2008/REUTERS)

“Short squeeze, crude expiration — that’s it in a nutshell.”

So says Tom Knight of Truman Arnold in Texas of the near 16% surge in U.S. crude for October to $120.92 a barrel. Among other factors in the energy markets today:

* TARP, the Sec. Paulson-led rescue plan for U.S. banks, has changed sentiment for oil, some analysts are arguing. (A 2% rally in gold amid a weaker dollar lends some support to an re-allocation assumption)
* Saudi Arabia trims oil supply to majors
* Nigerian rebels declare unilateral cease-fire
* U.S. oil sector recovering from Ike

How much more to go? “The dollar is down, the stocks are down and now investulators are jumping back into oil,” says Peter Beutel, analyst at Cameron Hanover in Connecticut. More views on the market today are here.

Oil tops $100; Washington’s plans to mop up bad assets bolster oil trading. Yet open the lens a little wider on commodities trends and note that the Reuters-Jeffries CRB index is trading at its lowest level since last October.

“The growth we saw in emerging economies from 2004-2007 was extraordinary — we may not get to that level again,”Tony Dolphin at Henderson Global Investors tells Humeyra Pamuk and Jane Merriman in an analysis on commodities investing trends here.

Meanwhile, Goldman Sachs energy equities analyst Arjun Murti, one of the first to predict $100 a barrel crude, cut his 2009 oil price forecast to $110 from $140 a barrel this week due to global economic weakness.

On the plate today:

•  U.S. Energy Secretary Sam Bodman said the US will not ask members of the International Energy Agency to release emergency gasoline and diesel supplies.
• Venezuela will sign deals to explore gas fields in the Caribbean with foreign companies, including U.S.-based Chevron, in a sign it is open to outside investment despite a wave of energy nationalizations.
• A bill to curb speculation in the oil markets could be too restrictive and reduce liquidity, a spokeswoman for the ICE says.

Gold comes off but oil futures work to recoup $100 and at least one commodities-linked exchange is outperforming as central banks pump money into distressed markets. (Toronto’s benchmark stock index is rising over 2% at this moment. No such luck in Australia overnight and the reeling Russian market remains shuttered)

Still the banks crisis remains a potent presence. Energy trading heavyweight Morgan Stanley elected to withdraw from the Platts benchmark oil trading window in Asia on Thursday, steering clear of a possible test of its credit acceptance among counterparties.

The Australian picks up on a concern the credit crunch squeeze is hitting smaller exchange players, quoting Philip Gotthelf, president of Equidex Brokerage Group that some brokerage houses

“are at 150 per cent of exchange margin. They’re essentially shutting the little guy out completely”. It is harder to buy or sell crude, because “there’s less credit around to do it.”

On the plate today:

• A lack of sufficient investment in new natural gas supplies and delays remain a major problem in most markets, Nobuo Tanaka, IEA executive director says.
• U.S. ethanol makers wrestle with unpredictable corn prices and dwindling cash pile
• MMS releases updated production data from Gulf of Mexico (1800 GMT )

On the plate today:

• Gold prices posted their biggest one-day rise in absolute terms since 1980
• As financial worries spread, Russia halted stock and bond trading in a response to the worst market falls since 1998.
•  The White House may decide as soon as this afternoon whether to ask members of the International Energy Agency to release emergency gasoline and diesel fuel inventories into the U.S. market, Energy Sec. Sam Bodman tells reporters
• Chinese Premier Wen Jiabao called a meeting of the cabinet to back plans for a national inspection of milk products, the UK Press Association reports.

A news website devoted to American politics picks up the threads in the oil market speculation story. Politico outlines the scope of the lobbying by the airlines-to-truckers backed “Stop Oil Speculation Now Coalition” and its new sparring partner, the Wall Street-backed “Coalition to Protect Competitive Markets”.

Regulation is in the air. Politico notes that gas stations owners have put out signs calling for customers to urge Congress to “take action against speculators”

On the second day of financial services turmoil, CNBC keeps a live update of the crude oil price on lower-right of the screen. An interesting choice for a sentiment indicator, particularly with the benchmark stock indices little changed.

Lehman Brothers, Merrill Lynch and American International Group all are clearing members on major commodity exchanges. All three had been active in getting clients to invest in the rally that made commodities the best performing asset class of the past few years, Barani Krishnan writes in an analysis on the apparent breakdown in relationships in asset classes.

(U.S. crude traded down $3.96 to $91.75 a barrel by 9:55 a.m. EDT in what’s seen as a move to cash. The Reuters-Jefferies CRB Index, a global commodities benchmark, neared eight-month lows on Monday.)

Some other stories we’re watching in commodities today:

• Hurricane Ike did not appear to inflict heavy damage on oil refineries, FEMA told reporters. Nonetheless, several offshore platforms in the Gulf of Mexico — including BP’s big Mad Dog facility — were damaged. It’s a sign a full recovery of oil and natural gas production in the region could be a long way off.

• Farm Foundation Forum on rural health insurance issues.
• Expecting Mexico and Central American coffee exports data and Nicaragua coffee figures
• Venezuelan Oil Minister Ramirez and Chile’s Mining Minister on a visit to sign exploration contracts

And the question for the day… What now for the pension funds and commodities diversification theory?

U.S. crude futures have just settled down 5.4 percent at $95.71 a barrel. Turmoil in the stock market plays a role but early signs Hurricane Ike spared key energy infrastructure also weighed on prices. In Texas, Chris Baltimore writes “widespread power outages were the key hindrance. Electricity is the lifeblood to Gulf coast refineries.”

Early indications are that the storm caused only minor to moderate damage to platforms and coastal refineries.

CUMULATIVE IMPACT OF GUSTAV AND IKE
*20.48 million barrels of crude oil
*102.79 billion cubic feet of natural gas
*33.06 million barrels of refining (counting only plants completely shut)

CURRENTLY SHUT/SLOWED
*99.9 pct Gulf of Mexico oil output
*93.8 pct Gulf of Mexico gas output
*16 refineries shut, 24.6 pct of US capacity
*5 refineries representing 7.7 pct of US capacity at reduced rates
*Some ports, Gulf Coast pipelines ramping back up
*At least 55 ships await entry to Houston
stock market plays a role but early signs Hurricane Ike spared key energy infrastructure also weighed on prices.

The Chicago Board of Trade soybean market certainly provided some fireworks on Friday when the September soybean contract shot up a whopping $2.74 a bushel, or 22 percent just before it expired at midday. 
    It caused a few gasps on the trading floor on Friday. But most traders had long ago exited their Sept positions before Friday’s explosion. 
    “I don’t remember anything going that ballistic on the closing day of trade in beans … in wheat, yes but not beans,” one trader said Friday.  
    “Obviously somebody was caught short. There wasn’t a lot of open interest coming in today so it didn’t take much to do it.” 
    The CME Group, parent of the CBOT, said late Friday that after researching their historical data going back to 1972 - it was the biggest move in soybeans since then. 
    A strong cash market helped fuel the explosion. CIF soybean basis bids at the U.S. Gulf for first-half September jumped 75 cents by Friday morning as exporters and processors wrestled for nearby supplies. A combo of tiny year-end stocks and a rain-delay harvest has limited the amount of U.S. beans moving into the pipeline. 
    As far as the week ahead, grain traders will be looking at the bigger economic picture for direction. Early in the week, the biggest driver will likely be crude oil as traders react to whatever devastation that Hurricane Ike may have left behind. 
    The Midwest has already gotten soaked this weekend (7-10 inches in northern Illinois by Sunday morning). The eastern belt could see even bigger rains on Sunday into Monday - a fallout from Ike. 
    No surprise that it is stalling harvest, especially in the south where the crop is ripe. USDA’s weekly crop update issued late Monday will post harvest progress, which is already about 2 weeks behind even before Ike. 
    The National Oilseed Processors Assocation will release its August monthly crush figures before the CBOT markets open on Monday. But with the likely volatility in crude, rains stalling Midwest harvest, and the dollar on a roll it will be on the back burner compared to the bigger macro economic picture. 
    All eyes on what happens with Lehman Brothers. Regulators and bankers resumed a third day of talks on Sunday in a desperate attempt to reach a deal to sell Lehman and prevent the struggling bank from flooding financial markets with assets at fire sale prices. 

Oil prices are rising as Hurricane Ike moves within 24 hours of striking the coast near Houston with a possible 20-foot (6-meter) wall of water.  A slew of oil refineries located in Galveston Bay that account for around 12 percent of U.S. capacity were also in the storm’s likely path. Weather forecasters at Planalytics saw “major and long-term damage likely at the major refining cities.”

Ike, the federal response and updates of output will set the tone for the day. Here’s a look at output shut in the Gulf and list of oil companies shut and some other events in commodities:

• Senate Energy Committee hold day-long summit to discuss America’s energy problems and solutions.
• Could see big calls for corn/soy after weaker than expected crop and stocks numbers.
• Ed Stoddard and Yereth Rosen probe whether Sarah Palin a friend or foe of big oil. As governor of Alaska, she raised taxes on oil companies. But on drilling, her positions look very like Vice President Dick Cheney.