11
Aug

Wrap – Week Ended 08/10/07 (In Progress)

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Gee, it didn't feel like an up week.

Crude and Products Got Spanked... Despite a second week of much bigger than expected draws on crude stocks and a surprising dip in refiner make which yielded a draw in gasoline and a smaller than anticipated build in distillates prices of all three fell this week. Blame a bunch of guys who just couldn't pass up making one more bad home loan (ok, it was probably more than just one loan).

  • Refiners Buy Gas To Prep For Hurricane Season. There was a bit of a recovery in RBOB on Friday and this may be part of the reason. According to an OPIS (Oil Price Information Service) statement highlighted by the EIA Daily report refiners are buying gasoline in advance of a possible increase in GOMEX tropical activity. Specifically weather models are citing August 19-22 for potential hurricane development in the Gulf.
  • MEND Is Back. On Thursday the Nigerian rebel group threatened more attacks on energy facilities and on Friday they kidnapped a British oil work.

...Natural Gas Broke Out. (click on the graph if your monitor can't display the full image). You can really see the breakout came with the gas storage numbers on Thursday and then ran Friday with all the tropic fear stories (see below).

  • 42 Bcf injection (I was 45-50) and the Street was 53 Bcf. This touched off a nice rally on Thursday which continued into Friday as activity in the Gomex began to heat up.

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The natural gas daily chart broke out of a two month range on Friday.

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  • Over the next few weeks, I expect the YoY storage surplus to decline as Summer has finally arrived. Note the rising injections a year ago from this point forward in the chart below.

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  • We'll need to keep a close eye on LNG send out volumes on Monday as we've now seen two weeks of sharp declines. Could it be the magic number for imports is $7 now?

CFTC Shows Natural Gas Short Position Retreated Slightly From Record Levels. The net position fell as the result of a small build in the longs and a good sized decline in the number of shorts. Sustained heat and.or a storm and the cover here will likely send natural gas prices substantially higher.

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Heat Wave Watch: The U.S. Southeast saw record electricity demand last week from Texas to Florida and north to Viginia. Souther Company, TVA, Duke Progress Energy and SCANA all reported record demand according to the EIA.

Forecasts Show Continued Heat: Red Dawn.

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...and then there's a rather explosive piece on the tropics from Accuweather... Looks like a made for CNBC graphic to me!

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...and the story John Kocet references is here. This is the one we've been watching for the last several days.

in progress -to be continued...

8 Responses to “Wrap – Week Ended 08/10/07 (In Progress)”

  1. 1
    zman Says:

    Area of south of Cuba is getting more active.

    Also coming off Africa, NOAA saying tropical development possible next 36 to 48 hours.

    http://www.nhc.noaa.gov/refresh/graphics_at3+shtml/143534.shtml?basin#contents

  2. 2
    Stephen Says:

    Looks promising, what are your Monday morning hurricane longs, you mention OII often, but it’s potential may be limited by recent action, any other recommendations … DEEP seems to be in a major down trend after delaying 2Q results.

    Helicopters … BRS, PHII, CKH

    Offshore platforms … GIFI

    Deep sea divers … GLBL, DVR

  3. 3
    zman Says:

    OII as always. DEEP I know peole like and it may do fine but no options.

    PHII hard to trade.

    But on the gassy side, SWN, CHK, APC, EOG, NFX…they’re going to run if something does steer into the gulf. Then you’ve got TSO which is a good long in the event the coast is threatened as they have not refining capacity their. At first, when the fear hits nearly everything energy has a quick move up but it rapidly (2-3 days) sorts to the real beneficiaries.

  4. 4
    sdanesh Says:

    Z,

    What about GRP?

  5. 5
    zman Says:

    GRP – it’ll trade with the OIH which I would expect to trade up as storm concerns rise. I don’t see how they benefit from actual damage (they’re bits, tubes, connectors, core analysis etc).

    If there is a big bad blow it seems to me it temporarily cuts demand for some of their products but the impact would likely be short lived and maybe not even noticeable. So in a nutshell I think they perform with the OIH and not differentially better than it.

  6. 6
    Stephen Says:

    I’m no expert, a moving, spinning thing, but with some dry air ahead:

    http://www.ssd.noaa.gov/goes/east/tatl/loop-wv.html

    http://www.ssd.noaa.gov/goes/east/tatl/loop-vis.html

    http://www.ssd.noaa.gov/goes/east/tatl/loop-avn.html

  7. 7
    Sambone Says:

    90L

    Moving west at 15 – 20 MPH. Shear is currently 20, but expected to drop to 10. Should be a TD today or tommorow.

    East coast or GOMEX

  8. 8
    ndog Says:

    where do you see tso going before it stalls

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