14
Aug

Tuesday – Rebound Redux?

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Trust No Rally, Keep Your Sell Finger Ready. We rallied. We sold off. This applied to oil and oil products, natural gas, energy stocks, and stocks in general.  Enough said. Except to say that that was not fun and no more of those kind of days for awhile please, especially not in op-ex week.

Oil Rallies, Then Fails Back.  Yesterday saw September crude rallied $1.72 to break $73 before falling all the way back to close at $71.62. Backwardation remains in place which during the current liquidity crunch is yet another limiting factor for rallies. I still expect oil to bottom soon but it may be in the high $60s.

Refinery Watch: Refiners hit the ground restarting this week. I don't usually point them all out but after last week's surprise dip in utilization and production its interesting to see several units popping back into service.

  • CDU back to full rates at (COP)'s 190,000 bpd Trainer, PA site.
  • FCCU restarts at (COP)'s 230,000 Linden, NJ site.
  • Hydrocracker restarts at (CVX)'s 260,000 bpd El Segundo, CA refinery (actually last Friday)
  • Coffeyville to restart the flooded 108,000 bpd Coffeyville refinery ahead of schedule, with the expectation that it will be back at 100% by the end of August. This is two weeks ahead of prior expectations.

Natural Gas. Broke up through $7 for the first time in 6 weeks. Then  we broke back through $7 to close flat. One eye on the Atlantic, one eye on the heat  shimmering off a vast swatch of the U.S.

Tropics Watch: 

  • TD 4 is expected to become Tropical Storm Dean in the next 24 to 36 hours and is tracking toward Cuba and could arrive there as a Cat 2/3 Hurridcane by the weekend.
  • There's another tightly bundled low just coming out of Africa behind it.
  • In the GOMEX a broad low could also develop into a tropical depression/storm in the next 24 hours.
  • The weather girls on business news lite this morning were surprised to learn that August to October was the real meat of the hurricane season.

Natural Gas Imports Rose Last Week: Imports rallied 12.1 Bcfgpd last week, up 1.2 Bcfgpd from the prior week, which is back near the highs for this summer. This level is spot on with year ago volumes with a rise in LNG imports offsetting a decline in piped gas from Canada.

  • LNG: Jumped 0.8 Bcfgpd to roughly 2.7 Bcfgpd arresting a recent sharp decline but still well off the 3.8 Bcfgpd record set just 3 weeks ago. According to the EIA, Energy Inteligence claims LNG imports may have hit a record of 3.9 Bcfgpd last Friday which augers for a further rise in imports next week.
  • Canadian Pipes: Also rebounded slightly to 9.4 Bcfgpd. This maintains the 1 Bcfgpd deficit in imports from Canada relative to a year ago volumes.

imports-081307.jpg

So What's The Early Read On Natural Gas Inventories This Week? All things being equal imports would have bumped the number up by 8 Bcf. But all things are not equal. They're hot. Damn hot. Moreover, it was hot in gas centric  generation regions of the country. I'll firm up my gas inventory estimate tomorrow but the following is a little run through on gas-fired generation demand in the near term.

The following busy little table demonstrates that heat in some areas like New England and the West South Central (ArkLaTexOk) means a lot more to gas demand that it does in say a region like the West North Central (square farming states). As you can see, last week's temps were pretty strong for generation relative to norms but not especially so for all regions. But look ahead to this week's projection. That's hot both compared to normal and especially to last year. This is how you quickly erode the recently created YoY natural gas storage surplus.

cdd-vs-gas-fired-generation-aaa-081307.jpg

I used August of last year as a basis for showing gas generation intensity (as this changes throughout the year) and it should be representative for each region during the same time of the year. Fore example, in the above table 45% of New England's electricty needs were met by natural gas fired generation last August.

If anything, as we move into the hotter part of August, the generation share for natural gas should increase given: 1) the availability of gas for peaking power, 2) the increase in gas-fired capacity since last year, and 3) the stretched to the limit nature of nuclear power. If your monitor does not display the full table below click on it to display a larger version.

For those of you who prefer to look at pictures, here's a look at the relationship between gas fired generation as a percent of total generation versus this week's projected deviation from normal second-week-of-August temperatures.

cdd-vs-gas-fired-generation-aaa-081307-graph.jpg

Finally, you need one more graph to put the above data into perspective. This graph really drives home the importance of the West South Central region for heat induced natural gas demand and also confirms the lack of importance of the West North Central region, despite the excessive heat they're now suffering, for gas demand (no offense square states but your heat doesn't amount to much for gas demand).

electricity-gas-by-region-aug-2006.jpg

Earnings Watch:

  • (VQ) - Interesting Cal/Tex player, went public last November.
  • Three areas of operations:
    • California - Sacremento Basin (Grimes and Willows fields)) - 100% gas, 120 wells planned 2007, 2x 2006 activity levels. Also tripling the number of recompletions 2006 levels to 100. Low risk, low cost exploitation with a large set of defined drilling locations and significant upside reserve potential with downspacing.
    • California - Coastal Region (four major fields in SoCal), also 3 offshore platforms.  Huge original oil in place augers for significant reserve adds through enhanced recovery.
    • Gulf Coast Texas. Two fields, one with CO2 flood development in the planning stage with (DNR).
    • Operates 96% of properties, has a large drilling inventory for it's size and a long reserve life (13 years). They've been picking off fields in California at decent prices.
    • Rising Capex with only 4% targetting exploration.
  • 2Q07 results last night
    • EBITDA - record high $57.1 mm for the quarter.
    • production growth 11% sequential although this includes acquired volumes from two acquisitions closed in the second quarter
    • good per unit cost control both LOE and G&A. LOE per unit costs were due to a combination of higher volumes and less remedial work. Second half per unit lifting costs are expected to fall further.
    • Conf Call: 11:30 est
    • Nutshell: five analysts follow it, it's somewhat oil and set to grow and at pretty good clip. I'll have expanded comments in tomorrow's post.

Holdings Watch:

CALLS: Took some modest new positions...got burned.

  • (HAL) Added the September 35s for $1.20. Then the markets as funds took profits in whatever was the up the most be it equity or commodity. Last bid $0.75.
  • (NFX) Added the August 50s for $0.40. Ditto reverse action described above. Last bid $0.10.

PUTS: No Action.

Odds & EndsErrata: Last Thursday I posted a table summarizing the prior day's EIA oil inventory report. It has been noted that I reversed the headings for actual and estimates in this table. Precision but not promptness points to Eugene for noticing.

Analyst Watch: (DWSN) to buy at Matrix, (COG) to aggressive buy at KeyBanc.

Subscription Watch: To reserve you spot, click here. Emails will go out shortly (probably next Tuesday) to those of you who’ve reserved a discount rate spot. The email will explain how to pay for your subscription and obtain your user name and password. As a reminder, this site goes private September 1 and I would recommend obtaining a PayPal account to help ensure a seamless transition. A limited and as of yet to be determined amount of material will be posted on a publicly accessible page with a link to the subscriptions tab. If you have any questions please contact me at zmanalpha@gmail.com.

Stocks We Care About Watch:

  • (NFX) signed a deal with Cnooc for two production sharing agreements for blocks 22/15 and 16/05 in the South China Sea. Newfield will conduct a 3D survey.  Not actionable but it's in line with prior statements about not leaving China, just their current Bohai Bay production.

Bolivia Watch:  Morale sets August 20 as drop dead date for foreign to submit investment plans or face "annullment of their contracts".  Sounds familiar to plans previously set forth in Caracas, Tehran, and Washington D.C.


121 Responses to “Tuesday – Rebound Redux?”

  1. 1
    Sambone Says:

    Weather girls, LOL

    Watching 91L closely. May be a TD by today. Cane Hunters out this afternoon.

    \
    http://www.orbit.nesdis.noaa.gov/smcd/opdb/aviation/loops/realtime/atlwv_loope.html
    Animate frames

  2. 2
    zman Says:

    91L path is western gulf, note the preceding wave’s spin.

    Re weather girls. Cantanea asks “did you know that the primary hurricane season is August through October?” Glick responds, “no,” but then without missing a beat ” she says “I guess that’s why we’ve had such easy time of it so far” or something very similar to that. It was as canned as the nightly news.

  3. 3
    Sambone Says:

    Now you know why I don’t watch that stuff, Talking heads.

  4. 4
    zman Says:

    Once in a while I see oil flashed up on the TV. I turn on the sound, listen for two minutes, shake my head and turn the sound back off for another month.

    tentative energy open this morning. refiners and service look a little better, E&P pretty mixed by mostly up slight. nat gas looks disappointed with that track which is more Florida than GOMEX.

  5. 5
    codydog Says:

    z–you on the IOC CC?

  6. 6
    zman Says:

    No – I’m not playing, anything interesting?

  7. 7
    codydog Says:

    new drilling report in 3 weeks

  8. 8
    zman Says:

    wasn’t it at 8:30 est, isn’t it over yet?

  9. 9
    zman Says:

    I assume on the Elk2

  10. 10
    zman Says:

    Somebody wake me when the broad market decides to stop panicking.

  11. 11
    Brian08 Says:

    Enjoy your sleep Z…See you next year…

  12. 12
    Alok Says:

    VLO is down 5% from yesterday top. Should we add some position?

  13. 13
    Nicky Says:

    Its hard to imagine that we won’t see higher prices in the energy complex later on in the week – just some weather insurance ahead of the weekend.
    WTI options expire Thursday and $75 may prove a magnet which also fits as target area for wave ii.

    It is not out of the question that wave i down is need of a slightly lower low. This looks to be the case in distillates.

  14. 14
    zman Says:

    VLO: I’m not. Market looks weaker/funds still raising cash from prior winners. So I’m waiting for now although it and TSO are in my sights when the dust settles a bit.

  15. 15
    zman Says:

    Nicky – I’m holding you to $75.

  16. 16
    zman Says:

    Fed liquidity injected last week has been withdrawn. There was no liquidity injected today which is the first time none has been added since May 11. Way to go Ben, crisis solved I guess.

  17. 17
    Sambone Says:

    40L is about to be upgraded to a TS named Dean. Navy has it as Dean now. Heading west towards Florida/GOMEX.

  18. 18
    Nicky Says:

    75 sounded a bit PF didn’t it Z?

  19. 19
    Nicky Says:

    WTI would also look better with a lower low prior to a corrective move up to 75 I would add.

  20. 20
    zman Says:

    wow – nat gas!!!

    ya know, as markets go I prefer my selloffs in the morning. let’s people cogitate on it and bargain hunt.

    you PF? ha,ha,ha … never!

  21. 21
    Sambone Says:

    91L – This might be TS “Erin” next.
    http://www.ssd.noaa.gov/goes/east/gmex/loop-rb.html
    We now have “Dean”.

  22. 22
    Nicky Says:

    You are right Z – I am not nearly bullish enough! See below.

    The Energy Report for Tuesday, August 14, 2007

    Feeling a little depressed? Maybe a bit tropically depressed? The oil market went from worrying about the swirling financial storm to worrying about the development of a potential tropical storm. Ah…it’s nice to see signs things are getting back to normal in the old energy complex.

    What ever normal is supposed to be. At some point in the energy trading day sub-prime fears, at least for the moment, became yesterday’s worry and now its all about TD number 4. That’s Tropical Depression number 4 and fears that it will soon be tropical storm Dean. That storm fear drove natural gas to as high as $712.70 at one point as the map projections and the Global Forecasting System (GFS) models from the NOAA and the National Hurricane Center seemed to suggest that this no-named storm could be on a long course towards the Gulf of Mexico.

    Yet later in the day the government and the GFS model seemed to suggest that the storm might miss the Gulf and now the projection is for the storm to move up the eastern seaboard away from production on a path that would hurt demand more than supply. Natural gas then sold off and the petroleum decided to sell along with it. But not so fast says Dave Tolleris WXRISK. He warns that the change in the model does not match other weather models including his own and the “European Model”. In his mid-day report WXRISK says, “The midday forecasting system GFS has decided that after showing 14 runs in a row and 16 of 19 runs with amazing consistency, it’s now time for some chaos and panic. The midday GFS has for some reason tracked “Dean” much further to the north tracking northeast of the Leeward Islands and passing north of Puerto Rico Day 6!! Not only is this a major change from what all the other model data has been showing over the last five days but the actual track is a little south.

    So the idea that TD 4/ Dean would pass north of Puerto Rico is patently absurd given what we currently know. In addition the Midday to GFS no longer has a large dome in the jet stream over the Southeast coast that stretches out into the southwest Atlantic and Bahamas.

    Speaking to Dave he feels that as of last night the odds were still very strong that this storm could head to the Gulf and that the selling off of the market was a bit premature.

    Yet even if the storm eventually makes it to the Gulf it is hard to say at this time if it actually will be a threat. Most storms turn out to have no effect on oil and production but they do always have an effect on the market. The chances that this storm will actually do some damage is small but it cannot be ignored because even if it doesn’t do damage it can damage your portfolio. The market will buy the rumor and sell the fact. The rumor was that the storm was on a path towards the Gulf. The fact as the market saw it was a change in the track of the storm. The market might buy the rumor that other models see the storm differently! How many days is this storm out? The market will price in storm risk for the next few days we will be on storm watch.

    Any storm that slows refining and production will not be welcome. Last week US refinery utilization fell to 91.8% of capacity. The average rate for this time of year is 93.7%. The focus on gasoline demand has come at the expense of distillates. NYMEX Direct points out that, “tight pre-season inventories and a demand spurt from winter temperatures expected to be colder than a year ago. Are expected to push up prices, with a change in clean-air rules also playing a role

    residential heating oil users can expect to pay about 15%, or 36 cents a gallon, more than last winter, or a nationwide average of around $2.84 a gallon, according to the EIA.” NYMEX direct warns that, “Tight inventories may buoy heating oil prices as winter nears.”

    In New England, the heart of the heating oil market, traditional heating inventories stand 34% below year-ago levels, pared by new regulations that limit the use of high sulfur distillate fuel. Total distillate stocks in the region are 27% down on last year, but those stocks are mostly pricey, ultra-low sulfur diesel fuel. Using that as heating oil is like running a junker as a car on premium gasoline. But it could happen if supplies run tight.

    The good news on the refining front is that we had some news that Conoco Phillips will restart its Cat Cracker and that repairs to the refinery in the flooded Coffeyville refinery are ahead of schedule.

    Sub-prime mortgage fears could become an issue for the market again. If the melt-down on the subprime side stays in sub-prime I would say the crisis is over. But if we hear that other types of mortgages start defaulting we could be in for another wild ride.

    With all the central banks adding liquidity to the market will OPEC do their part and raise production? OPEC says the sub-prime issue is clouding the outlook for oil. Don’t count on OPEC raising production unless things start looking really bad out there.

    Shorts are scary with the Atlantic getting active. Volatility is making position trades a bit more difficult. We may want to move stops intraday. Call me for the latest updates at 800-935-6486 or email me at pflynn@alaron.com. Sign up for the Phil Flynn Blast as well as a free trial to Alaronenergies and to open your account.

    Buy September crude at 7130 – stop 6970.

    Stopped on long September RBOB from apprx 19500 at apprx 19350. Buy September RBOB at 19000 – stop 18700.

    We’re long September heating oil from apprx 19600 – stop 19400.

    Buy September natural gas at 670 – stop 650.

    Have a GREAT day!

  23. 23
    zman Says:

    OIH responding to nat gas. OII has been nice all day. Let’s see HAL catch the wave (so to speak)

  24. 24
    zman Says:

    DJIA approaching news since sub prime debacle surfaced.

  25. 25
    El Diablo Says:

    Just a heads up to everyone that can’t pull themselves away from the Weather Channel: Broad market is still falling apart, you might want to take a look…

  26. 26
    zman Says:

    Really, holy crap, thanks man.

  27. 27
    ndog Says:

    was hoping for a better day in nfx. dumped my aug 50’s for a loss last friday at .55 and moved into common as its seems flightly and didn’t want to deal with the time decay. with redemption warnings already starting I suspect we are in for another weak week.

  28. 28
    El Diablo Says:

    Just trying to help, seriously. Joke all you want. You’re watching the wrong thing.

  29. 29
    zman Says:

    Yes ndog, I reiterate my market comment in #14 above: Market looks weaker/funds still raising cash from prior winners.

    I’m not even tempted to bottom fish as strong company fundamentals don’t matter for the moment.

  30. 30
    zman Says:

    El D – you have no idea what I’m watching.

  31. 31
    zman Says:

    It’s a red day, very little news in the energy patch, I have a CC with VQ in 22 minutes and in the meantime there was some weather news out that people can bandy about. Yes, WMT’s having the worst day since 2002 and the PPI was mixed, HD is suffering with the housing market etc, etc, the fed didn’t inject for the first time since May 11 which I pointed out above but yeah, you’re right, we should just change the name to TWC.com.

  32. 32
    El Diablo Says:

    Just judging by the relative number of weather posts in the past two days.

    Completely irrelevant.

    Watch USD/JPY, then the broad market, then redemption requests, and if none of that is directional, weather may have an impact on price. Weather is a marginal driver, not a major one. Only at the margin (absent any other news) can it influence price.

  33. 33
    ndog Says:

    yep and i was nodding my head yesterday with your post on when to call it a day on an option. i need to print out that post when i get back home as I have the same issue.

    Matters not what I paid, only matters what others will…

  34. 34
    Nicky Says:

    Broader markets – we look to be in v of (i) down. A thrust to new lows (anwhere between here and 12850ish) should be followed by a good bounce.

  35. 35
    zman Says:

    El D – well I guess you won’t be subscribing to this irrelevant site then.

  36. 36
    El Diablo Says:

    No, I won’t. I’m just trying to point out perhaps an incorrect assumption.

    On energy: that weather has driven prices higher in past summers rather than a massive inflow of easy money.

    On your site: that energy is a long-term focus of the market rather than the end of the bubble, in which case, your prospects for attracting new subscribers as a pay site will be difficult.

    If you’re right on both counts, congratulations. If you’re wrong on either, it may be painful.

  37. 37
    KL Says:

    Tell you the truth, I don’t much value your contributions El Diablo. I don’t think you know anything about energy and energy investing. I’m considering subscribing because of Zman’s and Nicky’s insights, among others.

  38. 38
    El Diablo Says:

    KL-fine, that’s what makes markets

  39. 39
    KL Says:

    No, in commodities it’s issues like supply and demand that make the markets. There are serious supply and demand issues in these markets right now.

    You’re incorrectly focusing solely on money supply.

  40. 40
    El Diablo Says:

    When you stop being able to conceive that an opposite view could be correct, you may be in trouble.

  41. 41
    zman Says:

    Thanks for your concern El D –

    I take exception to the “I know more than anyone else” tone which tries to squash conversations that aren’t your focus. I’m done.

  42. 42
    KL Says:

    No, El Diablo, I’ve considered your view, which is why I’m not in trouble. You are in trouble because you are clueless about this industry. But of course you’re not in trouble because you’re a phony–you don’t invest in this industry at all.

  43. 43
    El Diablo Says:

    I don’t know how you get that impression. I’m just trying to argue the other side as convincingly as everyone else.

  44. 44
    El Diablo Says:

    KL-I don’t sling insults, that’s for yahoo chat rooms

  45. 45
    ndog Says:

    wtf? why to you read and post on a blog so diligently if you think the value is limited and indeed wrongly focused?

    there are a mind-numbing nbr of blogs out there even on a topic of energy options. why would you waste your time on one where you thought the value was suspect?

    As the Thai would say “Ba”.

  46. 46
    KL Says:

    No, Diablo, you’re being obnoxious with your insulting comments toward the people in here who actually know what they’re doing. You’re nothing but a troll.

  47. 47
    zman Says:

    El D – ok, my bad.

  48. 48
    zman Says:

    KL – please don’t flame.

  49. 49
    El Diablo Says:

    And I’ve been here for months.

    I showed Z how to keep on top of the ridiculous refinery issue when that was the reason for higher prices.

    I noted my divergence from Z’s opinion when he got bullish on gas a couple months ago.

    Just trying to do the same again.

  50. 50
    Stephen Says:

    In terms of the broader market, the financials are now mostly making new 52 week lows, but the S&P is still holding above its bottom of 1428.

    It does not look positive, Nicky are you saying #34 that we head below 1428 on the S&P, if so where do you see supports, followed by a bounce into the close?

  51. 51
    zman Says:

    guys, i’m on a CC for VQ which no one but me cares about.

    I was a little defensive with El D earlier and that was my bad. Please don’t chat room this site. Please find a new topic. Thanks. As I said, I was a defensive and EL D does know his energy which I know from his postings both recent and long ago.

  52. 52
    codydog Says:

    http://bloomberg.com/apps/news?pid=20601087&sid=a6W7XECOfjPg&refer=home

    is the firm who halted withdrawals today and is being blamed for the mkt downturn

  53. 53
    Nicky Says:

    Stephen,

    I think the SPX may be able to hold above 1427 on this drop but if not we have support at 1408 – 1412.

  54. 54
    ndog Says:

    just the beginning Cody… if you have money market fund firms refusing redemptions its only the tip of the iceberg.

  55. 55
    codydog Says:

    it appears to be some sort of hedge fund regulated by cftc……maybe some sort of hybrid structure, doesnt appear to be well known or have a big website

  56. 56
    ndog Says:

    its a money market fund for commodity traders

  57. 57
    codydog Says:

    anybody familiar with CRZO?

  58. 58
    zman Says:

    VQ nice call ongoing for a newly public company. No options here. Costs falling, production rising…

    Production up significantly in current quarter, sounds like they’ll easily make their 2007 guidance.

  59. 59
    zman Says:

    CRZO Cody – yep, see any news on the spike here? That’s one I’ve liked for a long time although the options in the past traded kind of hinky.

  60. 60
    codydog Says:

    dont see any news, just see the spike

  61. 61
    ndog Says:

    CNBC says Sentinel isolated and only 1B fund

  62. 62
    codydog Says:

    makes me wonder what paper they’re holding

  63. 63
    zman Says:

    VQ CC wrap – I’ll most likely have something in tomorrow’s post. Going to do some more work here but the story is tight and they’re very busy. Production guidance sounds like a lock for 2007 which should drive impressive EBITDA growth (and better than expected growth judging by the analyst reactions on the call).

  64. 64
    ndog Says:

    I know you guys like to focus on energy but given the title of the blog includes “stocks” I’ll make this comment. I deserved to be kicked hard for not following through on my GS short. I watched that thing rollover and did nothing. Pathetic. I still think it can go as low as 160 but it will be spiky and jump to 180 as easily.

  65. 65
    zman Says:

    ndog – if I only had one thing a day I should be kicked for I’d be a very happy man.

    Drop the VQ onto the market watch. Listen to the replay of the CC if you have the time. Pretty neat.

    Energy should probably be sold now. lol. HAL, SWN and my other usual suspects trying to crawl out of this morning’s hole.

    Nat gas making a run on $7 but it can’t be storms or heat demand or anything I think it can be. It must be something else, maybe its the yen.

    Thanks for keeping it clean guys, I hate those chat rooms. I am thinking of getting a web cam and wall map of the Atlantic so I can do weather reports whenever I get bored though. Maybe I’ll hire a weather chick.

  66. 66
    ndog Says:

    zman – just as an fyi your activemeter gadget is slowing down your site. painfully obvious on a slow connection.

    (am1.activemeter.com)

  67. 67
    rammastr Says:

    RE #52: Yikes! Funds have to sell stocks to generate cash because their bonds are close to worthless. I can’t believe this is the only fund that has this problem! Thanks ZMAN for your focus on Tech/Fund in the energy complex.

  68. 68
    ndog Says:

    ha! whats your take on the VQ volume? any idea why the surge to 2.5M back a bit but ordinarily so low?

  69. 69
    zman Says:

    ndog,

    Does it always do that? They have had some intermittent problems with their service today.

  70. 70
    Lije Says:

    If you did buy a web cam you should definitely hire a weather chick. No offense or anything

  71. 71
    zman Says:

    ndog – secondary for an acquisition and to pay down their revolved. priced 6 mm shares at 18.5.

  72. 72
    Saeed Says:

    Now Now Children NEW 12Z GFS model is now out thru DAY 7

    dean is much further s and w est … the Hurricane pases n of
    Jamaica but south of eastern Cuba at day 6 and 6.5 and appears
    head for the Gulf ..

  73. 73
    ndog Says:

    intermittent. keep in mind I am on a very slow connection on the other side of the world for the next two weeks

  74. 74
    Brian08 Says:

    Hells bells on the weather chick, I’m all for that!!

    Is there anything I’m missing on NFX…This one seems to have bipolar disorder…The only thing I got to explain it is the crappy market we are in right now…

  75. 75
    zman Says:

    lije – Ha – you’re definitely not going to want to see my ugly mug up there. Don’t worry, I’ve got one in mind.

    Dow looks poised for a lunch time recovery – Nicky, any thoughts? My anemic technical knowledge tells me we don’t need to close here or lower. XOI looks a little better and OIH’s daily doesn’t look nearly as gloomy as the Dow/SPX

    UNG literally exploding to the upside, September gas has retaken $7 but since weather doesn’t matter I can’t talk about it. Damn my eyes!

  76. 76
    apbd Says:

    New Attraction:
    Zman and Naked Weather

  77. 77
    codydog Says:

    curiously the CME announced all members have met margin calls today – curious as sentinel seems to cater to futures guys

  78. 78
    MMarkkk Says:

    Z – VQ is Veneco, right? They’ve been around for a while. Had some friends who worked for them out in Carpenteria after they left the big company life. That was early 2000’s. They have some interesting activity but I’m not sure its anything on par with NFX, SWN or EOG, et al.

  79. 79
    zman Says:

    Saeed – Thanks

    apbd – my wife saw that and just turned the job DOWN, lol.

    codydog – you’re on to something with that statement.

    Mark – yeah but they just went public last Nov. Think management and some assets Unocal but don’t quote me as I’m way down the learning curve.

    58% oil, exploiter, waterfloods, extended reach onshore to offshore Cali, CO2 Tx GC and maybe in Cali. With 100 mmboe on the books they’re talking some potentially size adds given underexploited OOIP but not in a typical “we’re the next big thing” small cap cheesy way. Cautions and smart sounding.

    I just like to learn new stuff on big red days like this. If not for that, I’d just be starting at weather maps of the Atlantic.

  80. 80
    Saeed Says:

    no problem. iT COULD BE HEADED TO hOUSTON

  81. 81
    zman Says:

    Brian – Re NFX – action has nothing to do with the stock per se in my opinion. Solid market since earnings and we’d be low to mid $50s I’m convinced. That said, I’ll be running scared on any pop from my August calls as time has gotten exceedingly short. Proceeds to add to my Septembers most likely.

  82. 82
    Brian08 Says:

    That’s what I figured Z…I think I’m beating a dead horse asking, “what the hell is going on with NFX”…I don’t have the in depth knowledge like the rest of you guys do, but the quarter looked good to me…You see a glimmer of a rally like yesterday towards 50 and then an ax comes down and hacks it back towards 46-47…Be nice to see what would happen if it broke above even for the day again…

  83. 83
    rammastr Says:

    Nicky – Are we making a higher low?

  84. 84
    Sambone Says:

    EL – Energy basically goes in two cycles in the market. In the spring when the refiners switch from heating oil to gasoline, and then in the fall when they switch back. If you look at the charts it has happened for the past two years. The group moves together. The long term fundementals are sound, and earnings will continue to go up, but short term, what I see is the “Crowd” is coming out of energy, as they have in the past. They will be back. In regards to the over alll market, it is weak and trading on emotions (Fear). Watch 12,600 on the dow, because if it breaks that, watch out below. I think we all watch the market closely, but energy is our play on this site. The only reason I’m watching the weather is because I got stopped out of a lot of my energy stocks and I’m mostly in cash. I’m looking to play the Cane’s on the short term, because the crowd tends to follow itself. Hope that helps you.

  85. 85
    El Diablo Says:

    It always helps me to see what others think and why. Also helps me to see you defend your thesis.

    Is there anything wrong with this statement: 2003-2005 Nat gas traded up sharply during hurricane season. 2003-2005 is a known period of easy money. When money is not so easy (def true today), it is not clear whether it was the weather or the easy money that drove us to extreme price levels.

    Only time will tell.

    Of note, USD/JPY reached low of day at 11:10am and again right now, slightly ahead of broad market. JPY is known source of easy money. Which is chicken and which is the egg?

  86. 86
    codydog Says:

    z–Can you ask that the macro-econ folks take their discussions elsewhere? I have zero interest in reading what happened 5 years ago or what someone thinks leads/lags the mkt in a multi-year timeframe.

  87. 87
    zman Says:

    Cody – just skip what they have to say

  88. 88
    Sambone Says:

    EL – The “Crowd” + greed + momentum = easy money. Just remember what Ben Graham said about “Mr. Market”. Profit from it.
    http://www.sandmansplace.com/Mr_Market.html

  89. 89
    Sambone Says:

    Z – I’ll stop now

  90. 90
    rammastr Says:

    So, when the dust settles, which are the better momentum “gassy” stocks?

  91. 91
    Nicky Says:

    I am on the road for the rest of the day so can’t be much help with TA until I get back later. But……I think we could stage a bounce from around here or a bit lower. Expiry later this week so it could get really volatile. Can I request a weather boy? Maybe someone out of the Chippendales – would brighten my day! Something tells me I am going to be outvoted!

  92. 92
    El Diablo Says:

    Sambone-that’s precisely what I believe, “Mr. Market” appears to be saying very loudly that something has changed, I’m just trying to be sure what it is.

  93. 93
    Saeed Says:

    yOUR IN LUCK! i USED TO BE A cHIPPENDALE!

  94. 94
    Sambone Says:

    Nicky – You wouldn’t enjoy the “Sambone” as a Chippendale. Not pretty.

  95. 95
    Nomad4x Says:

    Good post Sambone re: Mr Market.

    Interesting discussion today re: energy markets and paradigm shifts.

  96. 96
    rammastr Says:

    O.K., when the dirt settles, where should the momentum shift to in the energy complex?

  97. 97
    Sambone Says:

    Ram – In my opinion, its not where, but when. I’ll be looking to go back in sometime between Sept – Nov. When I get sufficially depressed about the group, scratch my head and wonder why, then I’ll go back in.

  98. 98
    Popeye Says:

    Looks like OIH is following the DOW.

  99. 99
    Nicky Says:

    Fantastic Saeed! Sounds like a done deal! Samborne – we still want your commentary.

  100. 100
    Denise Says:

    A second vote for the Chipindale weather boy and regarding market history I always liked this quote
    “What we have learned from history is that we learn nothing from history”
    George Bernard Shaw
    and “History is a guide to navigation in perilous times”

  101. 101
    Lije Says:

    Z – I am trying to come up with a proxy group of companies to compare to BQI. Could you recomend a few names that whose operations would be pretty similar?

  102. 102
    zman Says:

    Don’t I get a say in this?

    Sorry for the late reply rammastr but the usual plays would apply except that I don’t know when the dust will settle, as Sambone so wisely indicated.

    I will be out of pocket during market hours Friday and Monday and there will likely be no post from Friday through Tuesday.

  103. 103
    zman Says:

    Lije I’ll get back to you. Most I know are operating divisions of bigger companies, COP, NXY, ECA, Western Oil Sands…got get on a call, anybody have a pure play oil sand for Lije drop here and please guys outvote the girls on the weather boy idea, lol

  104. 104
    Sambone Says:

    So Z, Nicky and I will be using Thursday’s post. Oh well, been there and done that.
    Denise – my favorite line is “If you think an expert is expensive, wait until you hire an amateur” Red Adair

  105. 105
    zman Says:

    The Hellfighters, best John Wayne movie ever made.

  106. 106
    Stephen Says:

    Lije, there is this company TSE:OPC, that is almost a pure play. As far, I remember there are lots of oil sands companies in Alberta, and only BQI in Saskatchewan.

  107. 107
    Lije Says:

    Thanks, I appreciate the help

  108. 108
    Sambone Says:

    Nymex Crude Ends Above $72 On Storm Concerns

    By ROSHANAK TAGHAVI
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude-oil futures finished above $72 a barrel Tuesday, rising to a one-week high as concerns that a tropical storm in the open Atlantic Ocean could hit the U.S. Gulf of Mexico outweighed fears that declining U.S. equities could stymie oil demand.

    “This has really been a tug of war between concerns about the economy and concerns about the storm,” said Phil Flynn of Alaron Trading Corp. in Chicago. “This market has a lot of potential to rally if the storm continues on its supposed path to the Gulf of Mexico.”

    Prices jumped above $72 a barrel after the National Hurricane Center upgraded Tropical Depression Four, in the open Atlantic between Africa and the Lesser Antilles, to Tropical Storm Dean.

    Anxiety about the onset of the hurricane season, which is generally between mid-August and October, has risen since the National Oceanic and Atmospheric Administration said last week that there is an increased probability of an “above-normal” 2007 Atlantic hurricane season, which is from early June to the end of November.

    Concerns about the impact of hurricanes on crude oil markets come from their potential to cut production of oil, gas and refined products in the U.S. Gulf of Mexico region. The Gulf Coast area stretches from the Florida Panhandle to Brownsville, Texas, and houses many of the nation’s oil refineries.

    A second tropical storm system, which is heading towards southeast coastal locations of Texas as well as the northeast Mexican coastline, is expected to become classified as a Tropical Depression and may be upgraded to a tropical storm by Wednesday, according to Jim Rouiller, senior energy meteorologist with Planalytics in Philadelphia.

    Rouiller added, however, that he does not expect such a storm to affect the energy production regions of the Gulf.

    “At worst, some minimal impact to Mexican rig systems along with some of the older rigs off the lower Texas coastline,” he said.

    The front-month September light, sweet crude contract on the New York Mercantile Exchange closed 80 cents or 1.1%, higher at $72.42 a barrel. Settlement at that level would be the highest since Aug. 7. Crude on the ICE futures exchange was up 31 cents at $70.54 a barrel.

    Final settlement prices weren’t in yet.

    Crude oil’s comeback was tempered by concerns that declining equities and limited access to credit will stunt economic growth worldwide and further pressure oil prices.

    Oil futures have been moving in tandem more with equity markets lately as traders worry that reduced availability of credit could hamper economic growth in the U.S., the world’s largest energy consumer, and in turn reduce oil demand.

    The rise in price on the back of weather concerns was mildly restrained by a fall in U.S. stocks after worse-than-expected results from Wal-Mart Stores Inc., the world’s largest retailer fueled concerns about the health of U.S. consumers.

    The Dow Jones Industrial Average, S&P 500 and Nasdaq Composite Index all fell even further after CNBC reported that Sentinel Management Group, a firm that manages short-term cash for commodity trading firms and hedge funds, had asked to halt investor redemptions, suggesting its investors were in a “panic.”

    “These redemption stories feed into the credit and sub-prime fears which lead to pressure on equities and in turn hit commodities as well,” said Tom Bentz, an analyst at BNP Paribas in New York.

    Front-month September reformulated gasoline blendstock, or RBOB, was up 3.69 cents or 1.9%, to $1.9744 a gallon. September heating oil rose 1.8 cents, or 0.9%, to $1.9845 a gallon.

    Focus shifted towards the end of the trading day to weekly U.S. Department of Energy inventory data, due 10:30 a.m. EDT Wednesday. The data, for the week ended Aug. 10, is expected to show a 2.1 million-barrel fall in crude oil inventories and a 0.5 percentage point rise in refinery use, according to the average forecast in a Dow Jones Newswires survey of analysts. Gasoline stockpiles are seen falling by 400,000 barrels, while distillates are expected to rise by 1 million barrels.

    “What’s really going on with the markets is that we’re waiting for data,” said Tim Evans, an energy analyst at Citigroup in New York. “We’re not breaking into new price ground here, and really I think it will be the DOE numbers tomorrow that really will push prices one way or another.”

    —By Roshanak Taghavi, Dow Jones Newswires

  109. 109
    Saeed Says:

    Midday 12z the TUESDAY afternoon EUROPEAN MODEL is out …
    has DEAN tracking N of Cuba– the GFS was south of Cuba
    then the euro takes him into eastern FL straits with a direct hit
    Miami at day 8.5 and day 9 into the eastern Gulf

  110. 110
    Sambone Says:

    Hope this puppy doesn’t start to spin.
    http://www.ssd.noaa.gov/goes/east/gmex/loop-rb.html

  111. 111
    Brian08 Says:

    Wow…If this thing spinning meant NFX would finally get outta it’s rut and we wouldn’t lose any lives then I’m all for it!!

  112. 112
    Popeye Says:

    Looks like the only thing to save the OIH today is the bell.

  113. 113
    zman Says:

    Ditto the Dow!

  114. 114
    Kevin Says:

    Z,

    Any comment on GST’s earnings? Looks pretty strong… All this company does is report good news and yet the stock is near lows!

    Thanks!

    K

  115. 115
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