29
Aug

Wednesday – Does Today’s Inventory Report Matter? Not For Long In This Environment

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Subscription Watch: Instructions for subscribing to the site can be accessed here and subscription rates can be viewed here. Tonight I will delete all old user names (ones that weren't acquired this week) making it easier to subscribe (as long as someone doesn't beat you to your favorite user name). This site goes private at week’s end.

One other bit of housekeeping: If you do plan to subscribe it's a good idea to add zmanalpha@gmail.com and wordpress@zmansenergybrain.com to your address book to prevent messages from me or those automatically generated by this site (including the one with your password in it) from being intercepted by your e-mail's spam filter. 

Welcome Back To A Crappy Market. Along with the Dow, the S&P500, the Nasdaq, and Bernanke's newfound reputation as a guy who "gets it", energy stocks took a beating yesterday. I'm not a chart guy like Nicky but I play one on the internet. Actually she's not a guy either but you know what I mean. To me, these charts offer a mixed bag of a picture.

  • (XOI) - Classic "Big Oil" Index. Technical Opinion: Not Altogether Horrible. It held it's 200 day average mid August and now it would need to hold 1,260 to due the same again. For those of you keeping score that's 45 more points of downside to that level which is just a little bit more than what it lost today.
  • (XNG) - Gassier Stock Index. TO: Perilous. Forget the 200 day average. It can't seem to get a grip on that level with gas seeming to want to test $5. The index has chart pattern support at 450, or about 15 points or about 4% below current levels.
  • (OIH) - Oil Service. TO: Better. Just bounced off it's 50 day from below and is way, way, way above its 200 day. Support looks to be nearby in the mid 160s and I'd only expect it to violate that if Congress does "seize those oil company profits" or Ben issues a statement saying the liquidity crisis doesn't matter. I know I harp on the "take those profits" bit (probably too often), but I'm fond of heating my house and driving my cars. 

I'm always amazed as to both the quality of talent in the area of humor on and around Wall Street during trying times and with the apparent loads of free time some of these guys have to make up new acronyms, musings etc. Sambone contributed this link yesterday in comments which gives insights as well chuckles. Another friend of the site sent along a new investment product which I'm sure will sell like gangbusters:

Constant Obligation Leveraged Originated STructured Oscillating MoneY Bridged Asset GuaranteedS or COLOSTOMY BAGS. The details split my sides and I'll email it to anyone who wants it.

For my part I'm thinking about coming up with a color coded notice system like the one used by the Homeland Security folks for my daily read on investing in energy land. So far I know Code B would be brown for Bernanke and translates to "be afraid, be very afraid" while Code G, would be for Goldman, not Green, and mean that I've finally bought into their Super-Spike Theory and that I'm buying oil stocks hand over fist with money from multiple zero interest re-fis. By the way, I will never mention Code G again. 

Now For Something Completely Different:

Oil Inventory Report Expectations (from a variety of surveys)

oil-report-expectations-082907.jpg

Take aways:

  • Crude Oil: Could be a much bigger draw down. Especially after last week's Dean inspired week long Mexican siesta in the GOMEX. You had about 1.4 to 1.6  million bpd (the part that goes to the U.S.) not show up for processing along the Gulf Coast.   
  • Gasoline: In the driver's seat for at least one more week.
    • Any build in gasoline would kill the recent rally in RBOB sending it well below $2 from its current level of $2.02 (possibly down to $1.90 if the build is material). In the event of a gasoline build I'll set tight stops and be ready to lose my calls in the refining sector for a couple of days.
    • Conversely, we'll need a draw in excess of 1.5 mm barrels for gasoline to continue its run (and overcome fears that the economy is going to pot and we're all going to stop driving. I personally will never stop driving).
    • Over 2 mm barrels and I'll immediately add to my (VLO) $65 calls unless the broader market is in yet another death spiral or the stock itself launches out of the report gate and I can't reasonably grab it in which case I'll go for a swim.
  • Distillate: Overall stocks remain in line with historical averages. Higher sulfur stocks remain depressed and I'm not sure and would love to be enlightened as to just what it is that people in the northeast are going to heat their homes with this winter. I assume it's the more costly ULS (ultra-low sulfur) but am not sure if it's straight up or a blend. Either way, unless the change is in inventories is very sizable I don't see much of an impact from this report component just yet.

Refineries Utilization: Analysts, traders and whoever else they get input from on the surveys think utilization fell 0.25% last week to about 91.6%. Talking heads and their favorite over exposed commentators will tell you, with no embarrassment at all, that this is 3 to 4% light of "normal" without bothering to mention that U.S. refiners as a group have been making record amounts of finished product. This is another one of those guesstimates the Street puts value on that is often wrong by a magnitude of 8 to 10x. I'll stop griping when they start predicting product make and not utilization. 

Crack Spread Update: Recovering after a nasty 3 month correction. While I expect oil to hold the high $60s (say $67.50) I expect products to fare ok as well (read that as less than 10% downside) in coming months which is why I've done a 180 in recent weeks on the more quality / value stories amongst the refiners.

cracks-082807.jpg

Holdings Watch

CALLS:

(TSO) bought more September $50 calls, bringing my average cost to $1.45; last bid $1.20. 

PUTS: No Action. Still holding my KWK puts which for now are treading water.

Odds & Ends

Analyst Watch: nada

Natural Gas Brief Comment: More commentary tomorrow but it's interesting to note that electricity demand has steadily risen through the Summer and continued to rise last week despite the decline in CDDs (because it was hotter in more populous parts of the country). 
  • Given that we know that a little more nuclear capacity was off line in the last couple of week than had been the case earlier in the summer and those regions which felt the heat are also big consumers of gas for gas-fired power generation this may make it difficult for gas injections to rally meaningfully this Thursday.
  • Then again, two week's ago saw what arguably was the largest ever imports number and there is sometimes a lag between imports and storage. This week's report may play a little catch up there.

Tropics Watch: Here's the latest from Accuweather. They're thinking we could have another named storm this week, as a disturbance roughly in the same area that Dean started out looks like it's about to get organized. Note that amidst all the red ink yesterday natural gas pulled out of its own death spiral rallying $0.21 to close at $5.59 on fears that this new storm (which will be named Felix if it develops) will not take such a peaceful path as far as hydro-carbon producing assets go as did its big brother Dean.

Injection Watch: ANR reported that it is restricting injections due to rising storage levels.

Cellulosic Ethanol Watch: (PBR) says it should have the first commercial plant running by 2011 with large scale production reached by 2015.   

Pemex GOMEX Watch: Production still at around 80% and the state run company says the last 20% will be brought back on line more slowly. They did say they won't issue a statement until the end of the week and that they will issue one when they get back to 100%. Comment: kind of sounds like those are two different time frames. 


 

 

 

70 Responses to “Wednesday – Does Today’s Inventory Report Matter? Not For Long In This Environment”

  1. 1
    scoop006 Says:

    testing

  2. 2
    zman Says:

    Morning Scoop.

    Market’s doing a little bottom fishing this morning. I have little faith in that kind of activity…also it’s a Wednesday and it would be nice to see the numbers first as all of this activity is just noise.

  3. 3
    Sambone Says:

    Nymex Crude Rises Above $72; Stock Draws Seen

    DOW JONES NEWSWIRES
    From MARKET TALK:
    [Dow Jones] Nymex crude rises above $72/bbl on expectations that DOE data scheduled for release at 10:30 am EDT will show a fall in crude oil and gasoline inventories, and support a price rise. Oct Nymex crude +39c at $72.13/bbl. Sep gasoline benchmark +1.52c at $2.0306/gal. Oct ICE Brent +35c at $70.90/bbl (roshanak.taghavi@dowjones.com)

    Reported earlier:
    LONDON — Crude oil futures edged higher in London Wednesday morning ahead of what is expected to be a bullish report on U.S. inventory.

    Analysts expect the weekly statistics from the U.S. Department of Energy to show a fall in both crude and gasoline stocks and it is this potential for further tightening, particularly in the gasoline market, that is supporting prices.

    “There are a number of factors that suggest we should be heading lower over the last few days but you can’t ignore the fact the gasoline market is still tight at a time when the focus should be moving away from it,” said a broker in London.

    At 1138 GMT, the front-month October Brent contract on London’s ICE futures exchange was up 31 cents at $70.86 a barrel.

    The front-month October contract on the New York Mercantile Exchange was trading $0.37 higher at $72.10 a barrel.

    ICE’s gasoil contract for September delivery was up $2.25 at $628.50 a metric ton, while Nymex gasoline futures for September delivery were up 126 points at 202.80 cents a gallon.

    The perception of tightness in the gasoline market is exacerbated by the fact demand is expected to increase ahead of the U.S. Labor Day holiday this weekend but concern that gasoline stocks could have been eroded by more than expected which is keeping buyers active, traders said.

    Last week, U.S. gasoline stockpiles fell by 5.7 million barrels and analysts surveyed by Dow Jones Newswires expect gasoline stocks to slide by a further 1.8 million barrels in this week’s report. They also expect crude stocks to have fallen by 800,000 barrels, while distillate stocks are seen rising by 600,000 barrels and refinery utilization is expected to hold unchanged.

    While there remains concern about the short-term fundamentals in the gasoline market, the peak gasoline demand period has passed and some feel any tightness will ease as the summer in the northern hemisphere comes to an end.

    News of the return to action of a number of out-of-action U.S. refiners over the last few days has backed this idea.

    But there’s a threat the low utilization rates, which have helped exacerbate the gasoline market tightness, could be replicated in the heating oil market over the coming winter.

    Peter Beutel, head of advisory Cameron Hanover, pointed out that in three of the last five years, utilization dropped 2.3%-3% from the end of August to the end of September and by substantially more during years of major Atlantic hurricanes.

    This latter factor is also not being ignored by the market although gas futures are proving more reactive.

    Natural gas futures have already rallied sharply on the emergence of another tropical weather disturbance in the Atlantic basin which has the potential to form into a strong storm or hurricane and the oil market is starting to take notice.

    “We are still in the preliminaries but its current calculated path would be favorable for a U.S. Gulf track and has been providing support to natural gas,” said Olivier Jacob, an analyst at Petromatrix in Switzerland.

    Aside from the fundamental factors, participants are also keeping a close eye on the health of the wider financial market.

    A relatively robust showing by equity markets in Europe and for U.S. equity futures has offered support but concern remains that any slowdown in the global economy as a result of further subprime woes will dent oil demand.

    “I believe the negative financial picture is absorbing any bullish refinery talk at present, possibly leading to softer numbers to come,” said Rob Laughlin, a broker at MF Global in London.

    —By David Elliott; Dow Jones Newswires

  4. 4
    zman Says:

    Morning Sambone, those Atlantic clouds are getting a little more organized. Also, multiple waves have formed again.

  5. 5
    Stephen Says:

    One more that I like is FTI, I will also try to buy this under $88. They do subsea well infrastructure, subsea separation of oil and water, and are trying to do subsea gas compression.

    They also have good links with StatOil / Norsk Hydro, and have last week signed part of a ~ $2.5B 5-year contract with them for work around Norway. Also, you said StatOil / Norsk Hydro have been very bullish in the deepwater GOMEX, when would those begin production, and would it be gas or oil, do you think?

    On the down side, I think they are a little more expensive than CAM, but seem to have better R&D.

  6. 6
    El Diablo Says:

    I think there is a reasonable chance that the rip in nat gas yesterday was due to expiry vs. storm fears. Haven’t heard any mention of it.

  7. 7
    zman Says:

    Stephen – I’ll take a look at FTI. I was just reading about sub sea excavation by a little company in combi with Norsk. Ya know OII is the subsea tree business as well.

    As to busy in the GOMEX, I was referring to the recent lease sale and given the water depth it’ll be 3 years min for the new leases, probably longer. Mix of gas and oil.

  8. 8
    zman Says:

    El D – you’re probably right on the move being exaggerated by upcoming expiry. Nobody else has mentioned it either. October and November had more moderate rallies, up 0.17 and up 0.12 respectively and then nickel up from then out through the strip.

  9. 9
    Stephen Says:

    FTI (FMC Technologies Inc.) has subsidiaries with weird names such as, CDS Engineering and FMC Kongsberg, so it just might be them.

  10. 10
    zman Says:

    on MN1.com

  11. 11
    Jill Says:

    Anyone have an idea when SWN may bottom? I’m wondering if it’s going to 32ish. I see no news so I guess it’s just the whole group?

  12. 12
    El Diablo Says:

    I don’t know the name of the book, but I think it was written by a former retired sell-side analyst, in which he described the strategy of a sell-side analyst as “finding the least ridiculous reason” for stocks to go up. This context sheds great insight into the views of the talking heads. I always wondered how they could say this crap without laughing….

    (anyone got the name of the book?)

  13. 13
    drdavis124 Says:

    FTI is the old Food Machinery Co. They have been aquiring high Tech machinery companies in growth areas for 20years with concentration on
    EnERGY worlwide. This could be a winner. History below a good read

    http://www.fmctechnologies.com/History.aspx

    Phil

  14. 14
    zman Says:

    Still on MN1.com on the oil report. You guys should call in.

  15. 15
    Sambone Says:

    Nymex Crude Rises Above $72; Inventory Draws Seen

    By Roshanak Taghavi
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude-oil futures rose above $72 a barrel Wednesday on the back of a rise in U.S. equities and expectations that U.S. government data will show declines in oil and gasoline inventories.

    The front-month October light, sweet crude contract on the New York Mercantile Exchange was up 50 cents, or 0.7%, at $72.23 a barrel. Brent crude on the ICE futures exchange was up 49 cents at $71.04 a barrel.

    “We’re really torn between the current (oil) demand numbers, which are pretty high, versus the fear of what demand is going to be in the future,” said Phil Flynn, an energy analyst at Alaron Trading Corp. in Chicago. “You can’t dismiss the fact that all this market turmoil could slow demand in the future.”

    S&P 500 futures, Nasdaq 100 futures and Dow industrial futures were all higher in early morning trading.

    U.S. petroleum inventory data is scheduled for release by the EIA, the Department of Energy’s statistical arm, at 10:30 a.m. EDT Wednesday.

    Gasoline inventories are seen falling by 1.8 million barrels, and crude oil stocks are predicted to decline by 800,000 barrels, according to a Dow Jones Newswires survey of analysts. Distillate stocks, which include heating oil and diesel fuel, are predicted to rise by 600,000 barrels and refinery utilization is forecasted to remain unchanged at 91.6% in the week ended Aug. 24.

    Some analysts believe last week’s gasoline inventories will post a rise, which should pressure gasoline and crude-oil futures prices.

    According to a report by MasterCard Advisors LLC, a division of MasterCard Inc., U.S. gasoline demand, as measured by purchases at the pump, fell 3.8% last week. Demand for gasoline fell by 387,857 to 9.865 million barrels a day, during the week ended Aug. 24, according to the report, which is compiled from SpendingPulse, a retail data service of MasterCard Advisors.

    “We will be viewing today’s gasoline stock figure as having the most significant impact on price direction across the complex,” said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Ill. “Any gasoline stock build…could force additional selling into the RBOB futures in the process of dragging the rest of the complex lower.”

    Front-month September reformulated gasoline blendstock, or RBOB, was up 2.01 cents, or 1.0%, at $2.0355 a gallon. September heating oil was up 1.73 cents, or 0.9%, to $2.0136 a gallon.

    Traders are also keeping an eye on a tropical weather disturbance in the Atlantic basin, which could develop into a strong storm or hurricane. Atlantic hurricanes have the potential to enter the U.S. Gulf of Mexico and wreak havoc with energy installations there.

    —By Roshanak Taghavi, Dow Jones Newswires

  16. 16
    zman Says:

    Sorry for the delay but I review the numbers live on the Wednesday radio show and it’s too hard to talk and type at the same time. Every Wednesday at 9:30 CST on MN1.com

    crude: down 3.5 mm barrels (hello Mexican holiday)
    gasoline: down 3.6 mm barrels
    distillates: 0.9

    utilization fell hard (down 1.5% to 90.6%).

    gasoline production: down slightly to 9.1 from just under 9.3.

  17. 17
    zman Says:

    TRADE: VLO $65 CALLS at $3.40.

  18. 18
    zman Says:

    Sane: you out there? Does API confirm these big pull downs?

  19. 19
    zman Says:

    Jill,

    Re SWN – holding pattern given what natural gas is doing. $32 is possible given it’s high multiple although that would be a steal based on their recent trading multiple, growth, leverage to gas which is very likely to rise into winter. I’m long a much higher and now worthless September strike now and will look to add more when that XNG (see above in post) firms up.

    Stephen – it was AGR with Norsk.

  20. 20
    zman Says:

    Tupp – picked up that extra VLO… those numbers were pretty product bullish. Less so for crude (still bullish) but I think it will be explained at the Mexican shut ins I wrote about. Really can’t believe the Street was looking for such a small decline.

  21. 21
    zman Says:

    Can I get a show of hands on those interested in a emailed Trade Blast for members? As a site member, you could opt in or out. Thanks.

  22. 22
    scoop006 Says:

    YES RE # 21

  23. 23
    sane Says:

    API

    Crude down 4.9
    Gasoline down 2.4
    Distillates up 1.7

  24. 24
    scoop006 Says:

    Z did you notice the contract volume in VLO Sept $65P’s

  25. 25
    Sambone Says:

    95L – Could become a TD by Friday. Moving south currently. Shear 15, but moving into lower shear.

    http://www.ssd.noaa.gov/goes/east/eaus/loop-rb.html

  26. 26
    Denver Says:

    Ditto Yes #21

  27. 27
    Jason Says:

    Yes #21

  28. 28
    zman Says:

    Scoop – no. I’d bet its the PSW guys hedging against a LEAP call they took not long ago.

    Thanks Sane – directionally that confirms the numbers well.

  29. 29
    BigJim Says:

    Hey Zman:

    Just became a subsciber. Looking forward to learning about energy trading from this community. I did purchase some DO calls at $100 strike before EIA report came out this morning. Seemed like a good play, especially with storm possibly brewing in the Atlantic and Lehmans liking the Oil Service group. Hope everyone has a good Labor Day.

  30. 30
    zman Says:

    Re 21 – I’ll ask in tomorrow’s post as well as I know many readers read the post late and have to work for a living during comment time.

  31. 31
    zman Says:

    BigJim,

    Saw that and thanks! DO’s probably not a bad bet at all. I’m in RIG for that part of service, also OII and then HAL.

    Ditto the good labor day comment. We will be around here handling sign up questions.

  32. 32
    cattleman Says:

    Yes on 21

  33. 33
    zman Says:

    TSO lagging the group….no real reason that I can find but it’s still well off its recent recovery bounce. The little expensive stocks in the group (WNR), (ALJ), (HOC) , (FTO). Valero is moving up nicely.

    Cheap and low margin (SUN) is doing better as well and that one could run into winter if the distillate picture doesn’t become more clear. Hopefully someone on the board uses heating oil and can give me a little primer on how this year is going to be different

  34. 34
    zman Says:

    Crude bumping up against $73

    October RBOB up $0.03 to $1.95 essentially reversing yesterday’s weakness. It looks like it can make a run on $2 here as it becomes the front month contract next Tuesday.

    Heating Oil (HO) up and looking like a break out as well. http://charts3.barchart.com/chart.asp?sym=HOV7&data=A&jav=adv&vol=Y&divd=Y&evnt=adv&grid=Y&code=BSTK&org=stk&fix=

  35. 35
    fan Says:

    This is probably the wrong forum for this but… DOES ANYONE KNOW WHY THE EURO-DOLLAR FUTURES JUST WENT DOWN A LOT TO A YEAR LOW OF 94.60 !!!??!? Does this mean that the large institutions are expecting an interest rate hike?

  36. 36
    fan Says:

    This chart of the September 2007 Euro-dollar contract might help

    http://quotes.ino.com/chart/?s=CME_ED.U07&v=d12

  37. 37
    jimbo Says:

    My best projection: US island of recession in a global sea of inflation. Euro rates up, dollar rates down. Euro-dollar down.

    I’ve rotated some into foreign bonds.

  38. 38
    zman Says:

    Hey El D – I think fan is looking for you on #35, 36. Sorry fan but that’s out of my comfort box. I know a little there but he’d probably do a better job fielding it. I don’t think the institutions are looking for a hike but they’re probably thinking a cut is less likely now.

  39. 39
    zman Says:

    Anybody getting slow response time to the site in the last few minutes, thanks?

  40. 40
    fan Says:

    Z,
    Yeah, you are probably right, it just seemed like a pretty violent move down today on really no news as far as i could tell, at least oil seems to be back to life for you guys…

    Thanks for the shout out to EL D, You are the best, seriously!

    BTW I haven’t had a slow response on my end…

  41. 41
    El Diablo Says:

    I’d be purely guessing on eurodollar (yes, I’m pretty honest about when I’m guessing). My top two guesses are that mkt is expecting a pause in rate increases at next meeting (which is soon but I don’t know the date) or that it is somehow related to EUR/JPY/USD cross rates–this has been extrememly volatile in past two weeks. If none of those work, I’d punk to Nicky and swear “it was just technical”

  42. 42
    D Says:

    Z- re 33 Do you think TSO is lagging because of the relative better supply situation for West Coast PADD vs Mid-Con and Gulf Coast? Also poor crack spreads comp Q/Q?

  43. 43
    BigJim Says:

    Zman:

    Any idea at this point if option price errosion for September, will be substantial after long Labor Day weekend. I am quessing it depends on Bernanke speech Friday and if storm develops into something.

  44. 44
    fan Says:

    EL D,
    Thanks! It could just be that the 1000 or so traders in the ED pits and their wallstreet brethen just took of to beat traffic for a really long weekend and closed their positions early…

  45. 45
    Stephen Says:

    I think this rally in OIH is a bit overdone, up 2%, but many are up 3%.

    If you look at the S&P, we are up 0.7%, but that was only the last hour of madness from yesterday.

  46. 46
    Fred Says:

    One way I’ve played the dollar weakness is UDN. My guess is we’re going to see a rate cut very shortly so that should further weaken the dollar.

  47. 47
    Fred Says:

    UDN – “Unload Dollars Now”

  48. 48
    zman Says:

    D – yes, I think it may take a little longer for them to improve than the others given their region but 1) they’re cheap and 2) production should drop in that region pretty sharply in the next couple of weeks as deferred maintenance occurs. Those cracks for CARBOB should then rebound a bit.

    Big Jim – depends on what volatility does when people get back, may actually pump up IV early next week. Definitely agree with the Ben and storm comment.

  49. 49
    zman Says:

    We’re going to blow out all old (pre this week) registrations by 4:00 today.

  50. 50
    El Diablo Says:

    While all of you here know that I abhor all the fear talk, there is an important observation that should be made here:

    Al Qaeda’s stated goal is to destroy the US ‘financially’–they know they can’t destroy us militarily, but they can disrupt our markets significantly.

    So my observation is this: if there is any meat left on Al Qaeda’s bones and they still have the capacity to carefully plan attacks and wait for the precise moment to execute, now would be ‘prime time’, when our entire financial system is on edge.

    We spent billions developing this red, orange, yellow warning system, yet the people in charge of administering it are thinking like beaurecrats instead of thinking like terrorists. I’d argue that right now, we are more ‘vulnerable’ to the implications of a terrorist attack than at any time in the past six years. So our ‘warning level’ should be upgraded so resources are deployed to protect this vulnerability, even at the ‘social risk’ of the mere elevation leading to a panic itself.

  51. 51
    drdavis124 Says:

    Phil’S tea leaf prediction. The market is going to trend down FOR AT LEAST
    3 months due to the constant barrarge of bad news. Inflation led by food & Layoffs in housing, auto, financial,Real Estate & continued bad IRAC news.
    Bought more s&p puts.

    Phil

  52. 52
    rammastr Says:

    ZMAN – What does #49 mean?

  53. 53
    zman Says:

    Ram,

    It means that if you registered with the site a long time ago your user name will be deleted tonight. If you want to re-register for the site you’ll need to click the register button in the right hand column AFTER we’ve punted all the old accounts. The new registration is basically the same except it includes a check box for all the legal stuff (see Terms and Conditions) page in the left hand column. The site will remain free to the public until the weekend post.

    For those of you who registered for the site this week please know that you will not be impacted.

  54. 54
    Fred Says:

    El D – That’s why I think we need a rate cut as soon as possible to take us out of vulnerability. Also, I believe real estate and equities both in the toilet would be more then our economy could bare and might move us into something worse then a recession.

  55. 55
    El Diablo Says:

    Not to mention energy simultaneously rocketing….

  56. 56
    BigJim Says:

    Zman:

    Thanks for the response. I try not to get greedy and close position when profit is good. I was wondering does anyone use a certain percentage to take profits. If you make 30, 40 or more percent in a position do you say I am out. I understand one may stay longer in a position depending on circumstances.

    Phil- Interesting outlook. This could certainly happen if Fed Funds Rate is not cut. I believe .25 cut an we still selloff. People keep looking for at least 50 basis point.

  57. 57
    El Diablo Says:

    Bump in crude at end of summer and at uncertain economic growth outlook seems a bit overdone. Is this just end-of-month window dressing? Especially given that the entire pullback transpired since August 1 (July was a great month for longs)….

    We saw a $4 move in the last couple days of June and July too, big question is if there is any reason for follow-through in September.

  58. 58
    zman Says:

    BigJim

    It depends on how I feel about the name and at least right now, how I feel about this crazy broader market. For instance, the second bit of VLO I picked up this morning after inventories (#17 above) is up about 15% which is actually a little tempting in a week like this and will be wiped out if that goes to up 30% leaving the original position in place with a lower cost basis.

  59. 59
    Sambone Says:

    Watching three currently – Mid atlantic, one off of South Carolina, and one currently on the Yucatan. All three have potential.

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

  60. 60
    zman Says:

    My stocks are complacently higher with the 231 point Fed governor comment inspired rally. This is usually a good time to take profits. Yesterday they hated everything energy, today they can’t get enough unless it’s gassy and they are still scare of those.

    Oil closed exactly at $73.50, gasoline at $2.104…pretty predictable

    RIG and OII exploding, VLo doing nicely, heck even NFX is up

  61. 61
    rammastr Says:

    Yes to #21.

  62. 62
    Cap Says:

    Yes to # 21

    GL w/ paid site Z !

  63. 63
    zman Says:

    Thanks Cap:

    wheels are turning on 21 – best case is probably 2 weeks.

  64. 64
    scoop006 Says:

    Z Did you read the article about The Bank of Montreal losing $675,000,000. in natural gas trades thru 6/30/07 and what impact if any does it have on the overall ng market.

  65. 65
    zman Says:

    Scoop

    I thought it was about c$90 mm in the latest quarter. Is that $675mm cumulative? Either way, it’s a negative (not sure of magnitude but definitely not a positive) as they likely have big positions to unwind.

  66. 66
    scoop006 Says:

    $675mm overall to date. The bank still has to unwind $10.8billion in ng trades.

  67. 67
    zman Says:

    Bone heads. I assume they bet on Canadian gas mostly as production up there is slipping and demand is rising. Then winter was weak, the oil sands players decided to burn other kinds of gas, Texas and assorted states managed to eke out a nearly 2% YoY gain in lower 48 gas production, and we’re seeing record LNG imports down here. So the gas they saw as more scare north of the border turned out to be not as needed as they thought.

  68. 68
    rgr4t Says:

    rgr4t

    classic scorched earth

  69. 69
    bill Says:

    ng up nicely

  70. 70
    bill Says:

    this press release defines who has what

    on blackbeard mmr has 42 % and pxp 47 %

    http://www.mcmoran.com/pdf/2009/122909.pdf

    Its like pxp hasnt moved on the news when i see mmr up 52 %

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