30
Aug

Thursday – Oil Review & Gas Preview, Plus A Little News and Commentary

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One of the Final Subscription Watch Watches:  If your old user name and password (and by old I mean created before this week) no longer let you login read this. If you haven't been stranded on a deserted island skip the rest of this paragraph. Instructions for subscribing to the site can be accessed here and subscription rates can be viewed here. This site goes private on Saturday.

Ben Drowns Shorts With Plea For Public Assistance. In a letter to Chuck Schumer, Bernanke urged Fannie Mae, Freddie Mac and the FHA to offer more assistance, if they can, to people trapped in sub prime loans. Your tax dollars at work.

Oil Inventory Report Review: We do this live on Wednesday's on MN1.com as the numbers come out with Andrew Coffey. You can listen to me run through the numbers and few stocks and options I'm looking at. In case you missed yesterday's broadcast I shockingly declared the numbers to be bullish, LOL! Oil ran $1.77 to close at $73.50 on the nose, RBOB jumped a whopping $0.085 stopping at $2.10 and heating oil got dragged along for the ride despite posting an in-line number settling up $0.045 at $2.06 per gallon! 

exp-vs-act-082907.jpg

Oil Stock See Much Bigger Than Expected Draw! Someone bearing a striking resemblance to myself wrote yesterday:

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.  

Imports were of course to blame. Crude imports tumbled right at about 1 million bpd which is probably entirely attributable to Mexico when you consider that they weren't down for the whole period.  

Gasoline Also Got A Much Bigger Than Expected Draw, Twice As Big That Is. yada

  • Production: Fell to just under 9.1 million bpd from last week's make of roughly 9.3. While inventories may be low you can't blame it on the refiners. That 9.1 is still the second highest gasoline production recorded for this week in history. You people just need to start buying more Vespas and fewer Hummers.  The real danger here is that with more refiners off line over recent snafu AND several at assorted locations around the country announcing planned downtime (for the second maintenance season of the year is just around the corner) the blue line in the chart below could shadow the red line over the next several weeks. In fact, I'm betting exactly that is going to happen.

gasoline-production-082907.jpg

  • Imports staged a minor recovery, nothing to write here or home about.
  • Demand: Still running strong at 9.626 million bpd, which is high for this time of year (but not quite the record). The recent drop in prices has inspired many drivers to actually buy a full tank of gas for the first time in three months.

gasoline-demand-082907.jpg

  • Days Supply: A Measure of Inventories Versus Demand Is At Record Lows. At least since they've been tracking it back to 1991. In it's weekly report, EIA surmises that the low level of stocks are likely to mitigate/moderate the typical seasonal decline in prices we typically see after Labor day. I agree.

gasoline-days-supply-082907.jpg

Distillates: Stuck in the middle of the five year range for this time of year. Nothing to add just yet.

Natural Gas Report Preview:

  • My Number: 35ish Bcf, vs 49 Bcf in the year ago week meaning we will almost undoubtedly eat into the YoY storage for the third week in a row and, given continued strong temps, both relative to normal and last year, we're likely to do the same for each of the next 3 weeks until we are finally below year ago levels.
  • The Street's Consensus Number: 44 Bcf. Gas will attempt to test the lows unless the injection comes closer to my range and ...

Holdings Watch:

CALLS:

  • (VLO) doubled up on my position in the wake of the inventory report. Specifically added the $65s for $3.40. Last bid $4.10. Current average cost: $2.90. 

PUTS: No Action. 

Odds & Ends

Analyst Watch: (VSE) and (AVR) upped to over-weight at Lehman and raised it's outlook on ethanol in general from neutral to positive, (PVA) initiated at Buy at Robbison Humphrey,

Shallow Water Watch: (ESV) says it expects 3Q numbers to be flat relative to be flat sequentially versus prior guidance which called for a 3% rise. They sight continued softness in the jack-up makret (shallow water) but the reduction in guidance. They added a $500 million buyback but that should be trumped by statements like "lower utilization and lower dayrates". My long term readers will note that I haven't been a big fan of the shallow water nor onshore drillers for some time. As I referenced the other day when talking about the most recent MMS lease sale the trend is towards less activity on the GOMEX shelf and more in the deepwater. This should also pressure (PDE) and (NBR), potentially (RDC). Heck, potentially all the drillers but it's an unfair association the more deep-capable they are.

Energy Labor Shortage Watch: This isn't news but it should be a big concern to everyone. I'd add that it's not just strong backs we need but we also need to be graduating more geologists and engineers. It's a global story too, not just in the U.S.

Buyback Watch: (FTO) authorized an additional $100 million.

 

 

 

96 Responses to “Thursday – Oil Review & Gas Preview, Plus A Little News and Commentary”

  1. 1
    zman Says:

    Note the bit about ESV and the shallow water guys in today’s post

  2. 2
    zman Says:

    profit taking + fear of what’ll come out of Ben’s mouth next = 100 point off sale on the DJIA.

  3. 3
    Alok Says:

    Any thoughts on your call on SWN. Should I sell it?

  4. 4
    BigJim Says:

    Zman:

    Will gas numbers at 10:30am effect deep water drillers at all? I believe alot of early sellers came to the market but we will even out later this morning.

  5. 5
    zman Says:

    Depends on the strike. Mine $45s are so far out of the money as to be nearly worthless. I plan on reloading this NFX, CRK, and CHK when the gas market looks a little more stable. Definitely not taking the original strikes as a combination of bad market and lack of storm blues has caused those to be too much of a long shot to reasonably attain by expiry.

    As to SWN specifically, nothing has change regarding the story except the gas price. They are roughly 3/4s hedged in the back half of 07 at almost $7.50 so that shouldn’t account for this downdraft (26 in 3 months) but it’s got lots of gassy E&P company. If gas prices stay weak they’ll reign in Cap Ex next year but for now I think this is overdone.

  6. 6
    zman Says:

    RE#4 – Not really and I tend to agree except that I and apparently everyone else is worried Ben will act like he still doesn’t get it tomorrow.

  7. 7
    zman Says:

    Big Jim, – were it not for Ben talking I’d add a little more RIG now. Still may for a trade.

  8. 8
    zman Says:

    refiners coming positive

  9. 9
    sane Says:

    I personally don’t think Ben gets it. Any which way, the mortgage market is toast. Asking the lenders to come up with even more creative schemes to get people out of defaulting is not going to help unless Ben and gang are going to drop rates. On the flip side if they cut rates, well inflation……

  10. 10
    BigJim Says:

    Zman:

    My same decision. Do I risk ahead of tomorrow and add more or just sell today and look to next week. Still thinking. But I like that the market is coming back. Could see some real swings today, especially into the close. That 3:00 to close hour is always wild to either side.

  11. 11
    El Diablo Says:

    I take issue with the Hummer comment because that is a great example of a mainstream media view that is incorrectly shaping the public’s perception of energy use. The media love to villify Hummers (and all suv’s) as ‘impractical fuel wasters’, when there are far more eggregious examples of ‘fuel wasters’ and ‘unnecessary’ waste. Please don’t perpetuate this misleading perception.

  12. 12
    Sambone Says:

    Nymex Crude Falls, Stays Above $73

    DOW JONES NEWSWIRES
    From MARKET TALK:
    [Dow Jones] Nymex crude oil begins a minor decline, but remains above $73/bbl, primarily on follow-through trading and profit-taking from Wed’s gains. Thin trading ahead of the Labor Day Holiday weekend has also been cited as a factor. “Trading is going to be thinner the next day or two, possibly into next Tuesday,” says independent analyst Jim Ritterbusch. He adds that with Sep gasoline contract expiring Fri and thin trade, crude price volatility is likely to increase. Nymex Oct crude -26c at $73.25/bbl. Sep reformulated gasoline blendstock +67 points at $2.1075/gal. Oct ICE Brent -31c at $71.82/bbl (roshanak.taghavi@dowjones.com)

  13. 13
    zman Says:

    Just going by trucks.about.com:

    9.6 mpg with a 32 gallon fuel tank.

    We’ve got to meet the problem from both ends. Increased tech and drilling rights in more place AND conservation. 9.6 sucks.

  14. 14
    zman Says:

    Taking a look at refiner charts they’re all more or less approaching their 200 day SMAs from below. TSO looks the furthest away for reasons discussed yesterday. FTO probably closest with that buyback announcement today.

    If they slice through we could be looking at pretty nice recovery rally for the group as late 3Q and most decidedly 4Q margins should not slide as much as is typical this year.

  15. 15
    sane Says:

    Re #11 and #13

    I agree with you both. El D, I like the comment you made a while back that it is about BTUs/person.

  16. 16
    El Diablo Says:

    MPG is not the correct yardstick, that’s the problem with the argument.

    MPG is appropriate for evaluating commuter vehicles. SUVs are utility vehicles–the only safe way to haul cargo in excess of 1,000 lbs (or 4 fat american passengers, just because they can squeeze into the seats doesn’t mean that the suspension of a civic can safely transport them), and the only safe way to tavel in inclement (snow) weather. This ‘utility’ must be factored into the equation.

    Compare this the the ‘waste’ of recreational boats. They have no utility other than pure pleasure. Their ‘MPG’ is half that of Hummers. Their emissions have been completely unregulated. And their numbers are significantly greater than that of SUVs.

    If you don’t buy the recreation boat argument, we can just check MPGs of Ferraris, Bentleys, etc… Never heard those guzzlers mentioned in the media, and their ‘utility’?

    The public needs to think deeply about energy consumption.

  17. 17
    El Diablo Says:

    If the evacuation of a major city occurs during inclement weather, priuses will get infinite gas mileage because they will be sitting in the traffic jam (remember the evac of Houston two years ago?) A utility vehicle gives you an additional option of leaving the ‘parking lot’ and finding an alternate route, regardless of environmental conditions. For that versatility, the cost is lower ‘MPG’.

  18. 18
    sane Says:

    El D,

    I agree with the utility part of the SUV argument, but the soccer mom down the street ( or her husband to boot ) from me with her Suburban, has no clue on how to drive it off road, or in adverse terrain. They would probably get it stuck or roll it over as quickly as if I tried to take my wife’s Prius off road.

  19. 19
    zman Says:

    EL – LOLOLOLOL. My sister spent something like 28 hours going 12 miles in that evac. Not a Prius but a Passat.

    Or you could ride a Vespa between the lanes of stalled cars πŸ˜‰

  20. 20
    sane Says:

    Scooters are fun

  21. 21
    zman Says:

    My block has 3 Prius. I’ve almost been killed crossing the street twice as they’re silent but I assume deadly. At least I figure they balance my gas mileage out?

  22. 22
    zman Says:

    Go HAL Go

    RIG down a buck…Scoop, what the heck did Cramer say. This shouldn’t be associated with ESV. NBR and RDC should somewhat but not RIG. Taking a little more call action here.

    Honda has a little scooter in black made out tubular steel. Looks like a combat vehicle for a teenager.

  23. 23
    Stephen Says:

    43 bcf

  24. 24
    zman Says:

    Thanks Stephen – all in the East region again. West up 1 and Producing -2.

    Number is clean of revisions.

  25. 25
    sane Says:

    My wife calls it stealth mode. It is a pain in a parking lot when there are people are waling down the middle of the aisle and don’t move because they don’t here you ( well most of the time they don’t move even if they can hear you ).

    All in all it is a very nice car. I was pleasantly surprised by it when we got it.

    I feel sometimes I fall into the eco-geek category, because I have a prius, I ride a scooter, and have solar panels on my house, but I am probably in mind farthest from it.

  26. 26
    Sambone Says:

    Nymex Crude Falls, Stays Above $73

    By Roshanak Taghavi
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude-oil futures declined Thursday to just above $73 a barrel on a bout of profit-taking that was exacerbated by renewed concerns about the strength of the U.S. economy.

    The front-month October light, sweet crude contract on the New York Mercantile Exchange was down 28 cents, or 0.4%, at $73.23 a barrel. Brent crude on the ICE futures exchange was down 31 cents at $71.82 a barrel.

    U.S. gross domestic product in the second quarter was revised up to 4%, according to U.S. Commerce Department data released Thursday. But the upward revision fell slightly short of economists’ expectations.

    The GDP report weighed on equities Thursday morning, and the negative sentiment spilled over into energy markets, said Tom Bentz, an analyst at brokerage BNP Paribas in New York.

    In addition, other economic data showed that jobless claims unexpectedly rose last week, a preliminary sign that employment growth is slowing.

    Petroleum and natural gas futures traders view economic indexes in the U.S., the world’s largest energy consumer, with particular scrutiny because these data are often seen as key indicators of energy demand.

    Adding to the volatility is the fact that September contracts for petroleum products expire Friday and that trading is thinner than usual ahead of the long Labor Day Holiday weekend.

    It’s understandable for futures to pull back a little bit, especially with the expiration of the product contracts this Friday, said Mike Cambria, vice president of floor brokers PNDR Energy in New York. He predicted oil prices could rise back up to a range of $74.35-74.45 a barrel.

    Crude oil prices rose almost $2 Wednesday on the back of a major rally in gasoline prices after the U.S. Department of Energy reported gasoline inventories fell by a larger-than-expected 3.6 million barrels in the week ended Aug. 24. The amount was double analysts’ forecasts.

    U.S. gasoline stocks now cover just 20 days of demand, the lowest level on record, according to the DOE’s Energy Information Administration. Some analysts also expect gasoline inventories to decline even further due to the long Labor Day Holiday weekend, when many Americans hit the road to attend celebratory events and take family vacations.

    “We are maintaining a view that any strength in the crude oil or heating oil going forward will be driven almost entirely by a tight gasoline market,” said Jim Ritterbusch of Ritterbusch and Associaties in Galena, Ill., in a research note.

    Nymex September reformulated-gasoline blendstock was dpown 1.43 cents at $2.0865 a gallon. September heating oil was down 79 points at $2.0340 a gallon.

    —By Roshanak Taghavi, Dow Jones Newswires

  27. 27
    zman Says:

    Did CNBC even review the numbers? Gas is up two pennies post number which was in line but a yawner as it reduced the YoY surplus by only 6 Bcf.

  28. 28
    zman Says:

    How is ESV’s problem (down rates on the shelf and lower utilization of Jack Ups) not NBR’s problems as well. Look at taking the September 27.50s or $30s.

    Sane – I applaud the effort. I’m still considering solar…the wife put the kibosh on the windmill.

  29. 29
    El Diablo Says:

    I’m not an eco-geek-basher either. If you commute 50+ miles a day to work, you SHOULD own a prius. If you have to buy 10 bags of concrete at Home Depot, do us all a favor and load it into a vehicle that you can steer and stop safely with that load. Same if you have to go out in a snow storm.

    I was going to say ‘back to nat gas now’, but not much else to talk about anywhere today…

  30. 30
    sane Says:

    Z, My wife was more happy with the solar panels, She hated the wind mill. πŸ˜›

  31. 31
    zman Says:

    EL – Agreed in part but I prefer Lowes πŸ™‚

    Sane – did you see one of the commercial sized ones fell the other day. Killed a worker who was on top of it when the rise broke off half way up.

  32. 32
    zman Says:

    ESV in the woodshed – down 6% now.

  33. 33
    zman Says:

    NE getting tagged on the ESV call although they’re a bit more diversified.

    RDC getting hit as well.

    NBR offshore not that diversifed away from the gulf yet and they still have lots of land rigs north of the border. That could really get hurt here.

  34. 34
    sane Says:

    El D,

    I am not disagreeing with you, If you need to haul stuff use a truck ( I know I do ), but I don’t think the average person needs a tank to carry them and their briefcase to the office.

    Back to the Market: yeah watching paint dry.

  35. 35
    zman Says:

    Natural gas apparently loving a new weather report which I haven’t seen yet, it can’t be that number that’s causing the UNG spike.

  36. 36
    sane Says:

    Re 31

    No I didn’t see that, where did it happen at?

  37. 37
    zman Says:

    Can’t remember, it was in the EIA’s nightly pub a couple of days ago. It was under construction, one of those really big ones, and it just failed while 2 guys were on it.

  38. 38
    Stephen Says:

    I went long UNG yesterday, which weather report?

    I thought the risk/reward was pretty good for a trade to mid-Sept, hurricanes, “hasta luego easy comps”, and all. Although, I know some here feel strongly about $4 NG.

  39. 39
    sane Says:

    Most likely TX. A lot of wind generation going up in TX

  40. 40
    El Diablo Says:

    It is going to be a very bad month for some hedgies if crude (energy equities) does not hold up. If it does hold up, we forgo the ‘redemption sales’ for at least another month.

  41. 41
    zman Says:

    Stephen, I was just looking for a reason to explain the big bump…know it can’t be shorts covering so I thought a new sat photo might be out….I see nothing so far and the gain appears to be melting back. EL D would probably tell you it’s not hard to manipulate the gas markets.

    By the way, Scoop pointed out big losses at Bank of Montreal due to nat gas trading. Big position, roughly $11B, to unwind.

  42. 42
    zman Says:

    Don’t think so but you are right about wind plans there. At least you know it wasn’t in Ted Kennedy’s back yard. He talks green but doesn’t want to have to look at it.

  43. 43
    El Diablo Says:

    And finally (I mean that literally), no one has any reason to be mad at Bernanke if he doesn’t cut rates–there has been ample opportunities to exit positions amid this uncertainty.

    Z- (and all others here) its been a pleasure, good luck with the site. And beware, if someone shows up there as ‘El Diablo’, they’re an imposter!

  44. 44
    sane Says:

    Z, just guessing. Ugh… don’t get me started on Teddy.

  45. 45
    zman Says:

    El D – you’ll be missed.

  46. 46
    sane Says:

    Later El D

  47. 47
    scoop006 Says:

    Z Did the RIG email arrive?

  48. 48
    zman Says:

    Latest weather out, and nat gas legging up again. If that thing half way across the Atlantic was a bright spot on seismic I’d say we have a prospect but a storm? My eyes just don’t see it. If anything it looks less cohesive to me.

    http://www.intellicast.com/Storm/hurricane/atlanticsatellite.aspx?animate=true

  49. 49
    zman Says:

    RE: RIG yeah, I replied, did you not get?

    I agree with him, I assume it was Cramer, for once. The arguments haven’t changed since the merger or second quarter on the fundies so he’s just regurgitating there but he’s right on selling this rather than something liquid. Lots of names that are great are down though. NFX is a steal here. CRK same. But RIG has the approaching completion of the merger date as a catalyst and it should really run.

  50. 50
    sane Says:

    Looks like nat is short covering d/t long weekend, plus if there is even a smell of hurricane over the long weekend a lot of players do not want to be caught with their pants down.

  51. 51
    scoop006 Says:

    Z Did not receive your reply

  52. 52
    zman Says:

    It was essentially #49

  53. 53
    zman Says:

    Nat gas in trading range $5.50 to $5.70: You’ve got up 18 on tuesday, down 17 yesterday, up 15 today. Sane, I concur, storm fears.

  54. 54
    tom2oc Says:

    Hi Z,

    I noticed Phil’s site no longer links to your site. Are you still partnering with him or are you going alone for your new site? Just curious about those combo subscription rates you mentioned earlier on this summer.

    All the best for your paid site!

    Tom

  55. 55
    zman Says:

    Tom! Where have you been???!!! Nicky’s taking a much needed break this week and I’m sure some folks around would love to get some chart insight from you. Is your sight up right now? Please post a link if it is.

    With regard to PSW, I had to go my own way. I have the utmost respect for Phil and his crew but at the end of the day, we just couldn’t make it work. I posted this earlier in the week but there will be no combo deal with Phil. If anyone is looking to subscribe to Phil I believe his subscription page is located at philstockworld.com/subscribe.

  56. 56
    zman Says:

    A little early to say so but “nice call of the day goes to BigJim as we’re green and happy now after a bloody open.

    PBR – announced a nice well in the Santos Basin. med crude in a pretty long reach stepout (10km) meaning the original discovery could be SIZE. They may not give much more details until after the next auction. Stock responding nicely. They have a lot of developments in 2H coming on line. Stock looks poised and no I still haven’t bitten. Fear a global melt like the other day which say stocks like PTR get whacked for eleven bucks in a single session.

  57. 57
    BigJim Says:

    Took profits this morning on Diamond Offshore(DO) with Bernanke speech coming and Labor Day approaching. Plus I will be leaving this afternoon for weekend holiday. News will not be easy to hear and computer not available. Hope everyone is doing well. Glad I have joined this site. Thanks Zman. Hope everyone gets some rest and stays safe. See ya next week.

  58. 58
    tom2oc Says:

    Oh, I see. That must have been a very tough decision for you. I’m sure you will not regret it. Usually better to be the master of your own destiny.

    I’ve been out of the market for some time now. I don’t have a buy or sell signal for the mid or long term timeframe so I simply stay out. Just leaving the bull/bear fight go on until a loser lies on the ground so I can run with the winner for the next leg up or down.

    Financials are way too screwed up now to get involved. See again today holding the whole market. On the bull side, BKX going back above 109 would help the short term picture but I’m waiting for a move above 112 to make it clearer on the mid term horizon before getting back long side. If BKX fails 100 then I’ll get back on the short side. But it also depends what my other 2 partners do at the same time. GOsh, this sub-prime mess will never end!

    My site is down presently. I’ve been opening it from time to time lately when I had to analyze significant market moves to see what’s up. So far, nothing has changed, the bull/bear fight goes on and I’m not getting into the street fight to not get a punch on the nose. It can go on for months, I dun care, I can wait.

    Heck, if you need a weirdo GOAX market analyst and chartist to diversify your site one day once you’re at a million subscribers, let me know! πŸ™‚

    Again, all the best in your new venture!

    Tom

  59. 59
    Sambone Says:

    94L – Could be “Gabrielle”. On Cane Hunters schedule.
    http://www.ssd.noaa.gov/goes/flt/t1/loop-rb.html

    96L – Could be “Felix”. Has a chance.
    http://www.ssd.noaa.gov/goes/flt/t2/loop-rb.html

    95L & 97L – no chance

  60. 60
    zman Says:

    Housekeeping. There a couple of test posts Friday night. Please disregard them as we make our final tweaks for the Saturday private site roll out. By the way, the new site will look just like the old. I thought about a new color scheme and zippier style but is that why you really come here? I didn’t think so.

  61. 61
    Sambone Says:

    I come here for the “Carolina Blue” color scheme, not sure why everybody else does, but that’s why I’m here.

  62. 62
    sane Says:

    I prefer cornflower blue, it must be Tuesday because I am wearing my cornflower blue tie….. oh

  63. 63
    rammastr Says:

    Carolina Blue is the only blue I know!

  64. 64
    zman Says:

    no calls for burnt orange?

  65. 65
    Sambone Says:

    Cornflower blue? Nah try this.
    http://tarheelblue.cstv.com/

  66. 66
    rammastr Says:

    ZMAN – The RIG issue you were talking about…#49. Cramer, Merger completion date. Is this the reason for the weakness?

  67. 67
    zman Says:

    Shouldn’t be…he was saying in one of his trading alerts that it’s a buy in his book.

  68. 68
    bill fraser Says:

    I’m trying to figure out how to play gas futures going into the 3 day weekend.

    Do you buy now and if a hurricane develops over the weekend, they will soar on Tuesday or stay out of it completely.

    Any opinions??

  69. 69
    Sambone Says:

    Burnt orange? As in pumpkins? I must be color blind, because this color looks like Carolina blue. Why do you think God made the sky Carolina blue? LOL

  70. 70
    Sambone Says:

    RIG – I think it is down because ESV announced after the close that3rd quarter will be lower. NE is down also. Peer group pressure IMO.

  71. 71
    zman Says:

    Sambone – true, I assumed he read the earlier comments. RIG shouldn’t be affected but of course it gets lumped in as someone who drills in water.

  72. 72
    sane Says:

    How about a nice shade of green with butterfly and dragonfly graphics. πŸ˜›

    –> Jumps out of window

  73. 73
    sane Says:

    I think my alma mater colors would be nausiating. Hoosier Red with black and gold. Barf…

  74. 74
    Stephen Says:

    I’m long NG for the weekend.

    http://www.weatherunderground.com/blog/JeffMasters/comment.html?entrynum=770&tstamp=200708

  75. 75
    Sambone Says:

    Z – Crowd = RIG, NE, ESV. One bad apple brings the bunch down is the way the street looks at it. BTW, my calculations have RIG earning north of $15.00 EPS in 09.

  76. 76
    zman Says:

    Their long term contracts are simply unreal (some at $1/2 million per day) and even if the deeper part of the GOMEX were to soften up (which I VERY much doubt) they are mostly global which is incredibly strong.

  77. 77
    zman Says:

    Nice link Stephen, thanks.

  78. 78
    Stephen Says:

    Here is another thing that may be causing the drop in drillers. Does anyone know the contracts signed by the drillers well enough, to know what the penalties or “early termination rights” are for a major just walking away from a contract.

    http://www.reuters.com/article/hotStocksNews/idUSN3043198820070830

  79. 79
    sane Says:

    Stephen

    Yeah L94 is tracking deans path. Probably making traders jumpy

  80. 80
    zman Says:

    Stephen,

    Mmmarrkk can answer this much more eloquently than I but first off I wouldn’t expect of rush of early terminations. This is handled by between the driller, the operator, and the next guy in line given the amount of demand. If a rig terminates early XOM may work it out that it goes to CVX when they still had time on it. It’s more of a portfolio approach. No for the little guys, like say an END, it would vary a lot more but the majors have a lot of leverage. I don’t think they ever end up just “paying it out”

  81. 81
    zman Says:

    LOST YOUR PASSWORD?

    If so refresh your browser. We just added a section with a step by step procedure for obtaining a new one in a page under that name at upper left.

  82. 82
    zman Says:

    Commodities tracking broader market a little lower. Gasoline really getting hit but this is expiry. October and beyond not tracking it so hard.

    Paint drying time.

  83. 83
    rammastr Says:

    ZMAN – Is their somewhat predictable timing for any of the energy complex to rally towards winter? Not that I believe in the Farmers Almanac, but do others use it as a guide – and do you know what the “prediction” is for this winter?

  84. 84
    Sambone Says:

    Wait til about 3:30 and we’ll see. Watching TRIN, currently at 1.45

  85. 85
    zman Says:

    Ram – as a general but obvious rule of thumb, heating oil and nat gas rally in winter (but not always). The stocks can go either way depending on valuation, market etc. And as to the farmers almanac and winter, I haven’t seen a prediction yet except from AG who thinks its going to be hot. Sorry, that was just about the most useless comment I think I’ve ever typed. I’ll take a look at some winter trends and get back with you this week on some more definitive stats, ok?

  86. 86
    rammastr Says:

    Thank you ZMAN.

  87. 87
    zman Says:

    Ben Fear + scant Senior traders = crappy market.

  88. 88
    zman Says:

    Cody around?

  89. 89
    Sambone Says:

    Everybodies on vacation. What is going to be interesting in regards to this market is what these money centers are going to report. A few have their quarter ending tommorow, so they will report in about three weeks. You better believe the conference calls will be heated and how they try to side step what they really have on their books and at what price they carry them. Interesting days ahead.

  90. 90
    zman Says:

    hear ya vacation…I’d take one but I just love what I do way too much.

    Yeah , agree re financial they “got some splainen to do!”

  91. 91
    zman Says:

    OII breaking out. That’s a nice looking chart.

    TSO down a buck…will wait for tomorrow to decide on adding a third leg to my position.

  92. 92
    rammastr Says:

    OII has been tracking nicely above it’s 50dma. Rig has resistance at it’s 50dma. RIG needs to blow through 105 to keep moving up!

  93. 93
    Sambone Says:

    Ah, Static day, waiting on Helicopter Ben.

  94. 94
    Sambone Says:

    Nymex Crude Falls With Gasoline, Stays Above $73

    By Roshanak Taghavi
    Of DOW JONES NEWSWIRES

    NEW YORK   Crude oil futures ended slightly lower Thursday, but remained above $73 a barrel, following the path of gasoline futures for the second day in a row.

    The front-month October light, sweet crude contract on the New York Mercantile Exchange ended down 8 cents, or 0.1%, at $73.43 a barrel. Brent crude on the ICE futures exchange ended down 20 cents at $71.93 a barrel.

    Final settlement prices weren’t in yet.

    September petroleum product contracts are set to expire Friday.

    Traders spent most of Thursday taking profits from previous bets on a rise in gasoline prices. The subsequent fall in gasoline prices dragged down the rest of the petroleum market as well.

    “Pressure on gasoline today is keeping a lid on crude (oil) and heating oil,” said Tom Bentz, an analyst at brokerage BNP Paribas in New York.

    Crude oil prices rose almost $2 Wednesday on the back of a major rally in gasoline prices after the U.S. Department of Energy reported gasoline inventories fell by a larger-than-expected 3.6 million barrels in the week ended Aug. 24. U.S. gasoline stocks now cover just 20 days of demand, the lowest level on record, according to the DOE’s Energy Information Administration.

    Expectations that gasoline supplies would tighten even further in the run-up to the U.S. Labor Day holiday, when many Americans hit the road to attend celebrations and take vacations, added to traders’ anxiety and boosted gasoline prices even more Wednesday.

    Gasoline gave some of those gains back on Thursday. Nymex September reformulated-gasoline blendstock ended down 2.23 cents at $2.0785 a gallon.

    September heating oil ended down 1.27 cents at $2.0292 a gallon.

    Developments in equities also contributed to gyrations in the crude oil market.

    Petroleum futures traders have been paying particular attention to economic indexes in the U.S., the world’s largest energy consumer, because these data are often seen as key indicators of energy demand.

    Traders are anxiously awaiting a speech Federal Reserve Chairman Ben Bernanke is scheduled to give Friday in Jackson Hole, Wyo. Bernanke is expected to discuss housing and monetary policy in the wake of the sub-prime crisis and ensuing credit crunch of the last few weeks. Analysts are widely expecting Bernanke’s comments to be positive for the underlying economy and supportive of consumer demand.

    “He will say something supportive for the equity markets, and this will spill over into the energy complex as well,” said Nauman Barakat, vice president of energy at Macquarie Futures USA in New York.

    Traders are also keeping an eye on a tropical weather disturbance in the Atlantic basin, which could develop into a strong storm or hurricane.

    There is currently one tropical system 900 miles east-southeast of the Windward Islands that could ultimately affect the energy industry, said Jim Rouiller, senior energy meteorologist at Planalytics, in a research note. He added, however, that “it is way too premature to speculate on this storm’s potential impact to the Gulf.”

    Atlantic hurricanes sometimes enter the U.S. Gulf of Mexico and wreak havoc with energy installations there.

    “Even though it (the weather) is not serious, with all this other stuff going on, especially with a long weekend, I don’t think anyone will want to be too short going into the weekend,” said Barakat.

    — By Roshanak Taghavi, Dow Jones Newswires

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    zman Says:

    Houekeeping Item. If you don’t have a PayPal account you can use your credit card to subscribe.

    After registering,

    login
    click the link on the Blue W page to activate your account.

    This will take you to the SUBSCRIBE page with 3 options on it (monthly,qtr, annual). Click one. At the bottom of the paypal page there is an option to use a credit card to subscribe if you don’t have a paypal account.

  96. 96
    Big H Says:

    c u z!

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