07
Sep

Fed Freakout Friday?

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Oil is off this morning do to the jobs data (first decline in 4 years) and inspite of: 1) yesterday's big draw on crude, 2) the fact that Opec will do nothing next Tuesday, and 3) the possibility that terrorists might do something next Tuesday (6 year anniversary of 9/11) and a rumor that that coward Bin Laden will release yet another video tape from his hiddie hole. Didn't you hear BL, ABC is making a show about Cavemen this Fall so we, now more than ever, could care less what it is you think you have to offer (unless it's your head on a platter in which case then by all means offer away). By the way, that lousy jobs number has bigger rate cut written all over it so the negative reaction in the markets may be short lived. For it's part the IMF just proclaimed US inflation "to be on a downward path". I don't believe it personally but it sounds nice.

Oil Inventories Review: In a nutshell: Bullish crude and gasoline, maybe slightly bearish for distillates

exp-vs-act-090607.jpg

Crude: I wrote this in Thursday's post:

I’d expect a number higher than consensus again as imports are likely to be disappointing for a second week in a row. Mexico was still in the process of reactivating GOMEX production through this past weekend. Any way you slice it we’re still adequately supplied but recent declines in stocks have made a dent and we’re headed into YoY deficit territory if further supply disruptions occur from the GOMEX. I still see oil testing the $78 and change high achieved in early August unless OPEC does an about face next week which seems unlikely. Comment: Check.

crude-stocks-090607.jpg

Crude Sidebar: Pemex Watch: Early reports on Pemex's 2008 capital budget were leaked to a Mexican news agency yesterday. The report contained data on expected production which show's Pemex is forecasting, at least in the draft that was leaked, a 0.7% decline in Mexico's oil production to 3.14 mm bopd nin 2008. Declines at Mexico's largest field, Cantarell, are expected to continue at around 15%. This year the field is expected to average 1.526 million bopd (down 15% from last year) and they see no reason why it won't decline another 15% to average 1.312 mm bopd next year with a YE08 exit rate of 1.155 mm bopd. Mexico is the second or third largest source of crude (it runs a close race with Saudi Arabia) for the U.S. after Canada.  

  • Gasoline: 
  • Production / Utilization: Production inched back up slightly but was slightly below year ago levels. A big jump in utilization to 92.1% from 90.3% in the prior week surprised both me and the Street. It won't last much longer.
  • Imports: Big bounce back to 1.3 MM Bpd. This is unlikely to continue much longer either.
  • Demand: Still running high for this time of year. Dropped back to 9.577 mm bpd vs 9.626 mm bpd in the prior week. In other words it barely changed and is running just short of all time highs, for this or any other time of year.
  • Inventories: Down 8% YoY and 4% to the four year average. This doesn't seem so bad until you consider that demand generally rises 1.5 to 2% per annum. It's also the lowest point since just after Katrina and yet we've had no Gulf Coast swamping storms in almost two years. Notably in yesterday's report, West Coast stocks which had been running high to year ago levels fell quite handily into YoY deficit which should be good for cracks their and (TSO) in particular which has been rallying but to a lesser extent than it's peers. 

gasoline-stocks-090607.jpg

    • Days of Supply: Lookout Below! Dropped to an all time low of 19.8 days. The chart below reflects the demand concerns I was expressing in the previous section.

gasoline-days-supply-090607.jpg

  • Distillate: Thought that estimate looked light. Production increased again and stocks are just above the mid-point of the five year average. 

 

Natural Gas Review: Three Trillion Cubic Feet In Storage Reached - First Time This Early In The Injection Season. That headline and a lull in tropical activity is apparently fueling a dip in gas prices this morning, which are off $0.16 and back to the mid $5.50s. 

  • 36 Bcf Injection. Consensus Was 44. My number was 40ish.
  • Storage as of August 31, 2007: 3,005 Bcf (updated September 6, 2007).
  • Max storage for this week in history: 2,969 Bcf (2006).
  • We are now 1.2% (36 Bcf) higher than year ago levels, down from 4% higher three weeks ago.
  • We are now 10.4% (284 Bcf) above the 5 year average which includes 2006's record levels. 

Follow Up To The CHK Curtailment Announcement. (APC) and (WMB) both stated that they see the current low gas prices as temporary and do not plan to curtail production. So far (CHK) stands alone but if things don't improve out west very soon I think they'll get some company.

Holdings Watch:

CALLS:

  • (PBR) - finally managed to buy some after talking about them daily for the last two or so weeks. Bought the September 65s for $2.40. Last bid $2.35. I waited so long on this one I'll be quick to take profits as it's already $10 off its sub prime induced lows and only $8 off its July oil market euphoria highs.
  • (APA) - this one I missed but I'll likely pay closer attention and snag the October $85s. This was part of my list of oily names from Thursday morning's post all of which did nicely yesterday.
  • (VLO) - botched my stop order there and as refiners took it on the chin over the better than expected utilization number I didn't take the opportunity to punt while it was only off a few pennies. I still like it and will hold as I think we're in for falling utilization in coming weeks.

PUTS: No Action 

Here's an updated holdings list: Note that the (NFX) and (SWN) are pretty decrepit positions, old by my standards and haven't been worth punting. The NFX is likely to get added to on weakness but not the current issue seen here. More likely Oct 50s.

open-options-090607.jpg

Stocks of Interest Watch:

(NFX) - Newfield presented at the NYSE Euronext Virtual Investor Forum yesterday. For an E&P presentation done right click here, click the time beside NFX to listen. They're getting closer to drilling Woodford wells from Pads (lower cost, quicker, better frac control). They also had a slide in the Lehman slide pack showing two exploration wells could be spud in the south China sea towards the end of this year. 

 

HAL vs SLB Watch: Flight to value. (HAL) has always been cheaper but occasionally the two converge a slightly. Pick your metric, HAL is (and has been) cheaper: PE (fwd) (HAL: 12x,SLB: 19x), PCF '08 (9.6x vs 14.5x, PB (5.4x vs 9.1x), PS (1.3x vs 5.4x). Part of that discount has been the lower margin business now gone the way of (KBR).  Also, as I said last week, their buyback was apparently put on hold during the sub-prime troubles of August but they apparently came out swinging in 

Odds & Ends 

Analyst Watch: (SGY) upped to outperform at FBR, (PTEN) and (NBR) upped to outperform at Bernstein (gutsy move Mav, I dunno about that just yet), (GLNG) initiated at buy and (TGP) at neutral at FBR.

Housekeeping Item #1: Email Blast List Watch. Email us if you DON'T want to be on the email blast list. Blasts should begin going out next week. Also, if you haven't already, please add the zmanalpha@gmail.com address your e-mail address book so that your spam filter will not round-file the blasts to bulk mail.

Housekeeping Item #2: What Happens In Fight Club, Stays In Fight Club. I've seen some of my material posted from time to time on other sites. In the past that was free advertising. Now that we've gone pay it is both against my copyright rules and, if posted on a site with lots of readers with options accounts, a detriment to me getting my orders filled and you if doing the same if you're so inclined. I'm not Cramer or some other talking head who says one thing while doing another...I don't have that kind pull nor that kind of screwed up moral compass so when I'm looking to go long something I'm not "really looking for an exit" and I don't want someone with lots more subscribers all bidding with and ahead of me. And besides, you're paying for it so why should those other guys get it for free? If you want to post something somewhere from the site of mine that you thinks is particularly in need of public airing just email me and ask. Sorry for the lecture but I do spend enough time on this that I don't want it cannibalized as I 'd hate to end up back at Taco Bell. Enough said. 

Sincere Appreciation Watch: Thanks to all of you who braved the wilds of PayPal and signed up. And Thanks for reading the posts and the occasional comment. We've got some new research systems in place and the site's tech side seems to be working pretty well now. If I don't see you in comments have a great weekend!

XOM Rockies Swing For The Fences Watch. (XOM) said it has begun construction in the Piceance Basin in Colorado that will increase production their from a current 55 Mmcfgpd to 200 Mmcfgpd. It ultimately expects to produce 1 Bcfgpd from the Piceance. Comment: Go get 'em tiger...I'll believe it when I see it. 

 

72 Responses to “Fed Freakout Friday?”

  1. 1
    Sambone Says:

    Nymex Crude Falls After US Jobs Data

    DOW JONES NEWSWIRES
    From Market Talk:
    [Dow Jones] Nymex crude turns negative after U.S. jobs report comes in much weaker than expected. Oct crude -16c at $76.14/bbl after trading around $76.50 before data. Oil is being supported by a drop in U.S. inventories last week and Tuesday’s coming OPEC meeting, where it is expected the cartel won’t raise production. (matt.chambers@dowjones.com)

  2. 2
    Sambone Says:

    Nothing really to report on the weather front. Just watching the wave off of Africa.
    http://www.ssd.noaa.gov/met8/eatl/loop-rb.html

  3. 3
    zman Says:

    They’ve already bounced crude positive. Jobs data = the only thing in the universe that is habitually predicted worse than the crude oil numbers. Expecting +121,000, we get -4,000. Those guys should be saying “would you like fries with that sir”

  4. 4
    sane Says:

    Did somebody ask about nuclear power yesterday?

  5. 5
    zman Says:

    Yes, it was Greg. No specific question posed yet though.

  6. 6
    zman Says:

    across the board energy selling looks overdone from weak hands. big gaps down in some favorite names. waiting for DJIA / SPX to find a level then bargain hunting.

  7. 7
    Sambone Says:

    Nymex Crude Pares Gains After Jobs Data

    By MATT CHAMBERS
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures pared early gains Friday after the U.S. Labor Department said employment fell for the first time in four years, sparking fears energy demand could be hit.

    Non-farm payrolls fell 4,000 in August, the first fall since August 2003, while June and July job growth were both revised down sharply.

    The front-month October light, sweet crude contract on the New York Mercantile Exchange was recently down 7 cents, at $76.23 a barrel. Prices had earlier traded as high as $76.73 on expectations OPEC wouldn’t raise production at its Sept. 11 meeting and tightening U.S. stockpiles. Brent crude on the ICE futures exchange fell 17 cents to $74.60 a barrel.

    “This could portend the beginning of flat to slackening energy demand growth, considering how bad the number was and the revisions to previous months,” said John Kilduff, vice president of risk management at MF Global in New York. “Our previous analysis that demand for gasoline would sustain itself was based on the robust employment picture.”

    Front-month October reformulated gasoline blendstock, or RBOB, fell 1.33 cents, or 0.7%, to $1.9584 a gallon. October heating oil rose 26 points to $2.1394 a gallon.

    Crude prices had risen in early electronic trading, before the 8:30 a.m. EDT release of the jobs numbers, as traders positioned before the coming Organization of Petroleum Exporting Countries meeting.

    While most talk from OPEC ministers and officials has indicated the cartel doesn’t see the need for a production increase, some analysts say recent crude price gains and tightening U.S. stocks in Thursday’s weekly inventory report, the last before the meeting, could see a change of heart from members.

    “Recent comments from OPEC oil ministers have reinforced a growing market consensus for a quota rollover, which we see as representing a risk of disappointment if OPEC opts to raise targets instead,” Tim Evans, an analyst at Citigroup in New York, said in a note to clients. “We continue to see this as a serious possibility as prices are strong.”

    —By Matt Chambers, Dow Jones

  8. 8
    drdavis124 Says:

    The post below in from STERMEN not mine. It is Right ON

    Is Chesapeake Energy Selling Assets For More Drilling?
    posted on: September 07, 2007 | about stocks: CHK
    It wasn’t that long ago that Chesapeake (CHK) shut down production at several wells because it had a surplus flow and the price of natural gas was too low. Now we recently learned that on top of the past shut down CHK is projecting an 18-22% production growth for 2007 and upped the production growth estimates for 2008 to a 14-18% range. This implores for a little analysis.

    On the one hand, CHK announced that it is selling reserves and production equaling 1.5% of all output in West Virginia and Kentucky. Supposedly the reason for the asset sale is to provide cash for additional drilling at other sites. The problem with this is twofold and contradictory. First, CHK doesn’t need to sell assets to raise cash for drilling. Second, CHK may have a regional production surplus. Without the ability to acquire new customers it makes sense to sell some assets. The contradiction is that CHK management are straight shooters and usually do not (have not) disseminate misleading PR statements.

    At first I had to double check the press release. It does sound like CHK is selling assets to raise cash for drilling. Then on a second reading it became clear what CHK is up to. CHK has tremendous reserves in the Appalachian mountain region. Recently CHK has been buying new reserves in Texas and other geographical locations. In essence what CHK is doing is an asset swap without adding substantially to its 10 trillion cubic feet reserve. The geographical diversification is expected to help lower delivery costs to market and help margins.

    Only $310M was spent on acquiring the new assets and CHK expects to sell $600M of existing production sites. The Deep Haley site (Texas) hasn’t been developed yet. I guess you can call this ‘selling assets to drill more’. In reality it is just an asset swap. By diversifying geographically, CHK is hedging against a possible future downturn in the Northeast and Eastern seaboard or alternately the Northeast market stays strong yet the West provides better future demand/growth. The latter is more likely as CHK has more than enough reserves to supply the Northeast and East, even after selling off 1.5% of current production.

    In any event, CHK is drilling again. Now wouldn’t it be nice if Deep Haley bumps up reserves by a trillion cubic feet or more? It’s a long shot, but you never know!

    Disclosure: No conflicts.

  9. 9
    zman Says:

    I hear what Tim is saying but I think OPEC will use the “uncertain U.S. economy” argument to hold off on officially increasing production targets. This same worry over the health of the U.S. economy is what’s got oil off a bit today.

    Besides, OPEC’s got it pretty good right now. They’re producing over quota and getting high dollars for each barrel. It’s like how the Fed doesn’t always have to use the blunt instrument of a rate cut to address money supply. The announcement of a hike will knock $3-5 off a barrel pretty pronto and could send prices into a medium term slide. I bet that sit pat on official numbers while continuing to slowly, quietly ratchet up volumes.

  10. 10
    zman Says:

    Dr P – let’s be very careful about directly posting copyrighted material to this site. Unless you have permission to do that I don’t want it here. You can talk about, there’s no harm there but direct lifting is a bad idea. I don’t have a lot of rules but that’s one of them.

    Not sure I agree with all of the premise but that’s ok. The important thing is , the equity deal is off the table for the next two years (and there was one coming). They continue to add reserves and announce it on a quarterly basis and they’re going to be the #1 produer of natural gas in the US next year.

  11. 11
    zman Says:

    Anybody play/watch NOV. Muey volatility. Could be interesting if oil continues to pair losses and the OIH goes positive too.

    DO as well.

    Oct crude positive now.

  12. 12
    rmkjr Says:

    NOV – went into NOVBBs a few weeks ago -2:1 record is today, pays 9/28. how would you play split ?

  13. 13
    QUARRYMAN Says:

    Hey Z,

    Two questions:
    1) Is there any way that you can make your comments a unique color background? Phil and Happy do this and it is helpful.
    2) BLASTING: you know I love this stuff, it’s why I came back to this industry, are you sending out your TRADE alerts via email now?

    “SAFETY PAYS”

  14. 14
    zman Says:

    R- nice move you’ve had. I don’t play splits b/c I’m a fundamental guy (mostly) and splits change nothing from the standpoint. From a psych point they obviously can make a stock rally (woo-hoo, more people scared to buy at 130 will love it at half the price) but the truth is stocks can and often do dive post split (party’s over syndrome).

    Business there has been very good. Can’t help but think it will slow a bit (reduced drilling activity and capex) but I don’t know how diversified they are by segment (onshore/offshore) or geographically. Even if drilling doesn’t drastically slow in the US I was think perception on the part of analysts may be to get cautious onshore US. That being said, FBR wasn’t shy about upgrading PTEN and NBR this morning.

    Thinking about NFX October calls

  15. 15
    QUARRYMAN Says:

    Into NOVIG and HALIG same day, with ODLUQ (funny coincidence) OIH put as hedge.

    I’m hoping that you can help call when to sell the ODLUQ put or hold.

  16. 16
    QUARRYMAN Says:

    Don’t you think this might test the 42 bottom on NFX?

  17. 17
    zman Says:

    Will look into the shading for my posts. I’m sure we can get it changed.

    E-mail blasts start going out next week. For now, trades are annotated TRADE in my comments in fact… this went out earlier but I don’t see it above so I must have gotten busy and not hit send.

    TRADE: APA OCT 80s Calls at $2.60

  18. 18
    rmkjr Says:

    z,

    yeah, amazing that many see splits as “on sale”. the post-split falloff is what i hoped you’d mention, so thanks. if i’m still holding just before pay date, best to exit pre-/re-enter post split ?

  19. 19
    zman Says:

    NFX: Listen to their call yesterday, still very positive and they should have a great 3Q and be able to talk more about the benefits of pad drilling in the Woodford Shale in October. Since the market stinks it’s possible it goes back down there and I’ll be a buyer of Octobers very soon and again if it falls that far.

  20. 20
    Sambone Says:

    I’m watching TNH. If it gets below 100, I’m in with a target of 140 short term. I agree with Z that Ngas will go down and if it does this will help this stock. It is very volitile though.

  21. 21
    zman Says:

    R – I’m thinking we get a recovery after yet another Dow down 200 day which will give a higher price point to take puts from.

    Again, I haven’t done the DD to be sure they’re not better insulated from a slowdown or potential slowdown of N. American onshore and Gulf Shelf activity than I think they are.

  22. 22
    zman Says:

    Sambone,

    After the last few years of high gas prices I always find it amazing anybody can even make ammonia/nitrogen in this country, lol. Remember (GRO) (Mississippi Chemical), they didn’t.

    Oil back to positive again. Watch that EOG bounce.

  23. 23
    zman Says:

    Forwarded from Mmmarkkk,

    Your call on CHK’s curtailment was spot on and I think they are just the first. I also am very intrigued with their plans to sell portions of their working interests in some of their properties to fund future drilling. Its a great way to do things. It looks, smells and quacks like a Volumetric Production Payment (VPP) which has been used by lots of companies. However, they don’t have a lot of the nasty accounting issues to deal with. It also looks a little like a MLP offering, but without all the SEC issues. There are a lot of investors that will jump in to buy up these assets at pretty nice prices. Aubrey and his team have come up with another great “financial engineering” tool. Plus, they won’t get hammered like they did when they issued debt or stock to fund their programs.

    I’ve missed several of the late runs in NFX and EOG due to my diversion to other things. EOG looks pretty good. I think NG will flounder for a bit longer but then pick up quickly as we near the winter season. Last year it took less than a couple of months to go from mid-$4’s to $8+ after a few companies curtailed production. Aubrey spoke at length about this in their investor call the other day. It will happen again this year, but maybe not at those levels but still a strong move north.

    Saw Phil’s bearish stance on oil and XOM in particular going into the end of the year. I’m bearish on the market in general and I expect a slight move up then a nastier move down, taking out the August lows. XOM follows the market pretty well and if oil prices come off the high’s, then it will move even further down and will be a pretty good buy at those levels. I’m buying put’s to protect some other energy positions, particularly some that I have that aren’t very “tradeable”.

  24. 24
    Nicky Says:

    Morning all – no internet connection yet again today until about 5 minutes ago!

  25. 25
    zman Says:

    N- You haven’t missed much. Markets peaceful and calm as usual.

  26. 26
    Nicky Says:

    Z – according to post no 20 I have missed you saying nat gas going lower – surely not????

    I did post late last night on broader markets – only short post but technicals were pointing to a big move – think we got it!

    Its gonna be volatile though and I am not expecting it to collapse just yet.

    Energy markets i think I agree with your daily comments – should be another high out there to come yet before we turn lower.

  27. 27
    zman Says:

    Not as low as all that, simply back to mid $5s over the 3 Tcf headline. Also, APC and WMB kind of snubbed CHK by saying they see low prices as temporary and that they don’t see a need to cut. Not very Cartel like, lol.

    Read post 23 from Mmarkk

  28. 28
    Nicky Says:

    Nat gas – move up from Tuesdays 5259 is only 3 waves and leaves it looking corrective. A move below that low will favour the iii of iii down.

  29. 29
    Nicky Says:

    Fed have a green light for a rate cut now – I wouldn’t be at all surprised to see it come ahead of 18th September. Would give us a relief rally no doubt.

  30. 30
    MMarkkk Says:

    The STERMEN post (#8) is so full of holes and problematic conclusions that I’m not sure where to start. I tried to reply to him via Real Alpha but don’t think it went through. Bottom line: I think STERMEN has it all wrong regarding CHK’s reasons for selling portions of the their working interests. Fundamentally, he’s out to lunch it appears. Go to the CHK IR website and print out the transcript of their investor call. It’s clearly spelled out and very well evaluated by the analysts’ questions and Aubrey’s responses.

  31. 31
    zman Says:

    Welcom M – Glad you made it!

    Re #8. Guess I was a little too diplomatic with my redirect to what I felt was important there. How do you like that chart I sent. Man, talk about some firepower those guys have!

  32. 32
    zman Says:

    Wall Street Consensus for peak storage: 3.6 Tcf. I just don’t think we’ll get there providing yet another reason to rally gas (actual relative to expected).

  33. 33
    Nicky Says:

    This is very interesting:

    http://www.321energy.com/editorials/roslin/roslin090707.html

  34. 34
    zman Says:

    Oil getting pantsed now over economy slowing worry. This likely seals the deal for OPEC to sit tight as it’s Friday and the meeting is Tuesday. I think it was sealed before but this worry should keep them from even thinking about it.

  35. 35
    zman Says:

    Nicky – got any broader market thoughts for us?

  36. 36
    zman Says:

    TRADE: more PBR Sept 65 C for $1.60

  37. 37
    zman Says:

    TRADE: smallish COP $85 Sept Calls for $0.85.

  38. 38
    rammastr Says:

    HI NICKY. Are we close to covering short/put positions in the financials short term? Where do you think we are if the “big one” is still infront of us?

  39. 39
    zman Says:

    COP trying to trade higher inspite of the market. Heating oil coming positive, oil down only 7 cents again.

    Fox showing picture from purported new Bin Laden video. His beard is dark now, vs 3 years ago when it was gray. Is that less stress or Grecian forumula?

  40. 40
    Nicky Says:

    Z – said last night I was expecting a big move and favoured the downside.

    It is possible to count a 3 wave move up from the August 16th lows which would indicate the ABC ii up is complete and we are in the early stages of iii down.

    A move below 13034.80 (DOW) will be a strong clue iii down is underway with a break of the August 16th lows confirming it.

    A move above Tuesdays highs 13494.10 (DOW) and 1496.40 (SPX) would indicate a more complex correction is still going on and a possible target area is towards 13700.

  41. 41
    Nicky Says:

    R – resistance is at 1467 – 1473 – whilst that holds I favor more downside.

  42. 42
    zman Says:

    COP cut losses in half. Crude now positive. Dow still down 179 at this point.

    N – I saw that, just doing a little bottom fishing on a slow, red Friday afternoon.

    DEEP!

  43. 43
    drdavis124 Says:

    1-Z thanks for the advice on Copyright.
    2-Remenber I talk longer term. Xom is doomed Their researves in NOC countries are very over-stated.
    3-I am short the Q’S,SPY & subprime. looking at puts on financials-XLF.
    4.LONGS: I for look sectors that are taking off. “FOOD-agriculture- The sector has just takin off. There will be world-wide shortegs of Meat, corn cotten wheat in the spring. Etc. Looking for Agricuture ETF’s.
    5.No one mentionsed I bought calls on AAPL. Should I average Down??
    6.Chk-in 4 years. McLenden has never made a mistake.

    Dr. Phil

  44. 44
    zman Says:

    RIG up, wow.

    NOV starting to pummeled. Was down $2 when talked about it earlier. Now down $4

  45. 45
    zman Says:

    Dr D

    4) Food: You couldn’t be more right. I guess the IMF can declare inflation dead in the US b/c nobody cares about food prices. In fact unless you like to eat, fly, drive you won’t be bothered by inflation.

    5) AAPL – anybody have any ideas. I like my 30 Gig Vipod but I feel I too should get a rebate since they’ve lowered prices on them since I got it for Christmas, lol. That $100 rebate is dumb. What are the going to do, use someone else’s Iphone? I doubt it.

    6) I agree, the guy is the quintessential oil man. I love the story…in 4 years there won’t be a CHK standalone.

    Speaking of oil, it’s up $0.34.

  46. 46
    zman Says:

    COP @ HOD, OIH approaching it.

    Re 2 Above. Doomed seems rather extreme

  47. 47
    rammastr Says:

    Weather anybody?

  48. 48
    Sambone Says:

    Off subject. For those in the south, it looks like “Gabrielle” will give some much needed rain. 99L should be upgraded after the Cane hunters fly at 5 PM.
    http://www.ssd.noaa.gov/goes/east/tatl/loop-rb.html

  49. 49
    Sambone Says:

    Ram – Watching big wave off Africa currently. Otherwise nothing cooking for the GOMEX at this time.

  50. 50
    rammastr Says:

    Thanks. Did you say something about possible short covering in RIG a couple days ago?

  51. 51
    MMarkkk Says:

    Z – agree that someone will snatch up CHK at some point. Just too good. Also, its the easiest way to grow – just buy! XOM has enough cash on their balance sheet to buy them outright. Yes, the green stuff – cash – for all those investment bankers looking for jobs.

    Dr P: Agree with many of your points. Can’t go with the XOM issue. I don’t own XOM but I think any company that generates the kind of cash they do year in and year out and have the financials they have can’t be bad. They could buy many countries, let alone companies. And I know you have some philosophical issues with them and all, but I’d put my money in them before 80% of other companies. But your view of XOM is well known and stated in most all of your posts in other places so I know where you’re coming from. We’ll just agree to disagree and make money in other areas where we agree!

  52. 52
    Sambone Says:

    Nah, I talked about DEEP with a short squeeze. Ram, here is the wave I’m watching. http://www.ssd.noaa.gov/met8/eatl/loop-wv.html

  53. 53
    zman Says:

    Had to step out for a bit to buy shells. Market getting shelled…see I didn’t miss much.

    Oil will be one of the few things to close green today.

  54. 54
    Sambone Says:

    Market being down like this on a Friday doesn’t bode well for next week. Wait, I’m wrong again, because the talking heads will say it’s time to buy bargins. Oh well, silly me.

  55. 55
    Sambone Says:

    Nymex Crude Ends Higher Before OPEC Meeting

    By MATT CHAMBERS
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures rose for the fifth straight session Friday, climbing to a five-week settlement high in quiet trading as speculators bet OPEC isn’t set to raise production and as a pipeline leak buoyed prices.

    The crude market shrugged off concerns that weaker-than-expected U.S. jobs data could mark a slowing of crude demand growth, as recent tensions in the Middle East and the recent quick development of two fierce Atlantic hurricanes made going into the weekend with bets on a fall in prices an unattractive proposition.

    The front-month October light, sweet crude contract on the New York Mercantile Exchange rose 40 cents, or 0.5%, to $76.70 a barrel, the highest settlement price for the front- month contract since Aug. 2. Prices have risen 3% this week. Brent crude on the ICE futures exchange rose 30 cents to $75.07 a barrel.

    “The betting this week has been that OPEC will do nothing,” and ignore calls for an increase in production, said Andy Lebow, senior vice president at brokerage MF Global in New York. “But it’s a shifting market, the higher prices go, the less likelihood there is of OPEC taking no action.”

    The Organization of Petroleum Exporting Countries, which produces about two-fifths of the world’s oil, is due to meet in Vienna on Sept. 11 amid calls for it to boost oil production to take pressure off prices that have risen 25% in the past six months. OPEC oil ministers have said they don’t see a need to raise production and that high prices are due to refinery problems and speculators lifting prices, rather than a shortage of oil.

    But this week’s gain in prices, and a bigger-than-expected drop in U.S. inventories for last week shown in government data released Thursday, have some traders not so sure which way OPEC will go. OPEC officials have also indicated that while official quotas might not change, informal increases have been occurring lately.

    “It seems they’re moving a little more to some type of production increase, whether it’s mandated, informal or subsequent,” Lebow said.

    U.S. non-farm payrolls fell for the first time in four years in August, the Labor Department said Friday, causing crude to fall briefly. But a U.S. pipeline leak drew prices up to levels they were at before the jobs data were released. The possibility of price-supportive developments over the weekend, such as the development of an Atlantic hurricane, or tensions in the Middle East after Syrian claims this week that Israeli planes entered the country’s air space and “dropped ammunition,” also supported prices.

    Hurricanes Dean and Felix, which both made landfall as Category 5 storms, the highest classification in the scale used by the National Hurricane Center, both developed quickly and pushed crude and gasoline prices higher.

    Kinder Morgan (KMP) shut down a 926-mile oil pipeline late Thursday after a spill in Missouri, a company spokeswoman said Friday. The company doesn’t know how much oil was spilled or when it will return to service, she said. The pipeline’s capacity is 164,000 barrels a day.

    Technical factors are also holding up prices as they approach the all-time intraday record $78.77 a barrel set Aug. 1, said Peter Beutel, president of trading advisory firm Cameron Hanover in New Canaan, Conn.

    “There’s a gravitational pull toward the highs and there are plenty of people who would like to see a print of $80.01,” which would trigger stop-loss buy orders and push prices higher, he said.

    Front-month October reformulated gasoline blendstock, or RBOB, rose 1.47 cents, or 0.7%, to $1.9864 a gallon. October heating oil rose 64 points, or 0.3%, to $2.1432 a gallon.

    –By Matt Chambers, Dow Jones Newswires

  56. 56
    Greg Says:

    Zman – here is the nuclear energy company I am interested in: Thorium Power THPW. It is a penny stock with all the important patents for this technology. Here is a link to an article that does a good job of explaining the concept and advantages: http://www.thoriumpowerinc.com/files/latest%20news/NW%20TP.pdf

    here is a link to THPW’s website: http://www.thoriumpowerinc.com/

    Wondering if someone with Nuclear Power expertise thinks there is any potential here? Thanks

  57. 57
    rammastr Says:

    ZMAN – Dove hunting?

  58. 58
    zman Says:

    Goose. Maybe doves if we’re lucky. Definitely squirrels if we get bored.

  59. 59
    Greg Says:

    test – 3rd try

  60. 60
    Greg Says:

    Zman & sane: The compay I was interested in is Thorium Power THPW, a little penny stock with a crappy chart but big $$$$ idea on changing the nuclear power industry. This article explains the concept: http://www.thoriumpowerinc.com/files/latest%20news/NW%20TP.pdf
    Here is THPW’s web site with many more articles: http://www.thoriumpowerinc.com/

    Wondering if anyone with nuclear knowledge finds this company interesting? Thanks

  61. 61
    zman Says:

    Greg – can see your comments. Will read this weekend. Thanks.

  62. 62
    TTupp Says:

    sup guys? i was dying my beard this am– just for men-

  63. 63
    zman Says:

    seriously, what’s up with that? vanity amongst terrorists?

  64. 64
    Greg Says:

    sorry for the duplicate post Z

  65. 65
    zman Says:

    Greg – no problem…the system forces me to moderate any comments with 2 or more urls in them. I was slow in responding to it and your comment was in purgatory

  66. 66
    zman Says:

    At least RIG had a nice move today. Any my interdays I think all ended up on the close.

  67. 67
    Webloner Says:

    Z do the BLAST will include when you entering a trade or just exiting.

  68. 68
    Wyoming Says:

    Apologies for the late entry but I don’t think that CHK will be taken by a major like XOM. CHK reservoirs are too small. Similar anology to why Shell is leaving the Barnett. XOM overhead is too large. What XOM does have in the US, they are farming, kind of like being the landlord. CHK will more likely be the acquirer or merger of “equals”.

  69. 69
    zman Says:

    Blast: entry and exit of completed trades. Plus the occasional bit of high impact news (probably very limited to major discrep in inventory actuals vs estimates). Really don’t want to overuse the blast as we all get too many stupid emails each day as it is. I plan on only sending 1 or 2 stupid emails per day.

    Wyoming. I think Mark was making a point by saying XOM could do it. I’d say if not them it could still be a major. Burlington Resources (former know as a “gas major”) wasn’t too small for Conoco to snap up last year. BR had 8 Tcfe on the books vs COP’s 19 Tcfe.

    CHK had 10 Tcfe on the books at mid year ’07 so it’s not exactly small and it will be the biggest gas producer in the U.S. bar none next year. But I do think they get acquired and not the other way around. Their currency (their stock) isn’t in a position to make many deals they’d want to on an accretive basis. But that’s just my two cents.

  70. 70
    TTupp Says:

    Z- where did you get your days of suply chart?

  71. 71
    zman Says:

    I made it using EIA data.

    http://tonto.eia.doe.gov/dnav/pet/pet_sum_sndw_a_EPM0_VSD_days_w.htm

  72. 72
    TTupp Says:

    it would be interesting to see one made up for distillates… i think it would be a much more grim picture when you take into accont the demand surge and the neglect due to the rush to normalize RBOB inventories…. ??

    PS does distilates as a group include HO, jet fuel, and diesel??? im was unsure of this?

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