10
Sep

Monday – All Eyes On OPEC

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If you missed the Weekend Wrap click here. Highlights include the surprising fact that oil, gas and all of the various energy groups were up last week. If you missed Friday's action consider yourself lucky. I took the opportunity to do a little bargain hunting in the afternoon as detailed in the Holdings Watch section of Monday's Post.

Interesting Stocks of the Day Watch:

  • (OSG) - announcing a new generation of faster larger, faster LNG transports, christened the first with three more on the way. The second ship will be names/floated on Tuesday. The new carriers hold approximately 40% more LNG than the largest of the current generation. The company is predominantly a drybulk and tanker firm and tanker rates continued to plummet last week (lowest levels in four years).  Rates may be near a bottom on tankers as OPEC will increase production in the not too distant future and drybulk traffic and rates continue to pick up. This is one to watch as the chart (like many of its peers) has been obliterated in the last couple of months.
  • (RIG) - made Baron's for being in a list of companies generated by Goldman that generate more than double the business of the typical S&P 500 firm from overseas business and are therefore "less susceptible to flagging" in the event of a US recession. I like it for a variety of reasons including that its business is fairly insulated from near term fluctuations in commodity prices (deep water plans take years to develop and trends in deeper water activity only point to an acceleration) and that it trades at an extremely cheap 7.0 2009 earnings which are likely to double relative to 2007 levels.

OPEC Watch: September 11 Meeting.  This week all eyes turn to OPEC where the majority of players are downplaying the incessant calls by governmental and NGO bodies for increased production. Crude oil prices, at least early this week, will be dominated by the decisions made at and tone of the OPEC meeting. Here are some odds & ends from the red carpet as the minister's arrived for Tuesday's meeting in Vienna.

  • "Output Increase Not Needed" Camp: Libya, Kuwait.
  • "OPEC Will be Hit If U.S. Catches Economic Cold" - Qatar. They go on to say that OPEC has not yet seen proof the world needs more oil now.
  • OPEC President Quotes pre meeting: "refinery shortage causing high oil prices", "oil markets well supplied ahead of meeting" and finally, "no comment". Comment: clear as Greenspan Bernanke. 
  • Iran's Oil Minister to preside over quota monitoring committee. Comment: Iran, a notorious quota breaker would if they could but they can't so they will now make sure, at least in theory, that no one else does.
  • Saudi Mulls 500,000 bopd or More Output HIKE. Comment: They're considering lots of options. You have to balance the fact that they are by far the swing vote in the Cartel vs the fact that just about everyone else is saying "Hold Fast". One other thing to consider is that last night to Japanese term lifters were informed by the Saudis that cuts of 9.5% relative to contract volumes will remain in place through at least October. This statement has sent October crude down about 1% pre market. While oil prices are starting the day with a decidedly negative tone look for extreme volatility until the OPEC meeting is concluded.
I think the Saudi statements are a bit of gamesmanship with the international community but that at the end of the day rates will be left "officially" untouched. If I'm wrong then (XOM), (SU), (APA), (EOG), and (USO) will be on the short list for puts. Also, if they do make a move toward upping quotas, the refiners may take a hit along with all things energy which will make little sense and would present a buying opportunity.

Natural Gas: Looking for a storm in a sea of calm. October gas is off a dime this morning and choppy seas in the Atlantic are likely to keep prices around the mid $5s at least early this week. Having looked at the weather we almost certainly slip into YoY deficit land on Thursday as lingering heat won't permit a storage number big enough to offset the big 115 Bcf injection seen in the comparable week last year.

  • Cooling Degree Days were a little higher than expected at 69 vs the Climate Prediction Center's expectations of 65. This is still pretty hot weather for early September (41% warmer than normal and 68% warmer than the same week last year). Next week CDDs are expected to fall to around 48 continuing the slide in temps as we head towards Fall but still warmer than normal and, more importantly, warmer than last year. There is a big cool front pushing into the norhtern plains this week so next week we may will be starting to talk about HDDs! Right now the CPC is looking for a HDDs to jump from their summer levels of 0 to 2 all the way to 12 (may not sound like much but those areas driving the increase will have to burn some gas to stay warm at night). 
  • Tropics Watch - Several lows are traversing the Atlantic and some of them are getting a little better organized while others have fizzled out. We'll keep a weather eye as always.

Holdings Watch:

CALLS - Friday's weak market trades:

  • (PBR) doubled position in the September $65s for $1.60. New average cost of $2, last bid $1.65.
  • (APA) added the October $80s for $2.60.  Apache is one of the oiliest of the independents (and even it is over 1/2 gas based on production) and runs a high correlation to oil prices so it should directly benefit from OPEC maintaining their quotas. That work's in the converse situation as well and I bought enough time to get in and  reverse if OPEC decides to hike. 
  • (COP) bought the September $85s for $0.85 as an opening position. This is the gassiest of the majors and if my theory on gas prices holds up (that they'll begin to rally a bit into Fall as 2008 capital intentions begin to spell a bleak YoY comparison due to low prices) it should start to move higher. Last bid $0.90. Either way, it's cheap AND growing.

majors-091007.jpg

Updated Positions List:

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Odds & Ends: 

Analyst Watch: (HAL), (SLB), and (BHI) started at buy at UBS. That's a gutsy call on Baker. Jefferies cut to hold (NBR), (ESV), (RDC) (my least favorite part / most vulnerable part of the offshore drillers..lower utilization and declining rates).

(DEEP) announced nice little 3 year, $30 million contract off South Africa. No options but it is a short squeeze candidate and is positioned to benefit from accelerating trends in the deepwater construction market.  

 

92 Responses to “Monday – All Eyes On OPEC”

  1. 1
    Sambone Says:

    Nymex Crude Down As Market Awaits OPEC Decision

    DOW JONES NEWSWIRES
    From Market Talk:
    1233 GMT [Dow Jones] Nymex crude is trading lower early Mon after six straight sessions of gains leading into OPEC meeting Tue. Oct crude -84c at $75.86/bbl. Prices ran up more than $3 last week on speculation the cartel will leave production unchanged but some traders are starting to hedge bets amid talk a formal or informal boost in prices is in the cards. (MC)

    Reported Earlier:
    LONDON — Crude oil futures were lower in London Monday, pressured by speculative selling as the market waits to hear the outcome of the Organization of Petroleum Exporting Countries’ meeting in Vienna.

    Consensus in the market suggests OPEC won’t rush to cool high oil prices and will keep output unchanged, an outcome that looks to be already factored into prices, traders said.

    “We’re seeing people book profits this morning,” said an independent trader. “It looks like OPEC aren’t going to surprise us, but there are a few people taking a cautious approach just in case.”

    At 1132 GMT, the front-month October Brent contract on London’s ICE futures exchange was down 62 cents at $74.45 a barrel.

    The front-month October contract on the New York Mercantile Exchange was trading 45c lower at $76.25 a barrel.

    ICE’s gasoil contract for September delivery was down $6.50 at $675 a metric ton, while Nymex RBOB gasoline for October delivery was down 254 points at 196.10 cents a gallon.

    One of the main factors expected to dissuade OPEC from opening the taps is the recent turmoil in the credit market which has raised questions over the health of the global economy and oil demand forecasts.

    Aside from the longer-term demand picture, observers also point out crude demand is expected to dip in the coming months as refineries enter the seasonal maintenance period ahead of the northern hemisphere winter.

    “OPEC’s forthcoming meeting on Sept. 11 looks on the surface like something of a non-event, with the cartel having already signaled its decision to leave quotas unchanged,” said analyst Doug Leggate of Citigroup.

    He also pointed out that the impact of such a decision would be “marginalized by physical production already above official output limits.”

    Others are more optimistic over the potential for oil prices short term given the fall in the value of the dollar and the current backwardation in the crude market’s forward curve.

    “Unless OPEC comes out with a surprise (something other than “unchanged’) and without a strong change in the dollar index or the backwardation, the momentum of investment flows in oil commodities is such that it should try to test and break previous highs as the next technical target starts with an eight,” said Olivier Jakob of Petromatrix.

    While a decision to leave production unchanged is most likely, there are suggestions that some members may try and push OPEC to lift production when it meets Tuesday.

    Washington D.C.-based PFC Energy consultancy said Saudi Arabia is mulling a rise in oil output.

    “The only thing we will confirm is that we have heard Saudi suggestions that a production increase of 500,000 barrels a day or even more should be considered,” David Kirsch, manager of PFC Energy’s market intelligence service, told Dow Jones Newswires in Vienna, Sunday. “This may not yet be the official Saudi position, but they are clearly considering a host of options.”

    Aside from the OPEC meeting the oil market has also been keeping a close eye on the Atlantic Hurricane season.

    Tropical storm Gabrielle, which hit the north Carolina coast over the weekend, has been downgraded to a tropical depression and is of little worry to the oil market but there are a number of tropical waves in the development phase that need watching, Jakob said.

    TALK BACK: We invite readers to send us comments on this or other financial news topics. Please email us at TalkBackEurope@dowjones.com. Readers should include their full names, work or home addresses and telephone numbers for verification purposes. We reserve the right to edit and publish your comments along with your name; we reserve the right not to publish reader comments.

    —By David Elliott; Dow Jones Newswires

  2. 2
    zman Says:

    Thanks to Jimbo for reminding me about crownweather.com. They put a lot of text into with the pictures which is always nice.

    http://www.crownweather.com/tropical.html#atlantic

  3. 3
    zman Says:

    FYI to new members, you can get a variety of forecasts on the Weather page at upper right. Also, taking the “Brief Tour of ZEB” will help you acclimate.

  4. 4
    Sambone Says:

    http://www.washingtonpost.com/wp-dyn/content/article/2007/09/10/AR2007091000596_pf.html

  5. 5
    zman Says:

    Thanks Sambone! Mexican rebels trying to steal the limelight from the Nigerians. I wrote about the increasingly chaotic state of several Mexican states a while back. Mexico wishes this were a small rebel group but it’s obviously getting bigger and bolder. Modest impact on crude prices so far. People forget that Mexico is our 2nd or 3rd largest source of crude (runs close second with Saudi Arabia). Cut off that crude and we have a real problem.

  6. 6
    Sambone Says:

    See Mexico and Venezuela. “Houston, we have a problem”! Z – We already have a problem. Both are in a sharp decline already. Cantrell continues it’s slide and it is going to be a major problem for both the US govt and the Mexican govt. Chavaz – enough said.

  7. 7
    zman Says:

    Further details say they are gas pipelines but if you look at the recent press articles they’re finding a bomb or more a week down there. Took one out of their Mexico City’s tallest building at the end of August…real problem.

    Natural gas jumping up 2.5% … end of the YoY surplus + stormy weather.

  8. 8
    zman Says:

    Yes, Cantarell falling 15% per anum, no end (other than THE end) in sight. Replacement field has been discovered, no help there until around 2012.

    VZ – the guy’s is best buddies with Ahmed and between them neither have a clue about how to run an oil country.

  9. 9
    Sambone Says:

    Agreed

  10. 10
    Sambone Says:

    Looks like the “Market” is turning to the Dark side. This could be ugly.

  11. 11
    zman Says:

    Crude looks like it wants creep back up later today once the profit taking/fear of Saudi crowd has lightened their loads. Crude down $0.60 now and would be up if Mex were the only news today. NG up 3% now.

    APA / SU could be in for a nice run here. In on the former and thinking about the latter.

    Chinese oils PTR, CEO, SNP all up strongly.

  12. 12
    zman Says:

    Sambone – agreed…scary market. Do you think we’re do a tumble back to 12,800ish?

    As far as options go XOM will be a good, low premium, low spread way to play OPEC. I’m comfortable with my positions now but their stock will rise or fall with the Cartel’s decision.

    Oil is all over the map today. Very hard to play. Down $0.90 now.

    Nigeria says that while they’d like to raise production they don’t see quotas being lifted and they have to abide the quotas. Comment: more likely that they’d cheat if they could but those pesky rebels are keeping them from it so instead they want to look a good little cartel member.

  13. 13
    Sambone Says:

    IMO, this market will retest it’s lows. GLD, UDN, SKF, SJH, QID and SDS are good hedges if anybody is “Long” the market.

  14. 14
    zman Says:

    Thanks Sambone

  15. 15
    Nicky Says:

    Nat gas – bearish count suggests that i of iii of iii finished this morning at 5.247 and we are tracing out a wave ii correction. Resistance at 5.725. Continuation low is at 5.192.

  16. 16
    Nicky Says:

    http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/09/09/cndebt109.
    xml

    This was fleetingly referred to on CNBC earlier today.

    I think it could bring big pressure to the markets.

  17. 17
    zman Says:

    Morning Nicky…can’t access that link

  18. 18
    Nicky Says:

    Try this:

    http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/09/09/cndebt109.
    xml

  19. 19
    Nicky Says:

    Sorry for some reason the xml bit is not highlighting so just copy and paste it and let me know if that works.

  20. 20
    Sambone Says:

    N – Not good

  21. 21
    zman Says:

    Ok, got it to work. That is scary. Banks taking debt onto balance sheets…how long do you think they can keep that up? Gotta cut rates so they don’t hoard cash. Bernanke and others need to wake up.

    Anybody got a good Euro Bank/Financial fund for me to short?

  22. 22
    zman Says:

    Refiners getting slaughtered on slowing economic demand concerns.

    Just reading a UBS headline. Margins fall most on west coast which saw a big decline in gasoline stocks. This makes no sense but they don’t question it, they just call the crude decline bearish for refiners. I guess right now everything is bearish.

    Lots of people seem to be all of the sudden questioning the Fed’s next move. Last week 1/2 point cut was a lock but now they think the fed may not cut?!

  23. 23
    zman Says:

    refiners continued…I’m gutting it out a little longer. Gains made over the last two weeks have been flattened after I missed my stops last Thursday. This week I expect utilization to retreat from 92% back towards ~ 90-91%. Product make should decline as well

  24. 24
    zman Says:

    OPEC Official:

    May hike quaots by 500K bopd,
    Gulf nations support hike, non Gulf Opecies do not.

    Venezuela pretty vehement about it since PdVSA just reported 2006 profits were donw 16%.

  25. 25
    BigJim Says:

    Zman:

    Hiking quotas would that be bearish for refiners and time to buy puts on VLO, TSO or XOM

  26. 26
    Sambone Says:

    I’m red across the board except CEO

  27. 27
    zman Says:

    Big Jim,

    Hiking quotas should reduce oil prices and would therefore be good for guys who buy it turn it into refined products. There is very likely to be a quick drop in everything energy if they do increase the quotas (produce more) but I think that’s a buying opportunity as the product markets remain tight.

    Meanwhile the refiners continue to sell off with the market as everybody thinks we’re going into a recession now and people will drive and fly less, and ship less stuff from place to place.

    Sambone – agreed, nat gas going red now too.

  28. 28
    zman Says:

    OIH near near term support

    TRADE: XLE puts 170s at $220…just in case

  29. 29
    Nicky Says:

    Distillates looking bullish. Resistance is this summer’s 2.1700 high, October’s 2.1788 mid-July high, the 2.2100 all-time continuation high and then October’s 2.2850 contract high.

  30. 30
    BigJim Says:

    Zman:

    Saw CBOE was offering 10 Oct 80 puts for 1.60 on XOM, so I quickly took the bait. The rest of the exchanges were higher priced. Looks like XOM is trading between 88 and 80. So I will see what the rest of the week brings. Hoping this not bad trade.

  31. 31
    zman Says:

    BigJim,

    Same deal behind my XLE trade. It’s insurance which I hope I don’t need but I feel better having it in place than suffering under the current red market regime. Ya know, they say September is the cruelest month in the market for a reason.

  32. 32
    calvino Says:

    Looks like the Dow is turning – maybe the world is not ending today. I’m going out to get a coffee downtown. All this red makes me need a break, and caffeine.

  33. 33
    sane Says:

    Afternoon all

    Lots o red today

  34. 34
    zman Says:

    Nicky – Re Distillates. Heating oil inventories are in sad shape.

    Just got off the phone with the EIA to confirm that statement. I wanted to make sure that I was looking at the right stuff for home heating (>500 parts per million sulfur) and that that was used primarily for home heating. Right on both counts.

    The EIA guy noted distillates are running near the high end of average stock levels for this time of year. I noted that HO inventories are indeed down by almost 1/3 relative to year ago levels. He sounded a little like “oh crap” and said the comments would be passed along to the guys writing the short term energy outlook for winter. The only alternative if you can’t get high sulfur will be to blend with ULS which costs a lot more. Sorry if you live in NE.

    Hey Sane – took a protective put on the XLE earlier (of course at the bottom) – market very ugly.

  35. 35
    zman Says:

    Here’s the link to HO inventories, note the YoY discrepancy.

  36. 36
    sane Says:

    Ugh, My VLO 70 Calls look ugly.

  37. 37
    zman Says:

    Sane – hear ya. I’ve got TSOs too. Very ugly. Cracks are actually up a bit today but they’re tossing the group on the economy.

  38. 38
    zman Says:

    Anybody else think this is gamesmanship? Oil now down only $0.30. Nat gas up a little over 2%. Latest tropics look shows a little more development (better organization) of a low pressure system between the lesser Antilles and the Cape Verde islands – expecting development into a TD over the next 1-2 days

  39. 39
    rammastr Says:

    RE #16 – WOW! I wonder what our banks are facing? Wouldn’t you think the FED would understand by now? Are these guys “too educated”?

  40. 40
    Sambone Says:

    Ram – Ask Cramer, he knows. LOL

  41. 41
    calvino Says:

    LIBOR runs our cash. Perhaps Helicopter and quiet Hank could exhort our lending institutions to peg consumer rates to OUR discount window. It’s better if we run our money from USA, no?

  42. 42
    calvino Says:

    Z – here’s a puzzler to test your brain on a queasy day. Name the closest refiner to the Northeast ports and who is getting hit on the shins as we speak?

  43. 43
    Sambone Says:

    Hjere’s Nicky’s bud! Nicky, I’m just “Pickin”.

    The Energy Report

    Phil Flynn
    September 10, 2007

    OPEC wants respectability. All right Ali, here’s your chance. In the past I have compared Ali al-Naimi, the de Facto leader of the OPEC cartel, to Alan Greenspan when he was Federal Reserve Chairman. Let’s face it, Mr. Naimi has relished his role as sort of the central banker of oil. Mr. Naimi is the Saudi Oil Minister and in truth is the most influential man in the OPEC cartel. He has tried to bring a certain degree of respectability to the business of price-fixing and collusion.

    Of course if you want to be compared to Alan Greenspan you have to learn to make the tough decisions and inspire others to go along with you. There are reports that Mr. Al-Naimi actually favors an increase in oil production at tomorrow’s OPEC meeting but does he have the will and power to make his case to the other members who fear an output increase? There is little doubt that Ali Al-Naimi is an impressive character but does he have what it takes to lead at this important moment in OPEC history?

    OPEC members we have heard overnight such as Kuwait, Iran, and Libya oppose an oil output increase. Can he make the tough call and get the rest of the cartel to realize that this might be the most important decision the cartel may make?

    If you want to act as a central banker of oil what you should do is add more oil to the market in signs of economic stress. If there is more oil one the market oil the prices should go lower and it easier it should make it easier for the economy to avoid a recession. And with the US economy in scary shape after the much worse than expected jobs report last Friday and the chances of a recession rising does Mr. Naimi have the ability to react to an obviously dangerous economic situation?

    Yet the cartel has other ideas. OPEC President Mohammad al-Hamli says that despite the tightening of credit in the US the world economy was growing strongly and should continue into next year. But is he as good a judge about the heath of the economy as al-Naimi? Hasn’t much of the growth around the world been fed in part by the US consumer? And wouldn’t the US consumer be better off if the price of oil was trading lower than the $76.00 per barrel area? Why does OPEC not see that a US recession would be a devastating blow to the prospect for oil demand. Is it just greed or is it fear?

    Well it’s probably both but the fear was best expressed by Qatari Oil Minister Abdullah bin Hamad al-Attiyah who asked, “What is an increase in oil production, and nobody will buy it?”.

    In other words, they fear a price collapse if they raise production and demand still falls. They still have nightmares of when they raised production ahead of the Asian financial crisis that nearly bankrupted many in the cartel. In the long run that price drop helped create an environment that lead to one of the largest price run ups in the history of the world oil markets.

    OPEC’s quota currently is 25.845 million barrels a day and there are signs that in some parts of the world supplies are tightening. As OPEC ponders the oil situation here in the US, we are pondering supply of products. Heating oil has been flying as traders are starting to take notice of over all distillate supplies running 8.6% below a year ago. In fact, come to think of it, in all major categories we are running below year ago levels. Gas is 8.8 percent below year ago levels and is at the lowest level in two years .Even crude oil supply, while still above the five year average, is at slightly lower levels than a year ago.

    The tightness in supply has led to a jump at the pump. Gas prices rose 6.5 cents over the last two weeks according to the Lundberg survey. Trilby, the goddess of gas prices, says that a lot of the price increase is a direct result of rising crude prices.

    Other than OPEC and economic concerns the focus will be on product inventories. Look for crude to be down 2.0 million barrels, gas down 1.5 MB and distillates up 1.5 MB with refinery runs steady.

    It’s great to be back! It is also a great time to be trading energy! Football season is in gear and that means winter is not too far away! Get ready to prepare to put on those winter energy strategies and open your account with me! Call me at 800-935-6487. Get signed up for the Phil Flynn Energy Blast! Call me today at 800-935-6487 or email me at pflynn@alaron.com! Also tune in to see me today on CNBC’s Power Lunch!

    Buy Oct crude at 7400 – stop 7300.

    We’re long October heating oil from apprx 19794 and we hit our profit target at 21000!!! Buy Oct heating oil at 20500 – stop 20300.

    Buy October RBOB at 19200 – stop 18700 with a target of 207.

    We’re long October natural gas from apprx 550 – raise stop to 550 and target 670.

    Have a GREAT day!

  44. 44
    zman Says:

    APA discovery. 80 MMcfepd tested (limited by facilities) from a third discovery off Australia. They think this is about 300 Bcfe gross (APA has 65%). Good timing given the recent strength in Aussie gas prices but these won’t be developed until 2010+

    Together with other Julimar complex wells tapped earlier this year, APA may have added as much as 1 Tcf net to it’s Australian reserves this year which is considerable given the 700 Bcfe on the books at year end 2006. They have over 30 prospects in the Carnivon Basin worked up for drilling.

    This will be totally ignored on a day like today but it adds up.

    Ram – Ivory Tower

    Sambone – No kidding

    Cal – From a concentration of capacity basis how ’bout SUN?

  45. 45
    scoop006 Says:

    CALVINO WOULD THAT BE SUNOCO?

  46. 46
    zman Says:

    Cal – hit on the shins for a refinery is hardly singling anyone out today though!

  47. 47
    zman Says:

    Wow – gas dreaming of the words “Year Over Year Deficit”

    Nicky – I’ve got a heating oil chart in tomorrow’s post all ready for you. Production there has been decimated. How can you not be bullish on heating oil unless you think winter will be an absolute no show. That’s won’t be the case according to the Farmer’s Almanac (sorry Big Al, guess you’ll need to fly around some more in your personal jet preaching the virtues of living a “carbon neutral” life style)

    http://www.bloomberg.com/apps/news?pid=20601103&sid=aw.mbN05w6xc&refer=us

  48. 48
    rammastr Says:

    Right guys – THEY KNOW NOTHING, THEY KNOW NOTHING, THEY KNOW NOTHING, …..

  49. 49
    Sambone Says:

    Weather – Three to watch; 90L in GOMEX Is that circulation?), 92L on Lesser Antilles Islands, 91L off coast of Africa. This is the one to watch.

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

  50. 50
    zman Says:

    HO over $2.15 is a breakout.

    1)So you’ve got gasoline at record low levels on a days of supply basis

    2) HO production falling through the floor. Trust me on that or you can check out this link and look at >500 ppm distillate production.

    3) And you’ve got HO stocks which are about 2/3s of what they were last year at this time.

    This is a great environment for refiners.

  51. 51
    rammastr Says:

    ZMAN – Are you still keeping the puts in place ahead of OPEC meeting?

  52. 52
    calvino Says:

    Sunoco in South Philly would be the answer – I was thinking of Harvest in Newfoundland though. I wasn’t going to make it that easy, was I? True Z, refiners are all getting beat up – that distribution just got fatter.

  53. 53
    zman Says:

    Ram – yes, gives me some balance since I had next to nothing on the put side and you never know what games these guys are going to play. Language to be interpreted as closely as the Fed.

  54. 54
    Sambone Says:

    Ram – After reading this link, you’ll understand why Cramer went crazy on TV in August. His friends on the desk are losing $ and their bonus’s. It will very interesting on these conference calls.

    http://www.marketwatch.com/news/story/stress-test-wall-street-soon/story.aspx?guid=%7B0ADCFB73%2D4EBE%2D435D%2DBF91%2D99B4BF7B608E%7D

  55. 55
    zman Says:

    Oil down $0.15 now.
    HO up almost a penny.
    RBOB still down $0.03

    XOM and the majors have gotten crushed today. No reason. SU down $2. If OPEC holds that will be a quick pop.

  56. 56
    zman Says:

    Oil running now into positive territory.

  57. 57
    zman Says:

    Nat gas up $0.333 ; 6.5%

    Oil up $0.33 in frantic trading. No news out of the ministers who should all be safely tucked in by now.

    OIH moving back towards flat.

    Probably should be taking SUN and TSO calls here but I’m a bit gun shy and there’s no rush (plus I’m already pretty long energy as it is now).

    XOM could go positive by day’s end…donw $1.30 now. May take a little of that if oil continues to advance.

  58. 58
    jiveyjr Says:

    crude oil just made a big up move..I see no news…futures 77.65

  59. 59
    zman Says:

    OII coming positive.

    UBS call this morning nice spread as these were all buys:
    SLB moving up strongly.
    HAL flat
    BHI down sharply

    OIL up $0.93 or 1.2% now
    NG closed up 8% or $0.45 to $5.96

  60. 60
    rammastr Says:

    UNG took off – any other “gassys” following?

  61. 61
    Nicky Says:

    Lost my internet connection yet again! Off and on for nearly a week now – the price to pay for living on a barrier island I guess! But driving me nuts.

    Z – re #47 – not sure if you are asking me how come I am not bullish heating oil but in #29 I said distillates was looking bullish. ie I was bullish!

    Mr PF says opec will increase production tomorrow!

  62. 62
    calvino Says:

    My hunch is that if they do increase, it would be stealthy, unnannounced cheat of an increase. Increasing into a rec ession? Do they have our best interests at heart or theirs?

  63. 63
    QUARRYMAN Says:

    What’s going on with NYMEX

  64. 64
    calvino Says:

    Looks like Harvest took back most of its spanking. That would be a nice gesture on their part since I opened up today.

  65. 65
    zman Says:

    XLE puts = quick ouch. You should know that every time I buy some insurance that’s the bottom. It’s one of the those situations where I hope I’m wrong but want to not worry about it so much. XLE up.

    Wow – all E&P running nicely with the Dow. Funny how the fact that what they sell has been up all day didn’t matter but the Dow going positive did.

    Gassy that hasn’t moved yet: SWN and KWK although they’re looking stronger into the close. PQ has put on a nice move…report on that one soon.

    Also, the majors and COP should turn up in this market.

    Nicky – I thought you were bullish, just thought I’d throw you some fundamental stuff to stand on as well, LOL.

    Calvino – agreed stealthy cheat.

    Q – ? with NYMEX…is there a problem

  66. 66
    Nicky Says:

    Z – I think the distillates run could be capped in the mid 220’s fairly soon maybe even as soon as tomorrow. Should then see a decent pullback before another run up to end (B) and then a much larger pullback.

  67. 67
    zman Says:

    Nicky – Hear ya, wait til you see the chart though. The HO component of distillates looks like crap fundamentally. There’s not a contract to trade for all of the distillates together that I know of. If there were, it would no doubt be less of a bullish looking chart.

    Very happy with my bottom fishing on Friday. Especially APA and the add to PBR. COP still needs to work but I’m not worried on that one at all.

  68. 68
    Sambone Says:

    Crazy market! 185 point swing today. Scares me, Daddy! I wonder if my man Cramer is back day trading?

  69. 69
    QUARRYMAN Says:

    NMX went from 122 to 129 about 2:30p.m.

  70. 70
    zman Says:

    PBR out with some pretty positive statements regarding its plans for US side of the GOMEX…big spender $4.49 billion ’08-12.

    Pemex – update on explosions.

    6 large pre dawn (2 am) explosions at oil and gas pipelines. The PRA left a note claiming responsibility. Looks like they are well organized and set off big explosive devices (felt 12 miles away). That outsized anything the Nigerians have done and the fact that Mexico has not been able to run this group into the ground since they emerged last year means this is pretty serious.

    Oil is on fire now (no pun intended) up $1.12 to $77.82

    Sambone – no kidding crazy market.

    PF on increased OPEC production. I think he’s wrong but that’s what makes a market. I agree that they will continue to quietly ratchet production. I think the 500 mm/d talk was a trial balloon to see the impact on oil prices. They saw it and it wasn’t good.

  71. 71
    Nicky Says:

    Z – I am sure you are right re fundamentals on distillates. However price is already very high don’t you think?

  72. 72
    calvino Says:

    Next time Enterra fires its CFO, please remind me not to daytrade them.

  73. 73
    rammastr Says:

    ZMAN – UNG smoking. Is this usually an ugly option issue?

  74. 74
    Nicky Says:

    any news – energy just exploded to the upside?

  75. 75
    zman Says:

    N – Not when you consider the HO contract is just for high sulfur distillate. You trade it…am I wrong that HO is just heat? Let me know if HO is Fuel Oil No2 or if it is an aggregate price of more than one fuel. I think I have that right though.

    HO Production is down by > 50% from year ago. HO stocks are at their lowest levels (for this time of year) this decade.

  76. 76
    Sambone Says:

    Pemex – I agree Z, this is only going to get worst.

  77. 77
    zman Says:

    Cal – ugh

    N – no, I’m watching M/ENE and nothing has scrolled that’s pertinent in some time.

    Q – I don’t actively follow the Nymex stock…that’s more of a PSW thing.

  78. 78
    calvino Says:

    Yea, pipelines in Mexico exploded and it took some time to sink in that it may be disruptive. Gas – don’t know, maybe bad weather in the West Africa littoral? I thought if we fought the terrorists over there, they wouldn’t come here??

  79. 79
    zman Says:

    Sambone – I’ve read recent stories saying a couple of the Mexican states are like war zones. Hard to report on as they kidnap anyone of value but stories say the govt has been in with actual artillery and is unable to maintain order. That’s too frigging close to Texas in my book!

  80. 80
    Nicky Says:

    Calvino that was hours ago – the big move up is in the last 10 minutes.

  81. 81
    zman Says:

    Cal – now you’re just being funny.

    Oil up so much. Maybe Al Naimi is having a drink in the hotel bar and getting chatty. $78.10

  82. 82
    Nicky Says:

    market goading opec I wonder.

  83. 83
    zman Says:

    Ya know, OPEC (and especially Saudi of late) has been cheating up a storm. I really think this 500K talk was a good way to test the waters. Even if do raise rates a little prices aren’t likely to get hurt for worse than $3 to 5 / barrel. Too much other stuff coming and a production hike would signal that they think the market is too tight. Very Fed like which I mentioned in today’s post before PF got his masterful piece out this morning. PF sent at least one Alaron guy come to the site daily but he hasn’t signed up since we went pay.

  84. 84
    rammastr Says:

    ZMAN – IS UNG a difficult options trade as a rule?

  85. 85
    Nicky Says:

    Somewhat confused now Z. The guy I get my distillates data off says we are reasonably well supplied, right around the 5 year average and only just below last year.

  86. 86
    zman Says:

    OK – I’ll post my cool graphs now…

  87. 87
    zman Says:

    Ram – I think it’s getting better. It used to carry a massive premium, the oil and gas ETFs and a large spread but both have shrunken of late.

  88. 88
    calvino Says:

    This could be far fetched, however, what if… the Pemex pipelines blowing smacks of Iraq trained miscreants. The old comandante Marcos rebels with flintlocks and machetes never did economic sabotage – this is a brand new game. Something to think about and possible repercussions in the energy market.

  89. 89
    zman Says:

    Cal – I personally think it’s pretty scary as we get a lot more oil from them than from Nigeria, much of it going to the Gulf Coast to facilities that are calibrated to process Maya crude. Repercussions would be higher gasoline prices for a broad swath of the U.S.

    Nicky – new post up for you. Everybody hit your F5 key to refresh.

  90. 90
    Nicky Says:

    Got it Z. Well could be the reason the market launches again later in the year.

  91. 91
    zman Says:

    Algeria says no need to raise production (man is he an early riser)

    PBR just said their Xerelete Field is viable and they think it contains 1.4 B barrels. Wowowowowow.

  92. 92
    rammastr Says:

    I think the Algerian is still partying! Should there be an immediate impact for PBR’s stock price? CHK still hasn’t really responded to it’s good news.

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