13
Sep

Thursday – Oil Review & Natural Gas Preview + Hurricane?! Humberto

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Commodity Watch: Crude down $0.30  to $0.40 to about $79.50 early in active trading. NG tagging along down a dime to $6.35.

Yesterday was fun. We got the $80 oil we were looking for after a big drop in crude inventories. So now what? See item B below. Natural gas also had a great day and not just because I've been calling for a bottom there, settling up $0.55 (9%) to $6.47 in large part due to short covering inspired by threatening tropical weather and the knowledge that we flip into YoY Deficit Territory this week. We now have Hurricane Humberto soaking the Texas Gulf Coast with potentially refinery flooding rains and Tropical Depression 8 in the Atlantic that is getting better organized and headed for the Hurricane breeding ground that is the Caribbean this time of year. I'll be taking profits where possible in September contracts (that time of the month) and looking for opportunities to roll into October and beyond.

In today's report:

A) A Review of Yesterday's Oil Inventory Report

B) A Look At 4Q Global Supply / Demand Balances For Crude

C) A Preview of Today's Gas Storage Report

D) Changes in Holdings

E) Stocks We Care About Today

F) Odds & Ends 

 

Oil Inventory Report Review

expected-091307.jpg

  • U.S. Crude Stocks Down 1.5% From Year Ago Levels. Imports fell again which I find a bit surprising given the recovery in Mexican production. The drop in imports explains a little over half the dip in inventories. The rest, as Nicky astutely reminded us yesterday in comments is likely attributable to backwardation as in "why store oil when it's just going to be worth less next month. 

Crude Stocks Remain Historically High ...

crude-stocks-091307.jpg

... But They Are Down YoY...

crude-stocks-yoy-091307.jpg

... And The Crude Days Of Supply Chart Is Approaching An Annual Low Point. Though this is not a wildly bullish for oil argument it is worth noting as it fleshes out that first graph a bit.

crude-days-supply-091307.jpg

  • Gasoline. RBOB is toying with the $2 level and stocks are at about 92% of year ago levels 
  • Production starting to slip which is normal given the time of year. Refinery utilization dipped sharply to 90.5%

gasoline-production-091207.jpg

  • Demand - Not Giving Up The Season Without A Fight. At 9.4 million bpd, gasoline demand in the first week of September wasn't a record but it was very close.

gasoline-demand-091207aaa.jpg

  • Gasoline Stocks: In the end they Fell To A 10 Year Low. I know, I know, tis the season to be thinking about heating (well soon anyway) not driving but the refiners will have to work just that much harder to get levels back up before demand starts to pick up again next season. 

gasoline-stocks-091207.jpg

 

 

Fourth Quarter Oil Price Thoughts: $70 to $75. This will be an ongoing series but that's my preliminary range right now. 

Here is global consumption by quarter last year in millions of barrels of per day:

1Q06: 85.04
2Q06: 83.22
3Q06: 84.02
4Q06: 85.45

1Q07 was 85.40 mm bopd (up 0.4%) and that’s the last full quarter of available data from the EIA but 2Q months April and May were running higher than their 2006 counterparts suggesting the growth in global consumption you would expect (low single digits). The EIA sees 4Q07 demand at 87.6 (up 2.5%).

Here is global output during same time frame (mm bopd):

1Q06: 84.22
2Q06: 84.13
3Q06: 85.13
4Q06: 85.55
1Q07: 84.08 (note this was down YoY, thanks OPEC)

As of May world output was around 84 (data still not final). OPEC production has crept up a little since then.  Non-Opec has been flat for quite some time now. It is a given that OPEC production will be down from 4Q06 to 4Q07.

Even if the rest of the world manages to offset the 600,000 bopd of lower OPEC production expected for the fourth quarter relative to year ago levels that leaves a short fall of 1.8 million bopd between last year's 4Q production and this years expected consumption. When you spread that out over 92 days for the 4Q that comes to nearly 170 million barrels that would be shaved off global inventories which I think might be noticed.

 

Natural Gas: Welcome to The YoY Deficit

  • My number: 50 to 55 Bcf.
    • Cooling Degree Days: 74 vs 79 in the prior week.
    • Imports having been trending lower for the last three weeks but were up very slightly last week, primarily due to another confounding piped volume increase from Canada. This shouldn't be much of a factor today as again it was a very small increase.
  • The Street's Number: 61 Bcf. That would normally be the over under on gas but I really think the focus will be weather first, second and third. To sustain prices here TD 8 will need to get stronger or we'd need to get a very low storage number, say 45 or lower. 
  • Last year's number: 108 Bcf.

Stocks We Care About Today:

  • Coal Watch: As in "I turned my back and coal rallied with natural gas." My favorite player in the group (ANR) went from $18 to $22 in the last week and a half. I would not play it right now because I think we're due for a modest dip in gas prices but hopefully once that occurs I'll be paying attention to the sector.
  • (KWK) - the Street loved the asset sale announced yesterday. I'll be looking to go long this one for a winter gas rally play after it cools off a bit.
  • Last Friday's Bottom Fishing: APA, COP, PBR. All doing very well.
    • Got lucky on the timing of an upgrade on the APA yesterday (thanks Goldy!);
  • I'm happiest with this one because I've been calling for it for some time and arguing it long versus on the MN1 for the last two weeks. It's very cheap and has a lot going for it relative to its peers. To add to that Lukoil (20% owned by COP) topped estimates last night with a strong beat on the revenue line.
    • PBR continues to perform very well operationally but I plan to exit this week and re-enter next in long contracts with the hope of playing possible weakness brought about by the potential loss of one their deepwater exploration blocks where they've already discovered oil. A court will decide the block's fate next week.
  • (GSF) / (RIG) - buy reiterated at Southcoast today after they listened to the (RIG) conference call yesterday afternoon and heard what I heard. Huge demand, better to build it now than wait and pay more later. 
  • Dry Bulks - Getting more interest as they come off their highs. The potential for consolidation in the industry is widely seen as the reason behind yesterday's weakness and not fears over a global economic shut down. The industry is extremely fragmented and ripe for some consolidation like the tanker market was a decade ago. That being said, buyers don't always decline and the acquired don't always rally. A little more weakness and I get very interested in (GNK) among others. Those with large building programs have outperformed and that trend appears likely to continue as tightness is driving both day rates and ship building costs up. 
  • Tankers: Depressed, beaten down, call it what you will. Short interest in these names is high. With OPEC producing more crude and given that we are in the midst of the normal seasonal bottom for rates it may be time for a squeeze (FRO) and (NAT). More on this and the dry bulks in tomorrow's post. 
  • Jackup Rig Markets - More signs of weakness. More analysts are jumping on the bandwagon that international shallow water and medium water rates are too high. Ensco (ESV) is said to have stacked some rigs in August and has a handful of rigs with free time on their hands all of a sudden. This weakness may only last a few months or it may be a longer term thing as more players exit the smaller target medium and shallower depths for participation in the larger opprotunities provided in the deepwater. Looking at (RDC), (NBR), (ESV) on the put side. 
    • I find (ESV) particularly intriguing since half the Street says to buy it and 20% even rate it a sell but the average target price is almost $20 higher than current levels....sounds like more brokers could be changing to the dark side soon there. 
    • (NBR) I like for a puts due to this issue and the continuing potential for disappointment onshore in the the U.S. and Canada. Chart looks bad too.

Holdings Watch: Look for more sales of September contracts today and Friday. Please email me if you don't want the blasts.

CALLS:

  • (COP) …added the September 85s for a quick trade at $1.25. This is a double of my position bought last Friday at $0.85 and a bit risky in front of numbers. Comment: that worked out pretty with oil and NG rally after the report. Average cost now $1.05, last bid $1.40. 
  • (VLO) - after the inventory report I added the $67.50 Septembers for $1.20. The stock then proceeded to trade lower most of the day with the Banc of America initiation of coverage at hold and possibly fear of storm damage (although that's a pretty unlikely cause for the weakness) weighing on the shares. Despite the fact that gasoline inventories deteriorated most in VLO's Gulf Coast backyard (which is supportive of regional cracks) the stock was hit harder than B of A's other initiation yesterday, a sell rating for (WNR)! It's day trady to worry about it and in general I'm not worried about the lower trade on the day but it's frustrating when this happens.
  • (HAL) - sold half of my September 35s for $1.70, a 89% gain in 8 days. I'll lose the rest this week and look to reposition in the Octobers or later months. Still like the story but I'm a little more heavy September contracts than I like to be this close to expiry.  

PUTS: No action. 

Odds & Ends 

Analyst Watch: Nada.

OPEC Meetings Before The Next Regularly Scheduled One In March. From the EIA: "OPEC agreed to reassess the market situation at its 146th (Extraordinary) Meeting on December 5, 2007, and could also review the market situation at an oil summit convening OPEC's heads of state November 17-18, 2007 in Riyadh".

101 Responses to “Thursday – Oil Review & Natural Gas Preview + Hurricane?! Humberto”

  1. 1
    coco Says:

    VLO- port authur refinery shutdown do to an area wide blackout. Corpus christi, texas city, and Houston refiners unnaffected.

  2. 2
    zman Says:

    Thanks Coco – oil black to flat from down as much as $0.50. Probably be the best thing in the world for VLO’s stock for that unit to be offline for a couple of days, lol

  3. 3
    zman Says:

    VLO – just added that they will “try moving equipment into the are to re-start part of the operation”

  4. 4
    zman Says:

    DJ headline: Gulf Coast spot mogas premium widens by 5 cents.

    Gas up 0.025 to $2.045

    another short term negative broker comment on ESV this morning

  5. 5
    zman Says:

    nice open on the stocks…even VLO (up a buck)

    OII is getting more than I’d expect, all time new high, up another a buck

    PBR up a buck…I’ll probably be out of that soon as per the post.

  6. 6
    zman Says:

    Fair warning:

    VLO has gotten back all it’s losses from yesterday ($1.05 to $1.10 right now)

    The ZPY IR’s bought yesterday for $1.20 are currently bid $1.55.

    I’ll borrow this one from Phil at PSW:
    “When in doubt, sell half.” and I’d add if your not liking the refinery action of late that taking all of it off the table for a gross 1 day gain of 29% is nothing to be ashamed of either.

  7. 7
    QUARRYMAN Says:

    Z: Coal stock.

    Walter Industries (WLT) which is the old Jim Walter Homes, they apparently have a metallurgical coal division. THis stock,like all the home builders, is tainted by subprime issues; is the coal portion fairly valued?

    It found a bottom at 22 and has popped recently.

    “SAFETY PAYS”

  8. 8
    zman Says:

    Q – thanks … never would have come up with that one, will add to the market watch. “buried value” plays like that are hard to play via options but the stock, ah, the stock might be of interest.

  9. 9
    zman Says:

    Q – you’ve got to be happy with the PTR/PBR action today.

    VLO screaming now up $1.44

  10. 10
    zman Says:

    Oil up $0.15 to $80

    Nicky must be offline again…although I’m sure living on a barrier island must be beautiful the very name begs the question, barrier from what? oh yes, hurricanes.

    VLO up $1.55 now (the 67.50s are $1.80 bid)
    HAL tapping on $37.
    RIG up $1.25

    where is everyone?

  11. 11
    Sambone Says:

    I’m here, nothing to report on the weather side. Just watching and waiting.

  12. 12
    redjack Says:

    Good morning Z

  13. 13
    Sambone Says:

    Nymex Crude Steady Near Record; Refineries Close

    BY MATT CHAMBERS
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures held near record settlement highs Thursday as Hurricane Humberto caused a power outage in a Texas refinery hub, which boosted gasoline prices. A weakening dollar and expectations of tightening crude inventories and growing demand in the fourth quarter supported crude prices.

    Valero Corp. (VLO) and Total SA (TOT) both said their refineries in Port Arthur, Texas were shut down after the passage of Hurricane Humberto, which made landfall this morning, resulted in a power outage in the area. Power utility Entergy Texas called the outage a “major event” and said it could take days to restore.

    The front-month October light, sweet crude contract on the New York Mercantile Exchange was recently down 33 cents, or 0.4%, at $79.58 a barrel. Prices closed at a record $79.91 a barrel Wednesday. Brent crude on the ICE futures exchange fell 25 cents to $77.43 a barrel.

    Front-month October reformulated gasoline blendstock, or RBOB, rose 2.55 cents, or 1.3%, to $2.0415 a gallon. October heating oil fell 38 points, or 0.2%, to $2.2153 a gallon.

    “Gasoline has run up pretty sharply with the Port Arthur outages,” said Addison Armstrong, an analyst at TFS Energy in Stamford, Conn. “The $80 crude price tag is a lot to digest; technically it would be a good time for some consolidation but the tightness in the market is still there — the fundamentals are bullish.”

    Crude prices ran as high as $80.18 a barrel Wednesday, a new intraday record, after the U.S. Department of Energy said crude oil stockpiles slumped more than expected last week. The stockpiles have fallen for nine of the past 10 weeks and are down 31.4 million barrels in that time.

    The reduced U.S. inventory comes amid forecasts from the International Energy Agency that fourth quarter global oil demand will rise to 87.8 million barrels, compared to current global supply of about 85 million barrels a day.

    A commitment this week from the Organization of Petroleum Exporting Countries to supply an extra 500,000 barrels a day of oil from Nov. 1 is being treated as too little, too late, considering the oil could take months to make its way to key consumers. -By Matt Chambers, Dow Jones Newswires

  14. 14
    rkbos Says:

    maybe some off praying, waiting for natgas nos. ?

  15. 15
    Brian08 Says:

    Kicking myself for missing out on COP and VLO and selling HAL too early…

    Scared to death to put any money to work here with the Fed coming in on Tuesday…Just don’t know where the hell this market will go…

    Would anybody be willing to go short the Dow at 13,400 today?

  16. 16
    kaman Says:

    Z-
    Checking in…going to hang onto my Oct 67.50 calls for VLO (bot at 0.90) unless they top $4 today. Need a watch list for today. cheers-K

  17. 17
    Denise Says:

    Anyone have any opinions on TXCO?

  18. 18
    zman Says:

    Denise – will look at for tomorrow’s post

  19. 19
    zman Says:

    64 Bcf – right in line with consensus.

    NG down $0.22 at the release

  20. 20
    zman Says:

    Ha! We’re tied with year ago storage at 3,069 Bcf

    watching gas now but I don’t see the impetus from the number for an immediate trade.

    maybe a put on kwk if you’re brave/stupid

    VLO up $2, yesterday’s calls still rallying, 2.05 bid

    may lighten my COP soon

  21. 21
    sane Says:

    Ugh finally out of those dumb VLO 70’s at a loss, but not too bad.

    Going into the green with the 67.50’s from yesterday.

  22. 22
    QUARRYMAN Says:

    Humble thanks Z.,

    PBR Sep 65s all out for 63% since 9/6
    PTR Sep 145s(not as ‘Happy’ a call) I need today to come even.
    COP Sep 85s 1/2 out 50% in 4 days, 1/4 out at 110% in 5 days, riding the free leftovers to expiration!
    HAL all out for 50% and glad for it at the time.

    I’m ashamed to print the XOM CVZ DIA mattress play I philled up on last week. Admittedly, I’m not a sophisticated hedger. Traditionally I hit a good lick on cheap calls close to expiration with prescient momentum.

    Cheers.

    “SAFETY PAYS”

  23. 23
    zman Says:

    K – $4 might be a little optimistic!

    B – never kick self, only others…should S&B motto.

    Nat gas fell just after the report but back to down $0.22 now as storm concerns outweigh storage concerns

    Q- were you short those majors?

  24. 24
    Nicky Says:

    Morning all – yes Z – off yet again from 8.30 last night and not restored until 10am this morning so I went and played tennis instead! They just can’t seem to fix the problem.

    Anyway nat gas:

    Line in sand for bearish count is 7.192. We stay below that and hat eating remains a viable option!

    Bearish count starts to warm up again with a move below 5.815.

  25. 25
    Nicky Says:

    WTI chart would look better with a couple more probes to the upside but it could already be done….

    Support below todays low of 79.36 is at 78.95, 78.56 and 78.17.

    Same with distillates….

  26. 26
    zman Says:

    Entergy Tx calls Southeast Texas power outage “major event”

    > 100,000 without power which is bad for NG demand.

    Could take 2 to 3 days to get power back up which is good for GC mogas prices

  27. 27
    QUARRYMAN Says:

    ummmm, Yes?

    PSW has a good idea to short majors, timing wrong. Again, I don’t have the portfolio or time to engage in broad, rolling hedging schemes.

    I don’t mind shorting calls and buying puts because “I make little rocks out of big rocks!”

    The JAN XLE puts, at a price, look tempting.

    My people graph our actual diesel tanker cost with each load, and oil just doesn’t stay up here in the long run. So let oil rise and let’s call a top.

    It takes contrarians to balance a market, or as my Granddad used to say: “To each his own said the old lady… as she kissed the cow.”

    “SAFETY PAYS”

  28. 28
    Nicky Says:

    A move below 21833 (ish) on distillates will break the current uptrend line.

  29. 29
    zman Says:

    Hey, I often short energy stocks … but not b/c I hate the Big Oil, enviro killing, roach motel of an industry. That’s a crappy reason and also it’s unfounded. Might as well hate Apple too b/c their products are made from plastic and you know where plastic comes from…

    But some people over there hate oil companies, an attitude that is just absurd and no way to invest. There’s a lot of “wanting oil to fall attitude” in that arena. I don’t want oil to rise or fall. I simply look at it (and everything else) and make a judgment. Valuations are not stretched for much of the energy industry and are cheap by any other industry’s standard.

    What’s more, I’ve got a lot of good friends who work at oil and oil service companies and not one of them is a card carrying member of the Nazi party.

    I’ll short ’em from time to time like I’m thinking about again with the land drillers and the shelf and mid depth international drillers (see today’s post) but I do it for fundamental, not emotional reasons.

  30. 30
    zman Says:

    Distllates, ya think 2.1833 does it. It looks to me more like $2.15?

  31. 31
    rammastr Says:

    I had to bail on the PBR’s. It’s the “nervous camp” syndrome.

  32. 32
    zman Says:

    Ram – I’m almost done there myself as they’ll take a quick drop next week if they lose that deepwater block….at which point I’ll buy back in.

    hope it treated you well!

  33. 33
    rammastr Says:

    Yes ZMAN. Thank you.

  34. 34
    Nicky Says:

    21833 does this leg. 21200 is 10 dma and to me would be more significant. 20200 says game over.

  35. 35
    zman Says:

    Thank Nicky

    Wow Coal
    ACI 3.5%, BTU up 4.5%

    TRADE: out VLO $65s position at $4.10 (up 41%). Would have held longer but it’s a September expiry. Will reposition in Oct/Nov in next few days. Still holding the $67.50s from yesterday (bid $2.20 now) but will stop out at $2 on a retreat.

  36. 36
    rkbos Says:

    Z,

    VLO 67.5s – are you out once you see bids @ 2 or trades at 2?

  37. 37
    zman Says:

    rkbos –

    Bids at $2… I didn’t tick the limit box so it’ll go at $2 or below.

    It’s volatile and oil is off and trading a wide range so I hate to schmuck up a nice profit by being too cute on exit. Hopefully it moves on up and I get to reset that at $3 tomorrow but I’m not greedy and this market is not to be trusted. Everybody (but me) hated this thing yesterday…if they turn the power back on today it probably drops a buck

  38. 38
    rkbos Says:

    Z,

    VLO – enjoying my first reco from you, so thanks

  39. 39
    zman Says:

    Glad you liked it. My lawyer would gently remind you that I don’t make reco’…just let you know what I’m doing/thinking but I’m glad it worked for you. Usuually I’m not this short term but yesterday’s action was contrary to what I thought it should be.

    TSO really banging higher now. There’s hope for my Sept $50s calls yet but I’ll not be buying any more for now.

  40. 40
    rkbos Says:

    Z

    lawyer – i’m fully aware, so got it. my bad, should have used another term

  41. 41
    zman Says:

    rkbos – no worries, call it whatever you like … just glad it worked!

    oil actually looking a coming green on the day.

    HO back up to 2.2126 – off half a cent

    PTR within inches of Q’s 147 mark

    PBR rallying with a very strong Brazillian market.

    TSO outpacing again, up $2 4.1%

  42. 42
    zman Says:

    US said to have 82 years worth of natural gas:

    http://www.upstreamonline.com/live/article140580.ece

    …it doesn’t talk about at what price though

  43. 43
    Nicky Says:

    sub 4 then?

  44. 44
    zman Says:

    probably for about 1/3 of it.

  45. 45
    zman Says:

    ya know you had people taking ceiling test write downs in the second quarter because gas was under $5.50.

  46. 46
    zman Says:

    TRADE: HAL; sold second half of the $35 September calls, (sold first half yesterday) for $1.90 (9 day 111% gain). Current bid $1.95. Again, selling Septembers and will reposition in later strikes soon.

  47. 47
    zman Says:

    Q-man – there’s PTR 147.

  48. 48
    coco Says:

    DVN selling its Oil sands property in Alberta

  49. 49
    zman Says:

    VLO $67.50s at 2.40 Bid – that a double for me. I’ll reset stop to 2.25 and likely punt for sure if it gets to $70 (69.29 now)

  50. 50
    zman Says:

    oil green at 79.95…maybe they close it >$80

  51. 51
    calvino Says:

    Colorado school of mines – they don’t have an interest in projecting high nat gas numbers do they? If I was training reservoir engineers, I don’t think I would want to use any sort of numbers that would encourage them to apply. Sub 4, hmmm.. I see shut ins, why run plant at a loss when you can go on vaction and buy some treasuries instead. Talk like that makes me think that very subtle mention in Prime West’s presentation, of alberta pipelines going westward to lng plants might not be completely loony.

  52. 52
    zman Says:

    there was talk of a pipeline going west for lng facility which would ship almost excl to China but it was canned a month ago. Could always pop back up.

  53. 53
    zman Says:

    MCF reported in the afternoon.I love the stock (no options) but man are they unconventional, even down to the timing of the pr for an earnings release.

    I’ve written mini reports on this in the past and continue to like it. Phenomenal production growth on the way as they’ve just done some upgrades on their giant dutch discoveries to shift production into overdrive.

  54. 54
    zman Says:

    wow KWK up another 5%

  55. 55
    QUARRYMAN Says:

    Z.

    I was out but the order clicked off, covered commissions and maybe a few tapas and espressos tonight 🙂

    Thanks. I’m building cash into this looking for the next opportunity in oil.

    “SAFETY PAYS”

  56. 56
    TTupp Says:

    z you se the 850,000 b/d ofline in texas right now?

  57. 57
    zman Says:

    No. is that what was just said, saw oil spiking back over $80

  58. 58
    TTupp Says:

    is the rate cut decision tuesday Z?

  59. 59
    zman Says:

    where’d you see that, I don’t have it? just port arthur which is 330

  60. 60
    TTupp Says:

    no TOTAL Sa, VLO and Shell, i think refiners are offline.

    http://www.bloomberg.com/apps/news?pid=20601072&sid=aAU0mmRemQpY&refer=energy

  61. 61
    TTupp Says:

    maybe i didnt read close enough

  62. 62
    TTupp Says:

    off topic: does anyone here know of / been to a “soup man” franchise restaurant near them?

  63. 63
    zman Says:

    Bidding ESV October puts

    no soup for you!

  64. 64
    TTupp Says:

    just sealed a deal with them for the right to all of canada. have you been to one Z?

  65. 65
    TTupp Says:

    get anything from that article Z?

  66. 66
    rammastr Says:

    ZMAN – RIG??

  67. 67
    zman Says:

    Congrats on that!

    I think so, do they have one in bean town. some of my nights there were pretty fuzzy. It could have been a soup kitchen, lol.

  68. 68
    TTupp Says:

    bean town?

  69. 69
    rammastr Says:

    ZMAN – SKEEDADDY – What up with RIG?

  70. 70
    rkbos Says:

    Z,

    VLO 67.5s – out at 2.20, thanks

    soup – maybe it was a/h at the pine street inn ?

  71. 71
    Sambone Says:

    The “Crowd”.
    http://www.theglobeandmail.com/servlet/story/LAC.20070913.RHEINZL13/TPStory/Business

  72. 72
    zman Says:

    RIG – brokers happy now with new drillship GSF purchased.

    rkbos – cool.

  73. 73
    zman Says:

    Sambone, yes I’ve been lightening my load all day.

  74. 74
    zman Says:

    TRADE: OCT $50 ESV PUTs for $1.35

  75. 75
    Nicky Says:

    A plus 80 close – hardly convincing though.

    If all ‘da boyz’ think we are going to 90 and beyond they are going to have to do better than this.

    Chart remains bullish – for now.

  76. 76
    sane Says:

    N,

    Yeah 18 Cents up on the day. Looks like it took a hell of a lot of work to get that 18 cents.

  77. 77
    Nicky Says:

    T – Tupp – just heard that McClaren have been kicked out of the World Championships and fined 100million!!

  78. 78
    zman Says:

    Nicky and Sane – agree completely but they got what they wanted, headline saying:

    “oil closes over $80 for FIRST TIME EVERY”

    T Boone must be backstage getting makeup on now.

    Would you want to be short oil going into this weekend with TD 8 brewing and everybody loving oil again? Track looks to me like its bending a little more to the north than the last two.

  79. 79
    Nicky Says:

    Sane – reversal could be spectacular when we see it. Everything falling into place on the charts…..

  80. 80
    sane Says:

    Z,

    Do I believe it is a pump, yeah, but I do believe we are now in dangerous territory. I personally am not fighting the trend, but I am mainly going to cash d/t nervousness.

  81. 81
    Nicky Says:

    Z – accepted but would you want to be long at 80 plus either if TD 8 comes to nothing. Even if it came to ‘something’ I think they have a high enough price to cover it. Remember what happened after Katrina?

    I would happily scale into shorts here. Far more risk to the downside now.

  82. 82
    zman Says:

    Sane – agreed. Been raising cash and starting a little shorting.

    HAL at 37, wow.

    VLO up $2.50, those 67.50s are $2.40 now

    energy stocks being bought across the board now.

  83. 83
    calvino Says:

    Yep, lots of spare production capacity now. This is a purely speculative move. If even one fund pulls out, there is going to be demand destruction to the tune of 10mbpd.

  84. 84
    zman Says:

    SU up $4.50, know you know the fix is in. T Boone’s biggest stock holding. This is the T Boone Was Right Rally! lol

  85. 85
    calvino Says:

    I love the sight of those flares from the Walt Whitman bridge!

  86. 86
    sane Says:

    C,

    I wouldn’t say there is a lot of spare capacity, or that we are going to get a demand destruction of 10Mbpd ( that would probably mean $10 oil ). I do get a little feeling about some demand destruction ( possibly a bit ) in the US d/t it being off peak season with high prices ( Like after Rita and Katrina ).

  87. 87
    sane Says:

    Ugh….. T Boone

  88. 88
    Sambone Says:

    Crude Ends Above $80

    DOW JONES NEWSWIRES
    From Market Talk:
    *DJ OIL FUTURES: Nymex Crude Ends +14c at $80.05/Bbl

    *DJ OIL FUTURES: Crude At Record Close As Gasoline Rallies

    [Dow Jones] Nymex crude slides from its record high of $80.20 after Hurricane Humberto weakens to a tropical storm. Nymex crude -70c at $79.21/bbl after earlier rising with gasoline as Texas refineries went down. Oct RBOB gasoline -6 points at $2.0154/gal after rising as high as $2.0625. (matt.chambers@dowjones.com)

    Reported Earlier:
    NEW YORK — Crude oil futures were steady Thursday after touching a new intraday record as Hurricane Humberto caused a power outage in a Texas refinery hub, which boosted gasoline prices.

    Expectations of tightening crude inventories and growing demand in the fourth quarter is supporting crude prices.

    Valero Corp. (VLO), Total SA (TOT) and Motiva all shut down Port Arthur, Texas refineries after the passage of Hurricane Humberto, which made landfall this morning, resulted in a power outage in the area. Power utility Entergy Texas called the outage a “major event” and said it could take days to restore.

    The front-month October light, sweet crude contract on the New York Mercantile Exchange was recently down 14 cents, or 0.2%, at $79.77 a barrel, after earlier rising as high as $80.20, beating a record set Wednesday by 2 cents. Brent crude on the ICE futures exchange fell 14 cents to $77.54 a barrel.

    Front-month October reformulated gasoline blendstock, or RBOB, rose 2.99 cents, or 1.5%, to $2.0459 a gallon. October heating oil fell 1 point to $2.219 a gallon after rising to a new intraday record of $2.2347.

    “Gasoline has run up pretty sharply with the Port Arthur outages,” said Addison Armstrong, an analyst at TFS Energy in Stamford, Conn. “The $80 crude price tag is a lot to digest; technically it would be a good time for some consolidation but the tightness in the market is still there — the fundamentals are bullish.”

    Crude prices ran as high as $80.18 a barrel Wednesday, a new intraday record, after the U.S. Department of Energy said crude oil stockpiles slumped more than expected last week. The stockpiles have fallen for nine of the past 10 weeks and are down 31.4 million barrels in that time.

    The reduced U.S. inventory comes amid forecasts from the International Energy Agency that fourth quarter global oil demand will rise to 87.8 million barrels, compared to current global supply of about 85 million barrels a day.

    A commitment this week from the Organization of Petroleum Exporting Countries to supply an extra 500,000 barrels a day of oil from Nov. 1 is being treated as too little, too late, considering the oil could take months to make its way to key consumers.

    Still, the refinery outages could have a price negative impact on crude, said Tony Rosado, of IAG Energy Brokers in Fort Lauderdale, Fla.

    “Where’s the demand for crude going to come from? We’re going to see crude negative at the end of the day,” he said.

    —By Matt Chambers, Dow Jones Newswires

  89. 89
    Sambone Says:

    I’m watching the GOMEX again. Alot of convection off Texas.
    http://www.ssd.noaa.gov/goes/east/gmex/loop-rb.html

  90. 90
    Sambone Says:

    08L is starting to run into a bunch of shear. We’ll see if it survives.
    http://www.ssd.noaa.gov/goes/flt/t2/loop-rb.html

  91. 91
    zman Says:

    re 89…see that

    also a wave south of cuba

  92. 92
    zman Says:

    from 88…wonder if that days to restore power is for the 100K people w/o power in the area or specific to the three refineries?

  93. 93
    rammastr Says:

    ZMAN – What are you thoughts on Sept RIG’s?

  94. 94
    zman Says:

    I probably lose my $105s tomorrow. It’s too gunslinger for me to go after the $110s with 6 days to expiry and those are the only ones I’d try on a bet right now. More fearful of the market than anything else. Will be adding October or later soon, maybe by Tuesday

  95. 95
    rammastr Says:

    ZMAN – not to add, but unload. THanks.

  96. 96
    zman Says:

    DRYS got whipped again, will likely buy in morning if not gap.

  97. 97
    zman Says:

    sorry, maybe/ maybe not DRYS also TBSI or GNK

  98. 98
    rammastr Says:

    DRYS seems to have gold plated options – mucho premium.

  99. 99
    QUARRYMAN Says:

    I like the DRYS idea.

    Good day, Z, ‘Glad I met Ye!’

    Have a good evening.

    Q.

  100. 100
    Webloner Says:

    Hi Z I notice went you talk about natural gas is a phrase YoY. What does a mean. I’m trying to catch up to all this new energy talk. Thanks.

  101. 101
    sane Says:

    YoY = year over year

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