15
Sep

Weekly Wrap – Week Ended 09/14/07 – PUBLIC POST

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The Stocks Watch: As you can see from the table above energy stocks fared pretty well and were in line with advances made by the broader market last week.

CFTC Watch: The net short position contracted slightly last week but at least through Tuesday it was only a function of an increasing long position outpacing increases in the shorts and not short covering.

Gas Prices Up With TS Ingrid: The sharp rally in gas prices came about entirely due to tropical concerns and we shorted a bit of gas late Friday as the move seemed exaggerated by Tropical Storm Ingrid (now downgraded to a tropical depression and curving north towards the eastern Seaboard). Never doubt Sambone's sharp weather eye! 

Gas Rigs Tumbled But Remain Very Active. Is it part of the coming expected reduction in activity. Probably not, more likely just mobilization and demobilization counting issues. One thing is for certain,  $6+ gas keeps the rig count closer to the 20 year high than does $5 gas. 

Holdings Watch:

Valero September Calls Retired For Nice Gains.

  • We exited the September $65s accumulated mid and late August for an average gain of 44%.
  • The fun trade of the week was buying the (VLO) $67.50s after the EIA Oil Inventory Report on Thursday. The stock suffered a contra-group move all day after Banc of America initiated with a hold rating. When the inventory report came out showing a further deterioration in gasoline and especially Gulf Coast gasoline inventories I could stand the madness no longer. On Wednesday morning I said:

 B of A cut its rating on (WNR) to sell and lifted (TSO) to buy with a $62 target saying it was the "best play on the extended refining cycle." He also raised (FTO) to buy. SUN was cut to neutral. I'm not a big fan of this analyst so I'm not surprised by his (VLO) hold or (FTO) upgrade. Comment: 47 hour 125% gain. To be fair, a little hurricane named Humberto didn't hurt my cause either.

 

Last Friday's Bottom Fish Trades. A week ago, September 7th the market was looking particularly pathetic, we fired off three  long trades that day (APA, COP, and PBR) and I'm happy to report all are doing just fine, especially the APA which doubled with the move to $80 oil and accelerated even higher Friday despite crude's slight retreat.

(HAl) sold the September 35 Calls in two batches last week; one for an 89% gain, the other for 111%

In general it was a week of lightening up although we add some puts on a shallow water driller and natural gas itself.  We'll be replacing some of those sold calls with longer dated strikes later in the week.

E-Mail Blast Watch List: Email Blasts of breaking news and trades as they happened starting going out this week. So far so good.   

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Have a question about the site? Email us at zmanalpha@gmail.com

Have a great one! 

Z

 

 

Hope you're having a great weekend!

12 Responses to “Weekly Wrap – Week Ended 09/14/07 – PUBLIC POST”

  1. 1
    Sambone Says:

    My Digital cable went down, so I’m rebooting now. Did a quick look at the weather and nothing of real interest on Saturday night.

  2. 2
    jimbo Says:

    Greenspan recently in the news. Talking about future global inflation at 10% and political conflicts anticipated with required rate increases. The Fed meeting Tuesday is really a precursor to these future issues. Let’s hope Ben has big balls and holds steady.

    “Capitalism w/o risk is….socialism for the rich.”
    ——————
    Good luck with your ventures Z!

  3. 3
    TTupp Says:

    z whats a good website to track hurricane’s and everything else that go along with that

  4. 4
    apbd Says:

    BC beats Georgia Tech.
    Notre Dame loses to Michigan.
    All in all, a very sucessful weekend.
    Bless all my Zbloggers.
    apbd

  5. 5
    calvino Says:

    Barron’s laid down the gauntlet with $45 oil. One of your chartists perhaps put in the call to ISI to run down positions. The crux of the proposition is the slackening demand, 1 mill less daily than they see in Paris. Demand destruction with $3 gas and an analogy to two previous spikes and cliffdives.
    ON the other hand, Oxburgh is beating the Peak Oil drum with shrill $150 calls. Sure – since he overstated his reserves and scurried over to bio diesel – peak oil wacko. Also Tillerson, van der Veer and Desmarest had lunch. How is that for a power lunch? Anyway, something is going on here, some complaining about the national oils hogging up reserves and a little talk down of prices. Funny Desmarest would complain, since he is French oil, de facto. He is still making eyes with Mr. Goodheart in Moscow – must be getting squeezed though. Anyhow Z, lots of swirling around, but how do you see things on Monday. I held long positions in e&p’s over the weekend, a little biased at gas, and am a little curious about Monday. Hope you made your spreads today, since you seem to be into it.

  6. 6
    zman Says:

    Tupp – there’s a weather tab at the upper left of this site. Crown Weather, hurricane watch and the storm tracking tool links are all excellent.

    Michigan had to do something finally!

    Calvino – I haven’t read it yet but demand destruction has not been evident. Don’t see $45 soon.

    As to Monday, hard to say, I went short a little NG late Friday as I think it’s ahead of itself and Ingrid looked questionable. This price in October/November but a little out of line for now I think. I don’t really have thoughts a day out though, as I’m not a day trader and am no good at it. Ask Nicky, she’s generally better in tune with the daily moves.

  7. 7
    jimbo Says:

    TTupp….
    weatherunderground.com
    crownweather.com –goto tropical weather discussion

  8. 8
    Sambone Says:

    Nothing much on my scope on the weather front. Some are saying that Cane’s weather is favorable in GOMEX or Western Caribbean this week. I don’t see it yet, but I will keep an eye out.

  9. 9
    Sambone Says:

    Crude Down, Weather Threat Wanes, Refineries Restart

    By David Elliott
    Of DOW JONES NEWSWIRES

    LONDON — Crude oil futures fell Monday morning in London as the near-term threat from the Atlantic hurricane season waned and on news of the restart of refineries hit by Hurricane Humberto.

    Traders said the failure to hold above $80 a barrel on Friday has also helped dent the short-term technical outlook, but most felt further losses would be limited given continued concern over a tight supply and demand balance for the remainder of 2007 and 2008.

    “We’re still running up against a U.S. refinery system that doesn’t seem to be able to meet demand, even though we are coming into the shoulder months [the changeover from peak gasoline to heating oil demand],” said a London-based trader. “If the price robustness in the wake of the OPEC production increase announcement told us anything it’s that the underlying fundamentals of this market are tight, and are going to need a big increase in supply if they’re to ease.”

    At 1121 GMT, the front-month November Brent contract on London’s ICE futures exchange was down 55 cents at $75.69 a barrel.

    The front-month October contract on the New York Mercantile Exchange was trading $0.62 lower at $78.48 a barrel, back from Friday’s all-time high of $79.03 a barrel.

    ICE’s gasoil contract for October delivery was down $6.75 at $687.75 a metric ton, while Nymex RBOB gasoline for October delivery was down 228 points at 201.36 cents a gallon.

    WTI’s late selloff and close below $80 a barrel Friday afternoon got the market off to a weak start in Asia and early in London Monday. This was compounded by news from the National Hurricane Center, or NHC, that Tropical Depression Ingrid, currently east of the Leeward Islands, is dissipating.

    Sentiment had already waned on news Friday of the restart of Total’s Port Arthur refinery and that Valero is restarting its Port Arthur refinery following a power outage caused by Hurricane Humberto last week.

    While this has pressured prices, the market will retain significant risk premium given the Atlantic Hurricane season is currently in full swing. This is particularly true following the unexpected speed with which Hurricane Humberto gathered strength.

    The NHC pointed Thursday to a tropical wave over the central Caribbean Sea, which could develop over the next few days, and another, weaker tropical wave between Africa and the Lesser Antilles.

    None are of immediate threat and many in the market believe this easing in hurricane activity will give the crude market time to retrace some of its recent gains ahead of another challenge of $80 a barrel and the all-time high of $80.36 a barrel.

    “The pullback in prices from last week’s highs is not surprising, especially in an environment where there is a strong undercurrent of concern about economic growth prospects and oil demand,” said analysts at Barclays Capital in a report to clients. “Nevertheless, short-term fundamentals are tightening fast and we continue to see oil prices trading with a bias to the upside.”

    Continued concerns over the U.S. refinery system’s ability to meet oil product demand are behind much of this view and could see the heating oil market experience tightness, passed on from the summer gasoline demand-led season, during the northern hemisphere winter.

    Goldman Sachs concurred with this view by raising it’s year-end 2007 WTI oil price target to $85 a barrel from $72 a barrel previously. The bank also warned of a “high risk of a spike” above $90 a barrel before the end of the year.

    But not everyone is as bullish.

    Some believe the oil market’s fundamentals don’t justify prices at $80 a barrel or more, at least not without further hurricane damage.

    “It would need further tropical storms or hurricanes heading towards the U.S. oil facilities in the Gulf of Mexico to keep crude oil prices at the elevated levels,” said Peter Fertig, analyst at Dresdner Kleinwort in Frankfurt.

    —By David Elliott, Dow Jones Newswires

  10. 10
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