18
Sep

Tuesday. B-Day

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Commodity Watch

  • Crude: I think it's ahead of itself having closed up $1.47 yesterday to a record $80.57 primarily because Goldman reiterated their super-spike theory. Last Thursday, I laid out some basic back of the envelope math for a fourth quarter tightening, the same issue GS is using to hype their $85 by year end target. While I think the supply demand equation will tighten I by no means think it's going to last through 2008 nor will it yield Goldman's ye08 target of $95 (they must not have heard of demand destruction).
  • Natural Gas: Big rally yesterday (up $0.37 to $6.53) even as Ingrid faded to a memory.  This morning it's off a dime in early trading but fear off another insta-storm like Humberto will be pervasive for the next few weeks and we may see a lot more volatility as we approach contract expiry at the end of next week. It's trading off 25 cents pretty actively this morning as nothing is materializing in the GOMEX just yet.

To Cut or Not To Cut. That Is Not The Question For Ben.The question is 25 or 50. 25 bp's probably disappointments. 50 bp's probably. Yesterday I said the market will trump oil and gas moves and they did as the two commodities soared and most energy stocks adjusted their pillows and rolled over, setting the alarm for 1:00 Est Tuesday. Expect much of the same this morning.

 


Early Read On Oil Inventories: (from the Reuters survey)

  • Crude: Down 2 million barrels.
  • Gasoline: Down 500,000 barrels. Think we'll see a bigger draw.
  • Distillates: Up 1.2 million barrels.

Crack Spreads -  Regional cracks slid slightly last week (except for the Mid-con where they tumbled) as the rally the in oil outpaced product price gains. This week I expect slightly down to flat performance as as the oil inventory report should show a decline in utilization (below 90%) on Wednesday as the impact of 2 days of downtime along the Gulf Coast for roughly 5% of the nation's refining capacity is felt.

  • West Coast - watching gasoline inventories closely here. Last week gasoline stocks dropped sharply here allowing cracks to tread water in the face of stronger crude. 
  • Mid Continent - saw the biggest drop last week which basically pulled it back into levels more typically for this time of year. I would expect that the coming busier than usual maintenance season will re-rally this region's cracks.

cracks-091707.jpg

Refiner Multiples: Well Off Summer Highs. Forward multiples are inexpensive for the large caps (down from 10x ish this summer) but remain lofty for the smaller players. Given my sense that cracks are in a bottoming phase and that product prices will remain elevated in the fourth quarter I still like (VLO) (currently out) and (TSO) (currently long and getting beaten about a bit).  

refiner-multiple-091707.jpg

Holdings Watch

CALLS:

  • (OII) entered the October $75s for $1.68. Last bid $1.95.

PUTS: No Action

For RAM - Thoughts on September Calls

  • (PBR) I'm still there with a double helping and am just barely above water.
  • (RIG), I sold half my initial position higher and am playing with house money now. I admit the recent weakness has been confounding but the initial move paid for the remaining so I don't get too worked up about it.
  • The (UNG) move stinks but that happens. Fish or cut bait is not far off here and a double down is not in the cards for me until I see it either 1) go up another blinking 5% and bounce off 7 or start to crack lower with momentum. Yesterday it just inched up all day which is hard for me to add on as it can do that for some time. If there is some follow through in today's pre market down draft this one may turn out OK.
  • On (TSO) I botched the sale a week and half ago and then I got hopeful and held too long again late last week. The Valero trades last week help to ease the pain there and I'll be jumping out of the trade one way or the other following inventories on Wednesday.
  • (APA) is a double plus (up 119% on last night's bid) and could get punted at any second but it's October so if thing's calm down or oil looks like it's settling in over $80 I may hang on to it for a bit.
  • (OII) setting myself up for next months action with yesterday's trade. Still hold the September $60s, up 293%, but the spread is large so I may exercise Saturday and punt the shares Monday. They did PR a $30 million set of blow out preventer control system order last night so there might be some positive notice taken as they continue to extend their presence in subsea infrastructure.
  • (NFX) and (SWN). Way out of the money bought back in July pre sub-prime when  everybody couldn't get enough of these stocks/stories. Not worth selling now but they've made significant. Regarding (NFX) this morning FBR, AG Edwards, and a whole slew of analysts are telling you how attractive the UK sale was yesterday. The stock didn't move because of the Ben Affect. AG Edwards even went so far as to call them "a more nimble growth story, or perhaps a more likely target." UBS called it" one of the most undervalued names in our space." I've been saying this for months. 
  • (ESV) - these are October puts. Earnings estimates continue to fall on an almost daily basis. The argument here is that the stock is too cheap to fall further. I've seen price targets going up (slightly) with those declining estimates as the company sends rigs further afield from the GOMEX were rates are off a little over 10% this year for the shallow water drillers. While geographic diversification is a good idea there are many who believe that the hard rally in mid-east and Asia rates (up 50% this year) is near a top. So (ESV) is essentially chasing performance like an investor who buys a mutual fund after seeing how well it's done in the past. Maybe they're setting themselves up for the future with these costly and time killing rig mobilizations but maybe they're just chasing rates.

Other Stocks We Care About Today

  • (PQ) Operations Update: Continues to show good results in the Woodford and is about to drill its first well in the Fayetteville Shale where it sees increasing activity in the fourth quarter. They also disclosed that they've hired Matt Simmons to explore strategic alternatives for their Woodford Shale. Can you say MLP? Come'on, everybody's doin' it. This is one I want to be long going into third quarter earnings and probably before.
  • (HK) In case you missed it I did one of my short reports on the story last night. This is one of the most interesting small cap stories I follow and I think it's undervalued. I will almost certainly be long before the third quarter conference call.

Odds & Ends

Analyst Watch: FBR visisted with (NFX) yesterday and are reiterating their outperform rating and increasing their price target to $60, (CAM) cut to hold at Wachovia. 

 

Technical Opinion Time. It's that time of the week again when I offer my lay-technician's opinion on the energy indexes. I should probably hold off until Ben has had a chance to 

  • XOI: Nice chart. Last week I said it was at a critical juncture and it held up well despite OPEC's decision to raise production quotas. 
  • XNG: Last labeled troublesome but strengthening, the NG rally last week did wonders for this one. Last week I said:

We need natural gas to firm up and pick a direction and for more than just one day at a time. Given the extreme likelihood that we dip back into YoY gas storage deficit territory this week for the first time in 8 weeks now may be the time that gas decides to make a move back over $6. Comment: It picked one alright and I think it's a bit ahead of itself on tropical storm mania.

  • OIH: Nice chart, still don't think it's a double top. Last week I said:

There is an argument for sideways trading based on the fundamentals which could leave the OIH range-bound between 166 and 186 for the near future. This argument is related to a slow down in the US side of the N. American gas drilling. Permits don't yet bear this out in the greatest center of activity, Texas, nor do the recent comments of most of the large cap independents. Meanwhile international fundamentals remain strong and rig and other service utilization remains tight. Comment: No change in opinion.

 

 

 

204 Responses to “Tuesday. B-Day”

  1. 1
    Sambone Says:

    Nymex Crude Up Before Fed Decision

    DOW JONES NEWSWIRES
    From MARKET TALK:
    [Dow Jones] Nymex crude is up in early screen trade before the Fed’s decision on US rates due 2:15 p.m. EDT. Oct crude +26c at $80.83/bbl after earlier rising to a new intraday record of $81.24. The Fed is widely expected to lower rates by 25 basis points, although there are hopes for a 50 bp cut. Cut is seen as positive for oil prices because it raises confidence in US growth and is also expected to weaken the dollar, which generally boosts dollar denominated oil. (matt.chambers@dowjones.com)

  2. 2
    zman Says:

    PBR – regulatory body decides to their deepwater block from the November auction…stock is rallying nicely.

  3. 3
    zman Says:

    CLR – has been creeping back up. Stock only but man is it an interesting one.

    UNG down 3%..One more day like today and I’ll be back to par on those September 39 puts

    Weather – whole lot of nothing going on

    NFX – if it weren’t for the possibility that the fed disappoints I’d be in the October/November 45 calls yesterday.

    Energy in general is paring early gains

  4. 4
    Brian08 Says:

    Z Re: The Fed…I’m hoping for a disappointment…

  5. 5
    zman Says:

    Fast money guest chick through out 3/8ths cut possibility last night.

    I’m thinking 0 or 25

  6. 6
    sane Says:

    I am hoping for 0

  7. 7
    Brian08 Says:

    So with no cut that’s probably what a 300-400 point drop in the Dow?? 🙂

  8. 8
    zman Says:

    that sounds about right, day 1.

  9. 9
    sane Says:

    Who knows, but it might start slowing the hot money.

  10. 10
    zman Says:

    how are the materials makers doing these days, shingles, wall board, wood, concrete etc? Q you out there?

  11. 11
    zman Says:

    Sambone – hows that GOMEX late week disturbance shaping up?

  12. 12
    Sambone Says:

    I frankly don’t see it yet, if the “Models” (See yesterday) are true. Alot of dry air currently. http://www.ssd.noaa.gov/goes/east/gmex/loop-wv.html

  13. 13
    Sambone Says:

    Nymex Crude Steady Near Record Before Fed Meeting

    By Matt Chambers
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures were steady Tuesday, after earlier rising to a new intraday record, as traders waited for the Federal Reserve’s expected cut in U.S. interest rates.

    The Fed is universally expected to cut its overnight target rate in a 2:15 p.m. EDT announcement, although analysts are divided on whether to expect a quarter or half-percentage point cut. Lower rates are seen as both being supportive of economic growth, and therefore energy demand, and pressuring the dollar, which generally boosts the price of dollar-denominated oil.

    The front-month October light, sweet crude contract on the New York Mercantile Exchange was recently down 8 cents, or 0.1%, at $80.49 a barrel, after earlier rising as high as $81.24, the highest ever for a front-month Nymex crude contract. The futures reached a record settlement high Monday. Brent crude on the ICE futures exchange fell 35 cents to $76.63 a barrel.

    “The market will take its cue from the Fed,” said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago. “If the Fed surprises the market and fails to give us a cut, then oil will plummet; if they do a 50-basis-point cut then oil will soar.”

    Not all analysts are agreeing with the sentiment behind the Fed meeting’s boost in crude prices, which have shot up 16% in the past four weeks.

    “We view the connection between today’s Fed decision and oil prices as quite loose since higher oil prices could easily negate any consumption benefits off of a stronger economy,” said Jim Ritterbusch, president of trading advisory firm Ritterbusch and associates. Still, “the veracity of this bull market cannot be denied” and any negative price response to the Fed decision could be short-lived, he said.

    Prices are also being supported by forecasts for continued drawdowns in U.S. crude oil inventories in Department of Energy data due Wednesday.

    Crude oil stockpiles are expected to have fallen by 1.5 million barrels to 321.1 million barrels last week, according to the average forecast in a Dow Jones Newswires survey of analysts. If the forecasts are right, it will be the 10th fall in stockpiles in 11 weeks and a 10% fall in that time. Gasoline stockpiles are seen falling by 1.3 million barrels in the data for last week, which is released by the DOE’s Energy Information Administration. Distillate inventories, which include heating oil and diesel fuel, are expected to grow by 1.1 million barrels. Refinery use is seen falling by 0.5 percentage point to 90% of capacity.

    Front-month October reformulated gasoline blendstock, or RBOB, fell 1.26 cents, or 0.6%, to $2.0316 a gallon. Heating oil fell 1.51 cents, or 0.7%, to $2.2136 a gallon.

    —By Matt Chambers, Dow Jones Newswires

  14. 14
    zman Says:

    Thanks…I guess a lot of other people can’t see it either as NG is down 5.5% now.

  15. 15
    zman Says:

    Nicky must be having internet troubles again. NG down $0.40 (6%) and still no hat eating comments!

    UNG is down 4.4% and my puts are still underwater but getting a bit of a boost.

  16. 16
    Greg Says:

    Hi Z: I haven’t had time to check in here for a week or more. Just a heads up that END has had a tanker load of insider buying the past 5-7 days. Might the insiders know something? thought you might find thisof interest. Doesn’t seem to have moved their stock yet.

    By the way, if you or Sane replied to my inquiry about THPW, please direct me to the date and I will go back to find it. Thanks

  17. 17
    zman Says:

    Thanks for the heads up on END. Those have got to be the most frustrated guys in E&P land right now. Will look into a little update.

    Sorry, I don’t think I can be much of a value add on THPW. Sounds interesting though. Sane?

  18. 18
    Greg Says:

    Z: My mistake, End had a modest insider buy on 9/14. It is ENP that the insiders are buying like crazy due to an IPO apperantly. Sorry for the confusion.

  19. 19
    zman Says:

    Greg – well END should be buying their stock like crazy so it sounded good to me! I’ll still do the review. I own the shares much, much, much higher than here.

  20. 20
    sane Says:

    Greg – I remember you asking about nuclear power. What would you like to know about THPW?

  21. 21
    zman Says:

    NG – wow, really diving for the deck now, down $0.45 6.6%

    UNG down 5%, 39 puts bid creeping up, still underway but only by a dime now.

  22. 22
    zman Says:

    Nice call Nicky re nat gas resistance levels yesterday.

  23. 23
    zman Says:

    question for the board.

    for those of you who get notification of the posts via feedburner email delivery, have you noticed them being particularly late? I just got the email notifying me of last nights HK post, 13 hours after it went out.

  24. 24
    Sambone Says:

    Weather – Still watching that blob off Jacksonville. Old Ingrid still has spin, but no convection. Shear still high, so shouldn’t be anything.

  25. 25
    sane Says:

    Re23 – I have been getting them late.

  26. 26
    Greg Says:

    Hi Sane: Re: THPW, do you think this tiny penny stock might have a chance to succeed? I think the concept is brilliant, but what are the chances of anyone adopting the technology? Thanks.

  27. 27
    zman Says:

    from yesterday’s comments:

    NS – you’re welcome and chart wise they both could get drop-kicked. Good luck and I’ll look at some vulnerable names for tomorrow’s post. Thing like my favorite OII and FTI that have had huge runs of late could be in for bad day on a 25 bps cut. I hate shorting quality as you never know when someone decides it’s too cheap to pass up but for a dt, they’d probably get a haircut.

    Guess some one else thought so too.

    FTI downgraded by Wachovia to underperform and other subsea operator CAM to market perform

  28. 28
    Sambone Says:

    Nicky’s buddy

    The Energy Report

    Phil Flynn
    September 18, 2007

    Better late than never. It was a perfect day to play a little catch up. Oil Is catching up with levels that probably should have been reached earlier this summer. Alan Greenspan clarified his comments about the war in Iraq being about oil and Goldman Sachs is catching up to The Energy Report!

    Oil surged to a record high and now Goldman Sachs Group has decided to raise its year end price forecast for oil saying oil should hit $85.00 a barrel by the end of the year. That’s up from their previous price forecast from $72.00 and now matches the level that I gave you in the beginning of the year. The Energy Report welcomes Goldman to the $85.00 a barrel club and I agree with that target.

    Goldman Sachs is not the only one raising their year end forecasts. Commodity funds that fled oil because of sub-prime slowdown fears are once again embracing the long side of the market. The Fed is widely expected to cut interest rates today and if they do will be seen by the energy complex as an open invitation for the economy to consume more oil. Funds are betting that indeed prices are poised to move higher.

    The bottom line is the market is getting more concerned about the supply outlook for this winter. Those fears were expressed not only by the markets movement but also by a report from the Centre for Global Energy Studies that warns that OPEC’s decision to pump more crude oil in November won’t bring oil prices down during the Northern Hemisphere’s winter. Bloomberg News quoted the report from the group founded by former Saudi Arabian Oil Minister Sheikh Ahmad Zaki Yamani as saying that additional oil will not reach consuming countries until the beginning of 2008. They also question the amount of real oil involved in the production increase saying that it will not add up to 500,000 barrels but be more in the range of 333,000 barrels.

    After a flood of criticism from many places including The Energy Report, Alan Greenspan is clarifying his comments about the Iraq war being all about oil. Mr. Greenspan said that the removal of Saddam Hussein was essential to secure world oil supplies and he made that very point to the White House before the war. Mr. Greenspan said that it was obvious that Saddam’s goal was to control the world’s oil market and the straights of Hormuz and was a major threat the economic welfare of the nation. Mr. Greenspan said that he never meant to imply that the Bush administration wanted to invade Iraq for the sole purpose of controlling oil supply. So Mr. Greenspan wants a do over just like the Democrats that voted for the war and now oppose it.

    Obviously the market will take its cue from the Fed. If the Fed surprises the market and fails to give us a cut, then oil will plummet. If they do 50 basis point cut then oil will soar! If they do a quarter point cut then it will probably do a little of both. So if it’s a quarter point cut then sell a sharp post announcement rally or buy a big post announcement break.

    Don’t forget to sign up for the Phil Flynn Energy Blast. Just call Phil Flynn at 800-935-6487 or email me at pflynn@alaron.com to open your account.

    Buy November crude at 7780 – stop 7500.

    Buy November heating oil at 22100 -stop 21700.

    Buy November RBOB at 20000 – stop 19700.

    Buy November natural gas at 620 – stop 580.

    Have a GREAT day!

  29. 29
    sane Says:

    Greg – Re 26

    I could, but my money is on them being bought out. As for technology adoption, if uranium prices stay high or go higher and demand for nuclear power increases you could see a nice drive for Thorium based fuel. There is considerably more thorium out there than uranium. Another plus is that there are a couple of reactor designs that could use the fuel with little or no modification. The CANDU and pebble bed designs come to mind, plus from what I heard is that there has been some development using thorium in standard PWR’s. Another future play for nuclear fuel is MOX fuel and those who are working on that.

  30. 30
    zman Says:

    I’m sorry but I find his stuff less and less worthwhile.

    He was just turning more bearish over the last few weeks as prices were in the 70s, now he says oil is reaching “levels it should have reached in summer” Come on, you can’t have it both ways.

    I deliberately left out the Greenspan things as it’s distracting but I agree with Phil there. The implication Greenspan made was that we went into Iraq to take their oil…that sells books I guess. Now he’s scrambling to say that’s not what he meant.

    But back to PF, he sees commodity funds flooding in and equates that with a fundamental reason for higher oil prices. That’s a load. Ever heard of Amaranth you lemming?

  31. 31
    zman Says:

    Sane – thanks for the thorium update. I agree that uranium prices either need to come down or we need to find substitutes like this or we have a real problem around 2010 when a majority of the long term contracts for utilities re uranium re price to spot.

  32. 32
    Sambone Says:

    Wow Z, tell us how you really feel! LOL now I can stop posting his dribble if you want me too.

  33. 33
    TTupp Says:

    what time is the announcement of the rate change?

  34. 34
    Sambone Says:

    2:15 EST

  35. 35
    zman Says:

    TRADE: PBR out September $65s at $3.50 for a 75% gain since the bottom fishing expedition on 9/6 and 9/7. Not bad but the deepwater block in question was removed from the auction block so I got what I wanted (near term) and I don’t trust Ben not to mess up my day.

  36. 36
    Sambone Says:

    Z – Question. Is the govt fudging on numbers? The PPI came out and prices were up where I am, but they said everything is Ok. I thought they were independent, but these numbers don’t pass the smell test IMO.

  37. 37
    zman Says:

    Natural gas: what the? storm?

  38. 38
    sane Says:

    Z,

    I think the uranium thing is WAYYYYYY overdone. Yes there has been an increase in demand, but it is not like you can build a reactor overnight, it is more like a slow creep in demand. Was reading just the other week that at $100 it becomes feasible to recover uranium from coal plant ash. Geesh, They are acting like we are scraping the bottom of the barrel. Plus it looks like there is quite a bit of uranium capacity coming on line post 09.

  39. 39
    zman Says:

    oh, ng up on oil which is hitting fresh all time highs, again. Now $81.30, up $0.90

  40. 40
    Greg Says:

    Thanks Sane! Even a buyout could be profitable for shareholders. May just buy a bit for a long shot gamble.

  41. 41
    Sambone Says:

    Invest 93?

    I don’t see it, but;
    http://www.ssd.noaa.gov/goes/east/carb/loop-rb.html

    http://www.wunderground.com/tropical/tracking/at200793_model.html

  42. 42
    zman Says:

    Sambone, does “invest 93” mean going long NG regarding L93?

  43. 43
    zman Says:

    TRADE: out COP September 85 calls @ 1.30, up 24% to average cost.

    chart looks like it’s breaking out and I’ll be back soon with Octobers but to borrow from Q, “safety pays”

  44. 44
    zman Says:

    Trying a different angle on NFX. I’m planning to buy it this afternoon, either on a fed disappointment dip or before it runs like crazy if we get a 50 bp cut. Then will sell higher strike calls against it while buying in the money calls (probably 45s)

  45. 45
    Sambone Says:

    Man, I’m not sure it’s anything at this time. I’m not seeing it, but if true, could be another Humberto. If true, it could effect the GOMEX and the platforms.

  46. 46
    Sambone Says:

    Z – 93L,I don’t think it is anything at this time. NGas is following crude + there is an orchestrated short squeeze on at the moment. There is huge short on Ngas, but a rather large fund is working on the buy side to force the squeeze, but they are running out of steam.

  47. 47
    zman Says:

    thanks Sambone, that makes a lot of sense.

  48. 48
    Sambone Says:

    Target on oil is 87, then 103. That’s what my charts tell me. It’s in a breakout on the upside.

  49. 49
    drdavis124 Says:

    -Question BTJ (Bolt) Anybody follow it? I oun it for some time.
    -Greeney the Clown: He claimed didn’t know about serious problems that his own regional national bank presidents were concerned about.
    -My shorts are not looking good at this hour.

    Phil

  50. 50
    zman Says:

    then you’ll be wanting to buy XOM, APA, SU etc

  51. 51
    zman Says:

    Dr D

    What are you short?

    Bolt – seismic player, haven’t traded in years, sorry not up on the story

  52. 52
    Sambone Says:

    Nymex Crude Hits $81.60; Awaits Fed Decision

    By Matt Chambers
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures hit a new intraday record high of $81.60 a barrel Tuesday as traders speculated the Federal Reserve could announce a half-percentage point interest rate cut later in the day.

    The Fed is universally expected to cut its overnight target rate in a 2:15 p.m. EDT announcement, although analysts are divided on whether it will be a quarter or half-percentage point cut. Lower rates are seen as both being supportive of economic growth, and therefore energy demand, and pressuring the dollar, which generally boosts the price of dollar-denominated oil.

    “The market is staying strong ahead of the Fed meeting,” said Peter Donovan, vice president of Vantage Trading in New York. “If we don’t see a rate cut we’ll see a tumble; even a quarter% cut might not be enough” to hold prices at current levels.

    The front-month October light, sweet crude contract on the New York Mercantile Exchange was recently up 82 cents, or 1%, at $81.39 a barrel, after earlier rising as high as $81.50, the highest ever for a front-month Nymex crude contract. The futures reached a record settlement high Monday. Brent crude on the ICE futures exchange rose 42 cents to $77.40 a barrel.

    Not all analysts are agreeing with the sentiment behind the Fed meeting’s ability to boost crude prices, which have shot up 16% in the past four weeks.

    “We view the connection between today’s Fed decision and oil prices as quite loose since higher oil prices could easily negate any consumption benefits off of a stronger economy,” Jim Ritterbusch, president of trading advisory firm Ritterbusch and Associates, said in a research note.

    Still, “the veracity of this bull market cannot be denied” and any negative price response to the Fed decision could be short-lived, he said.

    Also supporting prices, a bomb went off under an oil pipeline near the city of Beiji in northern Iraq, causing oil to spill into the Tigris River. The U.S. military said the blast was the work of al-Qaida insurgents.

    An Associated Press report on the bombing didn’t give the size of the spill or the pipeline, saying only that “huge quantities” of crude oil spilled into the river. Beiji, 250 kilometers north of Baghdad, is home to Iraq’s largest refinery.

    Prices are also being held up by forecasts for continued drawdowns in U.S. crude oil inventories in Department of Energy data due Wednesday.

    Crude oil stockpiles are expected to have fallen by 1.5 million barrels to 321.1 million barrels last week, according to the average forecast in a Dow Jones Newswires survey of analysts. If the forecasts are right, it will be the 10th fall in stockpiles in 11 weeks and a 10% fall in that time. Gasoline stockpiles are seen falling by 1.3 million barrels in the data for last week, which is released by the DOE’s Energy Information Administration. Distillate inventories, which include heating oil and diesel fuel, are expected to grow by 1.1 million barrels. Refinery use is seen falling by 0.5 percentage point to 90% of capacity.

    Front-month October reformulated gasoline blendstock, or RBOB, rose 9 points to $2.0451 a gallon. Heating oil was up 8 points at $2.2295 a gallon after earlier hitting a new intraday record $2.2385.

    –By Matt Chambers, Dow Jones Newswires

  53. 53
    Sambone Says:

    Dr D – I feel ya, big guy. Mine aren’t feeling good either at this moment.

  54. 54
    zman Says:

    Of course it may turn on a dime with a 25 bp cut.

    Oil is on fire, up anther $1.10 to $81.70.

    How about this for a bet, if NG hits 4 I eat the hat, if it hits $8, Nicky gets a satellite dish modem set up!

  55. 55
    zman Says:

    50 bps and I take the October XOM 90 calls for 2.70 ish and possibly the September 90s for 0.75 to 0.80

  56. 56
    Brian08 Says:

    0 or 25 would be fine and dandy chicken candy…Don’t have the stones to double up at this point in case Uncle Ben goes nuts and does a 50…

  57. 57
    drdavis124 Says:

    I have been getting good info on energy & mining from sharp pro’s in Canada. They consider it a bad sign “short term” when the the US analysts & CNBC talk about 85-100 oil.

    Phil 1/2 hr to go.

  58. 58
    zman Says:

    B – I hear ya! I say no way 50 as the dollar plummet will put crude to 85 in short order, thus insuring the inflation they used to be worried about. But betting on the fed isn’t nearly as fun
    (or safe) as a trip to LV and I only do that once a year.

    Look at XOM flat lining at up a dime. It breaks one way or the other.

  59. 59
    zman Says:

    Dr D – agreed, frothy. Just a few days ago everybody was looking for a pullback to 70 or 60 or 50 or 45. Now those guys are all in hiding and Goldman and Sambone’s comment about “crowd” being in charge couldn’t be more true.

  60. 60
    zman Says:

    PBR says output fell in August

  61. 61
    Nicky Says:

    Hieeeeee. Very late today as I thought it would be a quiet morning and went and played in a tennis tournament. Boy was I wrong there! Too late for hat eating comments now!!

    Broader markets rallied to 1491. One more pop would look good and then let them sell it….

    Energy has to fall with a .25 cut or lower doesn’t it? Thinking it will fall with broader markets. That said wti chart looks in need of a touch more upside. 80.23 should stay intact until this wave is done so if it goes then rally is probably done.

  62. 62
    Nicky Says:

    Gold looks like it topped at 730 this morning. RSI diverged badly into the high which is a sign the 5th wave may be done.

  63. 63
    Brian08 Says:

    I agree on the 50 (the dollar will go straight to hell)…The whole damn rate cut thing makes ZERO sense to me anyway, it’s not gonna get to the people who need it (the ones who are gonna default on their mortgages) rather it’ll get to the morons to took oversized bets in an illiquid market…

  64. 64
    zman Says:

    Nicky – I have to agree on the 25 bips comment. Maybe I should be looking at SU and XOM puts as a day trade instead of the XOM calls referenced in 55.

    that PBR output dip was tiny.

  65. 65
    Nicky Says:

    #57 been waiting for a week for the sign! when they start talking $100 it is a sure sell.

  66. 66
    zman Says:

    Sambone’s talking 103. I think he just split a new timeshare with PF and T Boone.

  67. 67
    redjack Says:

    Dr D…I own too much BTJ

  68. 68
    Nicky Says:

    Brian – I couldn’t agree more. But .25 is already factored in so thats going to disappoint and to a degree so is .50. Either way when the dust settles the market should tank.

  69. 69
    zman Says:

    1 mm shares just traded at 149.17 on the Spyders

  70. 70
    Nicky Says:

    103 this week???

  71. 71
    zman Says:

    I think Sambone said in 10 minutes, lol.

  72. 72
    sane Says:

    If oil goes to 103 I will give you a recession

  73. 73
    zman Says:

    NS – Sold the COP calls earlier, you go short it yet?

  74. 74
    zman Says:

    Sane, is that re or de?

  75. 75
    drdavis124 Says:

    I might be wrong. But I think Berneke. is going to turn out to be sharper than Greeny and looks at the big picture not what WALL SREET WANTS. The big problem is WORLD INFALTION & HE FEELS INFLATION IS THE BIG ISSUE.

    Phil

  76. 76
    zman Says:

    RIG and DO will explode to the upside on a 50. COP and XOM too.

  77. 77
    sane Says:

    😛

  78. 78
    zman Says:

    Refiners will get crushed on a 50, down 5% but maybe not until the smoke clears.

  79. 79
    Nicky Says:

    FWIW – DT the amateur weather forecaster I keep an eye on who is very good said yesterday that there was absolutely zero chance of anything forming in the GOMEX. I will try and copy and paste it later but it was all to do with the weather set up over the US.

  80. 80
    sane Says:

    re 74 a bit of both, The economy goes into a recession while I slip into a depression

  81. 81
    zman Says:

    Chinese oils simply flying again, PTR, CEO, SNP.. 25 bps and a selling market and down oil and they will quickly fold lower.

  82. 82
    Nicky Says:

    As if on cue – BPickens giving an interview on CNBC tonight with his oil and gas predictions!

  83. 83
    QUARRYMAN Says:

    Hey Z., just logging in .

    What did msgs #76 and 78 mean. What’s ’50’?

  84. 84
    Nicky Says:

    Big Ben does not strike me as someone who just wants to appease the markets – but we are about to see.

  85. 85
    zman Says:

    Hey Q – 50 basis point rate cut. Did you see NG this morning? I could have tossed those UNG puts for just under even, instead of the half bid they’re at now. Shoulda, woulda, coulda. arrghggg. 25 bps and maybe oil will fall taking NG lower.

    Sane – ouch

    Nicky – agreed

  86. 86
    Sambone Says:

    Hey, I’m just telling ya what my charts say. No time frame btw. It doesn’t mean that it will happen today. It’s under momentuem buying currently. Don’t put in with Nicky’s good buddy PF. I think the guys is a crackhead. T Boone is da man, but somewhat self serving because he owns energy.
    3 minutes

  87. 87
    QUARRYMAN Says:

    As any quarry guy should have known:

    NG gives headaches! (the nitroglycerin variety that is)

    “SAFETY PAYS”

  88. 88
    zman Says:

    Sambone – just wanted to see if you were paying attention. 2 minutes.

    SU could be a great put on 0 to 25 bips…of course that could be said about a couple of thousand stocks.

    That FTI keeps sinking, great business but it has had an awesome run

  89. 89
    Nicky Says:

    .50 cut – he is insane!

  90. 90
    Sambone Says:

    .50

  91. 91
    Brian08 Says:

    50, what a joke

  92. 92
    Sambone Says:

    yep, watch the USD

  93. 93
    Nicky Says:

    they will live to regret that imo.

  94. 94
    calvino Says:

    yesssssssssssssss

  95. 95
    sane Says:

    ugh

  96. 96
    sane Says:

    Welcome to inflation station

  97. 97
    Sambone Says:

    There goes the $, and oil is up.

  98. 98
    Nicky Says:

    Well Bernanke is turning out to be another Greenspan. He has just gone down in my estimation big time.

  99. 99
    calvino Says:

    Ben did good

  100. 100
    Nicky Says:

    Yes Sane – they must be nuts. Oil at 81 and they do .50??? I just don’t get it.

  101. 101
    sane Says:

    N,

    Bailing out their buddies not the consumer

  102. 102
    Brian08 Says:

    CNBC: “This is great news”…

    Glad to see the Canadian dollar will be worth more than the greenback in the near future…

    Way to bail out the morons who have zero common sense…Uncle Ben is a bigger turd than Greenie…

  103. 103
    Nicky Says:

    Yep refuelling the idiots who got the US into this mess in the first place.

  104. 104
    zman Says:

    agreed all

    NO TRADES for me.

    now I agree with PF, we will see $4 gasoline…in winter.

    30 year low against the C$, record low vs Euro…nice job ben

    SU nice play on that

    Chinese oils running hard

    TRADE

  105. 105
    TTupp Says:

    i think i might go shopping in michigan tomorrow lol, iim sure it will be at parity by them with my loonie!

  106. 106
    sane Says:

    wow look at that DJ flagpole

  107. 107
    sane Says:

    Hey sambone that 103 number sounds about right.

  108. 108
    Nicky Says:

    oil selling off hard into the close.

  109. 109
    zman Says:

    Tupp – ouch

    Oil is rolling over, again no trades for me but I’m considering some more September call sales.

    RIG is blowing out

  110. 110
    Nicky Says:

    if you call 81 hard!

  111. 111
    Sambone Says:

    I’m going to the Swiss Frank as I type as Jim Rogers does. I bet old Jim Cramer will be jumping up and down tonight.

  112. 112
    TTupp Says:

    how is that a good play on SU?

  113. 113
    Nicky Says:

    Well I guess the next question is when the markets will perceive .50 as panic?

  114. 114
    sane Says:

    What are the traders going to say about selling off into the close? Umm yeah since the feds cut 50 it means the economy is not doing well so demand might slow. OK yeah

  115. 115
    calvino Says:

    Am I the only one who likes the rate cut??

  116. 116
    drdavis124 Says:

    My oil screen all green CEO +5.39%
    My put screen all Red

  117. 117
    zman Says:

    SU pure oil play, oil over 80 and they mint money, weak dollar insures oil > over 80. didn’t mean spec to the C$

  118. 118
    sane Says:

    I think I am going to buy some gold

  119. 119
    TTupp Says:

    sold 250 22.5 vix calls contracts

  120. 120
    zman Says:

    OIL booming now, up a buck into the close of the close

  121. 121
    Nicky Says:

    distillates just jumped 100.

  122. 122
    TTupp Says:

    yea because when su converts their usd proceeds into cad they get less

  123. 123
    TTupp Says:

    our strong dollar has killed manufacturing in Ontario tho..

  124. 124
    Nicky Says:

    I was wrong with my gold call!

  125. 125
    calvino Says:

    the loon just broke 1.02.. 1.05 just a week ago.

  126. 126
    zman Says:

    distillate move not keeping up with oil, refiners rallying anyway with everything else,.

  127. 127
    Sambone Says:

    bght FXF

  128. 128
    zman Says:

    RIG and DO exploding to the upside.

    TRADE: NFX shares at 47.30

  129. 129
    zman Says:

    TRADE: Out APC SEPT $50 calls at 1.70 (21% gain) from about a month ago.

  130. 130
    drdavis124 Says:

    SU: long term could hit a wall they are in the mining business & they have to deal with sky rocketing cost of steel, labor equipment & NG. Expanding a mine costs a lot more than punching a Hole for Oil or Gas. Thats why most of my holdings are in NG & Oil.

  131. 131
    QUARRYMAN Says:

    What do you think of the NFX Oct 50s at .95?

  132. 132
    Nicky Says:

    27 point move on the futures in 15 seconds!

  133. 133
    Nicky Says:

    Big Ben obviously forgot he was running an economy and instead focused on the popularity contest.

  134. 134
    zman Says:

    That’s not bad Q – Ben just gave you the green light.

  135. 135
    drdavis124 Says:

    Sane: I am with you on Gold.

  136. 136
    zman Says:

    SU going for the century mark, probably gets there tomorrow.

  137. 137
    sane Says:

    Sad thing about this rally is it is an inflation rally
    Lame

  138. 138
    zman Says:

    wow XOM from up a dime to 1.50, let’s Ben they just “created” $7.7B of market cap.

    Record high is 2 point away….bet it goes for it

  139. 139
    sane Says:

    I get this mucky feeling that this cut is going to do more harm than good.

  140. 140
    drdavis124 Says:

    I stand corrected on Ben.

  141. 141
    sane Says:

    Don’t feel bad Dr

    I thought he was smarter than this.

  142. 142
    Nicky Says:

    WTI above 82 – well done the Fed.

  143. 143
    zman Says:

    Cal – sorry for the late reply, trades, snippy comments etc. I’m concerned along with some others here that Ben is pandering to the Street/feeding the problem. If he was truly worried about inflation he seems to have forgotten it…seems a bit reactionary to me.

    Consumer confidence is going to dive if we’re paying $3 for gasoline at Christmas and we may be setting up for that.

  144. 144
    Sambone Says:

    Z – Going long FXF across the board

  145. 145
    Brian08 Says:

    Can we fire Uncle Ben for gross incompetence?? Sorry to keep dwelling on this, but I mean it’s pretty clear to me that this is a HUUUUUUGE mistake and I’m a 2nd year MBA…We don’t know anything!!! 🙂

  146. 146
    sane Says:

    Hey z, what about $3 HO for Christmas. The consumers in that market are not going to be too giddy.

  147. 147
    Nicky Says:

    Okay here is my take on the TA for WTI. Hard to concentrate on it right now but….

    we are in iii of v of v.

  148. 148
    calvino Says:

    The high fuel prices are a blessing in disguise! It will force us to a) conserve what is very precious b) develop alternative fuels.

  149. 149
    drdavis124 Says:

    Samb.Thank for the idea. I bght FXFCF OPTIONS 3/08 @ $4.30

  150. 150
    Nicky Says:

    Brian08 for Fed Chairman is my take! You know more than BB!!

  151. 151
    Brian08 Says:

    Re: 148…And it will put an even greater squeeze on those who are gonna get screwed with these resetting rates on their mortgages…

  152. 152
    zman Says:

    Sane – No doubt re HO.

    Cal – tell that to all those people on fixed incomes who are cold this winter. 8-0

    Chinese oils now apparently selling diamonds

    those xom 90 calls doubled and I missed them. arrrgggg

    RIG up $2.50…where’s RAM?

    I’m ticked the FED has taken away what would have been a good buying op as we approached 3Q results.

    I second Brian for Fed

  153. 153
    Nicky Says:

    Give me a break Calvino pleeaaase! What they save on their mortgages they are going to be paying in fuel!

    If only you were right but the average american is not interested in conserving fuel.

  154. 154
    Brian08 Says:

    Ha, thanks Nicky…Too bad I didn’t know enough not to go short on the Dow at the end of last week…

  155. 155
    zman Says:

    SU ‘s not waiting for tomorrow on the 100.

    Nicky, what do you think the odds are of a big gap up on crude in the morning given the run into the close and the current sentiment?

  156. 156
    rammastr Says:

    RAM is here. Wrong side of S&P. I guess this was not a corrective move NICKY??

  157. 157
    Sambone Says:

    Brian has my vote also

  158. 158
    Sambone Says:

    Ram – I’m there with you. The Street (See Jim Cramer) says with this market that all is well in the world, don’t worry be happy (Wasn’t that a song?). Ben is at the helm and won’t let them down. Nobody cares what others say (See overseas, especially asia), because there good buddy ben is buying the drinks. brian sounds better by the minute.

  159. 159
    Nicky Says:

    Ram – we are into the area I said earlier in the week. I gave two target areas – this is the first one and 1517 is the second.

    Hold the faith….

  160. 160
    zman Says:

    Nicky, think we get a morning oil pop given how it closed?

  161. 161
    Nicky Says:

    Z – futures are already well up in the energy market for tomorrow.

    Wait until the inflation part sinks into everyone’s head.

    Every single thing we buy is going to cost more.

  162. 162
    Nicky Says:

    But yes Z I would think so.

  163. 163
    TTupp Says:

    also sold: GS sept $195’s @2.45 puts, may buy calls when IV becomes more reasonable after expiry

  164. 164
    Nicky Says:

    Funny thing about this is that you would expected Greenspan to make a move like this and yet even he said yesterday that the Fed should not be too aggressive.

  165. 165
    TTupp Says:

    oops forgot this was an energy board. Z, what trades are you mulling? you waiting for a ST retracement in the crude names or next week after expiry?

  166. 166
    zman Says:

    XOM up $2, that’s $11 B

    PTR up $6, CEO up $10, SNP up $3 wow

    Tupp – I’ve been lightening up which sort of sucks and was planning to use the disappoint of a 25 bp cut to add Octobers. I’m a little out of position for this but will continue selling profits, RIG, OII, and APA especially which are on fire again, probably waiting on an oil pop tomorrow to dump but they’re big gainers so I don’t care about dimes and quarters there.

    Mised XOM and the chinese which makes me a little sick.

    Think SU crests 100 on the open tomorrow.
    RIG probably best 110
    COP up another 1 to 2 points
    HAL to 38

    and I’m thinking of more puts on the 40 strike September UNGs but that will definitely wait for the morning.

  167. 167
    rammastr Says:

    HOLD THE FAITH…..??? My only hope is that my 5 month old gets all his teeth overnight and this darn diaper rash fades. How can anyone rely on charts when an individual changes things fundamentaly??

  168. 168
    Sambone Says:

    $8.00 a gallon for milk

  169. 169
    zman Says:

    Oil is 82.33 now, up $1.77, chart looks like a telephone pole.

  170. 170
    Nicky Says:

    The charts are still intact Ram. Trying to think of something for the diaper rash though!

  171. 171
    Sambone Says:

    Wow, I should buy the “Loonie”. It’s now 98.37 US cents per Canadian dollar, a 30 year low. Soon to be at parity.

  172. 172
    zman Says:

    NS – did you see COP?

    TRADE: EOG $75 Septembers for $0.40. Don’t try this at home. Super risky

  173. 173
    zman Says:

    Nicky, thanks for that opinion re very near term oil.

  174. 174
    gaamblor Says:

    Z, have you looked into the CanRoys? ie CNE PGH, HTE

  175. 175
    rammastr Says:

    NICKY – O.K. In tact. Looking for downdraft tomorrow.

  176. 176
    Nicky Says:

    This just arrived in my inbox:

    http://seekingalpha.com/article/47541-the-oil-scam-driving-crude-over-80

  177. 177
    zman Says:

    G – Every great once in awhile I put together a yield spread sheet and work them up to see who’s undervalued because someone much smarter than myself asks me to and then they point it out like 2 years later when the things have made a killing for them.

  178. 178
    Nicky Says:

    Robert Shiller on CNBC – this guy talks sense.

  179. 179
    zman Says:

    Nicky – no comment. Do you have a comment on it?

  180. 180
    zman Says:

    N – let me know what he say, we’ve got Nickelodian on in my office this time of day.

  181. 181
    Nicky Says:

    Ram – fundamentally they may now start to question how bad things really are for them to have cut .50.

  182. 182
    zman Says:

    Re #181 Hear, hear.

  183. 183
    Nicky Says:

    Z – he has been saying this for a while. My only comment would be is that it will continue to happen.

  184. 184
    Nicky Says:

    Shiller said they needed to cut and its no surprise to him. He said .50 is not aggressive under the circumstances and that he is still look for 50% drop in house prices in the hot spots.

  185. 185
    zman Says:

    N – Have you looked at his math?

  186. 186
    Nicky Says:

    No – enlighten me.

  187. 187
    zman Says:

    Holy cow, FMC which is the FTI I was thinking about as a long, down while everything else was flying…is one of two suppliers that just got awarded subsea orders ranging from 2.6 to 4.4B from Statoil. That’s perfect. Well, maybe the other is OII

  188. 188
    zman Says:

    Re 186 – check your email.

  189. 189
    Brian08 Says:

    I wish I was taking a class with Shiller this semester so I could ask him if he has lost his mind…

  190. 190
    Nicky Says:

    Brian – are you at Yale?

  191. 191
    Brian08 Says:

    Yup, 2nd year MBA student…

  192. 192
    zman Says:

    Smith girls = fun, Wellesley not so fun.

  193. 193
    QUARRYMAN Says:

    Z.,

    Back in the day… I had a girlfriend from Smith who had the t-shirt “Smith College: 100 Years of Women On Top!”

    “SAFETY PAYS”

  194. 194
    zman Says:

    LOL Q!

    I’ve got a T-shirt from a week long stint in a Wellesley dorm. Talk about feeling like dead man walking.

    Married a UT MBA. Much more down to earth.

  195. 195
    Nicky Says:

    Brian – even more reason for you to head the Fed down the line!

    Normally Shiller commands my attention and respect to be honest. But I was surprised by his comments this afternoon.

  196. 196
    rammastr Says:

    ZMAN – Why did you choose EOG for your near term trade?

  197. 197
    zman Says:

    It has a high correlation to oil (despite the fact that it’s primarily a gas company) and could cross the distance to the goal line ($75) in a snap. It was a rank dice roll. Hence the “don’t try this at home” tag line.

  198. 198
    rammastr Says:

    ZMAN – Thanks. Apparently I gravitate towards rank dice rolls.

  199. 199
    zman Says:

    Have you made another rank dice roll lately?

  200. 200
    rammastr Says:

    YES. EOG.

  201. 201
    zman Says:

    EOG said it shut in 50 mmcfgpd, or 5% of its 2Q US natural gas (or 4% of its N. American volumes)in the Rockies due to extremely low local gas prices. They said they still expect to meet their ’07 production guidance, says it will keep an open mind as to 2008 Capex until the end of winter.

  202. 202
    rammastr Says:

    Sorry ZMAN – Does this info. influence EOG tomorrow?

  203. 203
    zman Says:

    I said ANOTHER rank dice roll since you made it sound plural. I think I put quite a bit of caution into the TRADE announcement. see 172 above and in the blast AGAIN VERY RISKY.

    As far as EOG goes, no it shouldn’t this came out in the middle of the day but wasn’t widely distributed until later. If anything it’s sort of negative for the UNG put trade except that gas is pretty lofty on storms and this may not be enough to hold it up if they don’t materialize.

  204. 204
    Nicky Says:

    Ram – broader markets: higher volume today implies we have higher highs to come. Target areas are 1522 with an outside chance of 1540. Once the top is in we should see a correction back to 1470 – 1480 or lower within a week or so.
    I hope that helps a bit.

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