19
Sep

Wednesday – Ben Hands Out The Mulligans, Now To Oil Inventories

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I spent yesterday selling into early strength. Do I wish I had held some of the Calls into the Fed announcement? Sure but I don't kick myself nearly as much when I take profits than when I watch bids fall to oblivion and profits turn to wipe-outs. That's how I sleep so well. For a list of what I sold yesterday and month to date and the current holdings list flip down to the Holdings Watch section.

In Today's Post

A) Commodities Watch

B) Oil Inventory Report Expectations

C) Natural Gas Thoughts For Thursday

D) Holdings Watch

E) Odds & Ends

 

Commodities Watch:

  • Crude Oil: Oil Closed Up $0.94 to $81.51 on Ben's Rate Cut Party. After the 2:30 close of NYMEX, oil rallied further as the dollar fell to a record low against the Euro and 20 to 30 year lows versus that of it's major trading partners. This morning oil is trading up $0.50 to peg $82 (which is in line or slightly below levels it traded at yesterday after the close).
  • Alaskan Oil Production 9% Below Forecast. Since June 1, Alaskan oil production has been running 9% below plan or about 70,000 bopd due to increased maintenance and a series of unplanned field shutdown.
  • Iraq Export Pipeline Bombed. Section of pipeline from the Kirkuk oil fields to the Turkish export terminal was heavily damaged. The route has been shuttered for eight consecutive days now and is one of only two ways oil leaves the country, the other being via Basra in the south.
  • OPEC Watch. According to a spokesman, OPEC plans to discuss increasing production if prices stay over $80 for 15 to 20 days.
  • Iran Watch. For its part, Iran said OPEC "would not allow itself to be pressured by consumers in the face of rising prices...current record crude highs were good for oil exporting countries." Comment: short-sighted but honest. 
  • Natural Gas: Sank early yesterday falling as much as 6.5% to $6.17 before recovering all but $0.085 to close at $6.57. Gas is off a dime+ in early trading as nothing continues to materialize in the GOMEX or Atlantic (although there is an odd disturbance taking up residence over Florida).

Following In Aubrey's Footstep's Watch: Taking a page out of Chesapeake CEO Aubrey McClendon's book on price management, EOG's CEO Mark Papa said that his company 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 and added that they will keep an open mind as to 2008 Capex until the end of winter.

Oil Inventory Report Expectations (from the Bloomberg survey)

expected-091807.jpg

Comments by Z:

  • Crude - The draw could be bigger than expected again as the Houston Ship Channel was shut towards the end of the week potentially shaving tanker imports. Given that the current sentiment for oil seems to have shifted from "we have enough" to "we're all going to freeze to death" at the touch of the Goldman Spike Switch I'd say anything bigger than the 2 mm expected draw will be used as reason to make a run on $85.   
  • Gasoline - I think gasoline will be a bigger than expected draw this week as imports and production should both have dropped while demand might be off but less so. The Street is expecting utilization of 90%, down from 90.5%. They missed by a mile last week (down 1.6% versus expectations of drop of only 0.1%). The shut down of 5% of U.S. refining capacity for 2 days during the reporting period (Humberto) could move this number and production lower than expected. 
  • Distillates - 1.4? Sure, that's just slightly beneath the four week average build. There's no real demand right now for heating oil and there shouldn't be much of a shift in other distillate uses. It may fall slightly lower for the same reasons as gasoline but it's less dependent on imports.
How I'll Play It. I'm mostly out of the refiner patch right now have recently taken profits on two sets of VLO call positions. I'm still in the TSO $50 calls which have risen from the ashes at the proverbial 11th hour and could make a break for only a small loss or a wash if I'm very luck tomorrow. Right now those are off a disappointing 66% and time is running very short. Otherwise, I'll only move back into the refiners if I see a report that in my mind stabilizes crack spreads:
  • good for gasoline prices (a bigger draw, especially on the west and gulf coasts)
  • poor for crude which I doubt.
  • or if distillates fall (which I also doubt)
  • October (VLO)'s will be the most likely vehicle. I'd actually like to see oil spike with gasoline failing to keep pace much like it has over the last several sessions. At some point people should wake up to the fact that crack spreads are tailing off again and it will give me an entry point for a winter call position.

Listen for the oil report play by play live on www.MN1.com starting at 9:25 CST every Wednesday.

Natural Gas: We're going into YoY deficit land this week for sure. We're up against a 93 Bcf injection last year and most of the Street is looking for a mid 60's number this week.

  • Gross Imports. Down 1.0 Bcfgpd week over week, slightly below year ago levels.
  • LNG: Fell about 0.5 Bcfgpd week over week.  As you can see from the chart below, LNG imports have tumbled in the last five or so weeks as the lower domestic prices sent shipments to Asia (prices in Japan are close to $11 per MMBTU right now).
  • Canadian Pipes: Also Fell 0.5 Bcfgpd. Typically volumes inch up as winter approaches. It remains to be seen if Canada has capacity to spare this winter.

imports-091407.jpg

 

Holdings Watch:

CALLS

  • (PBR): Sold the double helping of September $65 calls bought in the first week of September for $3.50 up 75%. I will reposition when they (and perhaps the Brazilian market) cools off a bit.
  • (COP): Sold the September $85 calls bough on 9/7 and 9/12 for a 24% gain versus the average cost.
  • (EOG): bought the September $75 calls for $0.40 on my gut (and Nicky's) that crude would pop in the morning. And yes, before anyone points it out, I know they're mostly NG but that doesn't change the fact that this little beasty trades with oil prices 4 out of 5 days of the week. Last bid $0.35 but if this goes the wrong way in the morning it'll be toast. I labeled this as super risky in the e blast and the TRADE comment but is it really necessary to say so when the option is at all out of the money with 3 days left until expiration.

PUTS: No action.

What I've Closed So Far This Month:

 

closed-september-07-091807.jpg

 

 

What I've got on the books now. A mixed bag of winners and losers (some with time, some without)

open-positions-091807.jpg

STOCKS: 

  • (NFX) added for $47.30. This doubles my original position bought back in April at $44.05.

Odds & Ends 

Analyst Watch: nada

Sour Grapes Watch: PBR's C-M-273 Block Off The Block. Brazil's National Petroleum Agency, ANP, removed the block where PBR had discovered oil but was tardy by 9 days in filing a development plan. ANP had said it would re-auction the block, which is pretty much heresy in this business but PBRs lawsuit scared them out of their position when they realized litigation could hold up Brazil's entire annual auction. 

 

 

 

132 Responses to “Wednesday – Ben Hands Out The Mulligans, Now To Oil Inventories”

  1. 1
    Sambone Says:

    Crude Up As Fed Rate Cut Boosts Demand Outlook

    By Natalie Obiko Pearson
    Of DOW JONES NEWSWIRES

    LONDON — Crude oil futures were trading higher, just below all-time highs Wednesday morning in London after the U.S. Federal Reserve’s interest rate cut cast off the likelihood of any near-term correction lower in oil prices, boosting convictions that oil demand is only set to grow in the months ahead.

    With the larger-than-expected rate cut reassuring the market that economic activity would be protected from turmoil caused by the U.S. sub-prime mortgage crisis, all eyes have turned to U.S. weekly inventory data that’s expected to show that U.S. crude stockpiles have dwindled further.

    “Anything short of an actual inventory build coming out today is probably going to help support prices. We just seem to be in this constant bullish mood at the moment,” said Simon Wardell, an analyst at Global Insight in London.

    At 1117 GMT, the front-month November Brent contract on London’s ICE futures exchange was 43 cents higher at $77.99 a barrel, just shy of Tuesday’s all-time high of $78.60 a barrel.

    The front-month October contract on the New York Mercantile Exchange was trading $0.61 higher at $82.12 a barrel, back from Tuesday’s all-time high of $82.38 a barrel. The October contract expires at the end of trade.

    The ICE’s gasoil contract for October delivery was up $8.00 at $705.50 a metric ton, while Nymex gasoline for October delivery was up 27 points at 226.10 cents a gallon.

    The U.S. Department of Energy is set to release its inventory data at 1430 GMT.

    Analysts surveyed by Dow Jones Newswires expect crude inventories to have fallen by 1.5 million barrels, gasoline by 1.3 million barrels, and refinery utilization by 0.5 percentage points. Distillates are seen building by 1.1 million barrels.

    The hefty rally for global equity markets following the Fed’s 50 basis point rate cut was helping restore confidence in oil demand forecasts, said a London-based broker.

    “While the market’s been pushing higher, people have been worrying a bit about the shaky economy,” he said. “The Fed’s cut should put that to the back of people’s minds and help us to focus on the fundamentals.”

    A combination of seasonal, geopolitical and supply-side worries have contributed to the bullish outlook. Those include news of more attacks on Iraqi oil installations, increasingly hawkish rhetoric from Iran and storms brewing in the Atlantic that could affect refineries.

    Disturbed weather patterns over the western Atlantic prompted Shell to evacuate 300 nonessential personnel from the Gulf of Mexico due to potential development of Tropical Disturbance 50.

    “The oil companies aren’t taking any chances following the speed with which (hurricane) Humberto became a nuisance,” he said.

    Technical analysts at Barclays Capital said Brent crude oil futures could push through their all-time high of $78.65 a barrel in the coming weeks amid tightened supplies. WTI has further upside potential toward $85 and $88 a barrel but after that, “a correction (lower) is more likely,” they said.

    There are some factors that could help bring oil prices down: demand for oil is expected to dip in the upcoming weeks as the summer driving season ends and before the world’s largest energy consumers head into winter in the northern hemisphere.

    “The seasonal numbers can get quite big,” said Wardell. “But just given the mood in the markets now most of the things (people will) be looking for will be bullish and they’ll probably find it.”

    —By Natalie Obiko Pearson, Dow Jones Newswires

  2. 2
    Sambone Says:

    Weather – Over Florida we have 93L. Moving west. Looks to be in the Upper part of the GOMEX tommorow. Low shear, bathtub temps. Tracks say LA most likely. Next named TD is Jerry
    http://wavcis.csi.lsu.edu/forecasts/forecasts.asp?modelspec=temperature
    Note hit wind and then start
    http://www.ssd.noaa.gov/goes/east/carb/loop-rb.html

  3. 3
    zman Says:

    Sambone

    re that wind chart, NG traders don’t seem to buying it. The visible looks like it’s moving north east if at all. Could be a gas trade in there if the model you’re looking at proves to be correct.

  4. 4
    zman Says:

    NG looking to have a weak open again, off 4.25%, down $0.28. Will watch very closely for a close to the UNG trade.

    Oil holding $82, up $0.70

  5. 5
    Sambone Says:

    Nymex Crude Up Before US Inventory Data

    DOW JONES NEWSWIRES
    From MARKET TALK:
    [Dow Jones] Nymex crude up from its record settlement before key US inventory data expected to show the 10th fall in crude stocks in 11 weeks. Oct crude +58c, or 0.7%, at $82.09/bbl. Tropical storm activity in the Atlantic is also buoying prices, which rose to a record Tuesday after the Fed cut rates. (matt.chambers@dowjones.com)

  6. 6
    zman Says:

    So tropical storm bouys oil which is global but not nat gas which is local?! Gotta love reporters.

  7. 7
    calvino Says:

    Morning Z, like you said, not yet for nat gas.. it should give another buying opp.. re. canadian pipe – there are about ten drill rigs working up there now, that’s from triple digits last year.

  8. 8
    JMiller Says:

    Z
    how do I log onto MNL.com to listen to you? Is it a paid site?

  9. 9
    BigJim Says:

    Good Morning Eveyone:

    Looks to me XOM going to $100.00. Any thoughts. especially with new money coming in the 1st of October. Opinions welcomed.

  10. 10
    j Says:

    SU caught a downgrade, just bought a little on weakness.

  11. 11
    zman Says:

    TRADE: Out $75 EOG CALLs at $0.65, 62.5% gainer

  12. 12
    Nicky Says:

    WTI – has risen 20% in the last 18 trading days.

    IF we are in the final leg up (of this wave) then we cannot exceed 83.20. If we are still in iii of v then upside target moves to about $84.00.

  13. 13
    zman Says:

    Jmiller – Its free but the address is

    MN1.com that’s 1 as one. It’s like CNBC for the internet. Phil of PSW and I phone into the show. It’s also on the dial if you happen to be in Dallas

  14. 14
    Sambone Says:

    Nymex Crude Up Before DOE Data, Eyes Storms

    By Matt Chambers
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures rose above a record settlement before key U.S. government inventory data due Wednesday that is expected to show continued drawdowns in crude stockpiles. The evacuation of some staff from oil platforms in the Gulf of Mexico ahead of an approaching storm also buoyed prices.

    Crude stocks are seen falling by 1.5 million barrels to 321.1 million barrel in the data, which is for the week ended Sep. 14, according to the average forecast in a Dow Jones Newswires survey of analysts. If this happens it will be the tenth fall in stocks in 11 weeks, and mark a 9% drop in that period.

    The front-month October light, sweet crude contract on the New York Mercantile Exchange was recently up 60 cents, or 0.7%, at $82.11 a barrel after earlier rising as high as $82.37, a penny shy of the all-time intraday record set Tuesday. Brent crude on the ICE futures exchange rose 47 cents to $78.06 a barrel.

    Prices rose to a record Tuesday after the Federal Reserve cut rates more than expected, capping a 19% gain in crude in the past four weeks. Prices have risen largely on expectations of tight supplies going into winter, hurricane concerns and a weakening dollar.

    “We have a couple of tropical disturbances that could turn into hurricanes by this weekend, and this morning’s DOE report is likely to add fresh ingredients to an already bullish stew,” Peter Beutel, head of trading advisory firm Cameron Hanover, said in a note to clients.

    The National Hurricane Center said a disturbance off the coast of Florida that is likely to move into the Gulf of Mexico could develop into a hurricane in the next day or two.

    BP PLC said it had started planning the evacuation of non-essential personnel from its Gulf of Mexico platforms because of the potential development of Tropical Disturbance 50. Royal Dutch Shell PLC (RDSA) said Tuesday it had evacuated about 300 non-essential personnel from its operations in the area.

    Also in the inventory data, which is due at 10:30 a.m. from the Department of Energy, gasoline stocks are seen falling by 1.3 million barrels, distillates are seen growing by 1.1 million barrels and refinery use is seen falling by 0.5 percentage point to 90% of capacity.

    Front-month October reformulated gasoline blendstock, or RBOB, rose 2.66 cents, or 1.3%, to $2.0869 a gallon. October heating oil rose 23 points, or 0.1%, to $2.2446 a gallon.

    —By Matt Chambers, Dow Jones Newswires

  15. 15
    Sambone Says:

    The Energy Report

    Phil Flynn
    September 19, 2007

    Hey dude, a clear message has been sent and you’d better pay attention if you know what’s good for you. You better straighten up because there is a new sheriff in town. His name Is Ben Bernanke and he’s bad and he is bold and has made it clear you do not mess around with him.

    Now if you heard that Ben Bernanke was just a wimpy intellectual academic that would lack the machismo to stand up to the rough and tumble world of the real markets, well dude I am here to tell you he’s proven he’s tougher than the man who shot Liberty Valiance. If you thought this guy that reminds of your high school econ teacher would ever emerge from the towering mythical shadow of Alan Greenspan, well after yesterday you might say that Alan Greenspan is now in the dust bin of history.

    Big bold Ben Bernanke shocked long time Fed watchers by doing something none of them thought he had the courage to do and do something that perhaps even former Fed Chairman Alan Greenspan might not have the courage do and that was surprising the market with a 50 point basis cut in both the Fed funds and the discount rate. For those of you who thought Ben Bernanke would try to be Alan Greenspan well Mr. Bernanke made it clear that he is not your father’s Fed Chairman and it isn’t even Alan Greenspan’s Fed but now with this decisive move this is now sheriff Ben Bernanke’s Fed. And he is taking no prisoners.

    Bernanke and the Fed said they moved because they felt it was necessary to forestall some of the adverse effects on the broad economy that might otherwise arise from the disruptions in the financial markets and to promote growth over time.

    For oil traders it was Ben Bernanke declaring open season on any remaining oil bears. The stock market went soaring in a wave of euphoria and of course the dollar was no mood to rally. Gold traded at its highest level in 26 years (not in the inactive front month but in the active December contract) and commodities were once again king. Yet the question is, when all the excitement wears off, will the market view the Fed decision as bold or a sign that perhaps thing are a lot worse than many traders think. I think that the Fed wanted to get ahead of the issue and send a strong message that it will not allow this bursting of the housing bubble to infect the rest of the overall economy. Well whatever the case, Mr. Bernanke proved that he is one aggressive and decisive leader.

    With an improving economic out look and with demand forecasts beginning to rise it is apparent that the fundamentals for oil are getting more bullish by the hour. And to add a little more frosting to the bullish cake comes word that Shell oil evacuated 300 non-essential workers from the Gulf of Mexico because of the threat of a tropical storm. The hurricane season in the Atlantic continues to be active and is a reminder that the season is far from over.

    Now with this bullish scenario playing out is it possible that OPEC is sending out rhetorical trial balloon to see if anything they say can lower oil prices. Dow Jones newswires quoted an unnamed OPEC official as saying, “If the market persisted, like today, with volatility and speculation, I think OPEC will add more production.” Of course others shot down that notion and they probably did so because the market failed to pay attention anyway.

    Crude looks like its on the verge of technical destiny. The Energy Report predicted in the beginning of the year that before the year 2007 was out, we would trade at $85.00 a barrel. Last year in 2006 we correctly predicted in the beginning of the year that oil would hit $78.00, a number that I hit pretty much right on the button. Should oil hit $85 (we could get near $86) then we should start looking for a yearly top. Baring any major damage from this storm or an early blast of cold we should start looking for a yearly top as the move should signal that the market would have run its long term technical course. But next year in 2008 the target for oil should be at least $95.00.

    A New York Times shocker! The New York Times almost sounded a bit capitalistic when they editorialized on the high costs of ethanol. The Times, long a proponent of the home-grown fuel and a opponent of more domestic drilling, is now realizing the impact ethanol is having on food prices. The Times ended its editorial with, “There is nothing wrong with development of alternative fuels.” What is wrong is letting politics, especially the kind that leads to unnecessary subsides, invade the natural landscape that is best left alone and soaring food prices that hurt the poor-rather than sound science and sound economics drive America’s energy policy. I am not sure but could it possibly be that the New York Times now supports drilling for oil in Alaska? Well if its sound science and sound economics they want, what is more proven as an energy source than oil?

    Yes, that was me all over the TV yesterday and if you missed me, you’ll get plenty more chances today. See me on CNBC, Bloomberg and CNBC Asia. Oil is blasting off! Are you on the Phil Flynn blast? Better get on board by calling me today at 800-935-6487 or email me at pflynn@alaron.com to open your account. Also, thanks to all that have emailed me! I am glad the reports are helpful and I am glad to hear of your trading successes!

    We’re long November crude from apprx 7780 ( bought Monday) – raise stop to 7990!

    We’re long November heating oil from apprx 22100 ( bought Monday) – raise stop 22450!

    We’re long November RBOB from apprx 20000 (bought Monday) – stop 19700.

    Buy November natural gas at 660 – stop 640.

    Have a GREAT day!

  16. 16
    zman Says:

    SU’s got to go to 100, you just know it. Man, I bet that analyst just made a lot of enemies, lol

    Sambone – thanks for the weather updates

    Nicky – what’s up with NG

    TSO – woo hooo back for the dead.

    Ram – how do you like the EOG now?

    RIG – wow
    NFX – double wow

  17. 17
    zman Says:

    Sambone – would you mind just posting a link to PF’s stuff and if you want maybe highlight what you think is important…could be a copyright issue. Thanks.

  18. 18
    zman Says:

    If the Dow is going for 14,000 then I think XOM could do 95 and if oil holds 80 for 2 weeks or so then $100.

  19. 19
    Nicky Says:

    This is the forecast from David Tolleris I mentioned yesterday:

    INGRID ripped apart …. Dr Gray’s Call for 5 named storms for SEPT 2007 is in BIG trouble — Overall Pattern EAST of the Rockies will turn WARM for mid and late SEPT…. Huge Uper Low to form over West coast and a equally strong Ridge over Eastern CONUS builds into a massive DOME… expect more temps above 90 over the Plains this week and 80s over the Midwet and Deep South this week thru the 9/23— stalled trough over West coast will set up wet / stormy pattern over N Rockies along US Canada Plains into western ONT next 7 days … scratch the idea of any tropical development in the Gulf

  20. 20
    j Says:

    CLNE up huge after T Boone pimps it on CNBC this morning.

  21. 21
    Nicky Says:

    Can the PF stuff really be copyright – its all over the net and he even emails it to anyone who asks. There is nothing on my emails about copyright.

  22. 22
    Sambone Says:

    Z – Will do on PF. The only reason I do it, is because he reminds me of Cramer. LOL

  23. 23
    Nicky Says:

    Nat gas – bearish case says we have started iii of iii down although a move above 6.730 would argue that ii is not done. A move below 6.160 would say the rally is done and at least a decent pullback is underway if not something bigger.

    Bullish count says we pull back to around 5.83 to 5.96 before launching back to the upside.

    Did you see BP last night saying he did not see a play in nat gas yet.

  24. 24
    Sambone Says:

    Weather – 93L, If it enters the GOMEX south of central Florida, then there will be a chance of it going to a TD/TS. The more north less water travel, so not good for 93L. We’ll see in 12 to 36 hours.

  25. 25
    calvino Says:

    s slightly exagerated crude decline

  26. 26
    Nicky Says:

    wti draw of 3.5 (double what was expected)

    RBOB build of 400k (unexpected)

    Distillates build of 1.5 (slightly more than expected)

    Utilization 89.6.

  27. 27
    calvino Says:

    PF reminds you of Cramer? Noooooo, have you ever seen the guy. I see Al Bundy, and I like Al.

  28. 28
    zman Says:

    TRADE: TSO out September 50s at $0.60

  29. 29
    sane Says:

    API

    1.6M Draw crude
    2.1M Draw gasoline
    341K Build Distillates

  30. 30
    zman Says:

    Let’s see if we get some buying ops in refining land over the next few days.

    The increase in gasoline stocks makes little sense as they said gasoline demand crept up a bit on the 4 week average. Gasoline production was up with down utilization.

    Oil trying to hold 82

  31. 31
    zman Says:

    and gasoline imports were low. numbers look kind of squirrelly.

    Thanks saw for API, that makes a lot more sense.

  32. 32
    sane Says:

    Hey z,

    Looking at the eia report gasoline demand was down to 9.25 going by products supplied for the last week.

  33. 33
    j Says:

    With the exception of refiners, oddly muted response to the numbers in energy stocks.

  34. 34
    zman Says:

    Sambone / Cal – so he’s a cramer/al bundy hybrid. Wow, nobody would want to drive one of those, lol

  35. 35
    Sambone Says:

    Z – That’s why I post the guy. He only wants us to open an account. “Where’s the beef”?

  36. 36
    zman Says:

    J- crude looks tired to me but that doesn’t mean they won’t push it towards Nicky’s number.

    Sane, you’re right, it was down almost 175,000, had production number, not demand stuck in my head. Sorry, my bad.

  37. 37
    zman Says:

    Ram – if you’re out there you can still dump the EOG for a profit though its gains today have been halved.

    Watching gas like a hawk now for an acceptable exit on my ill-fated September 39 UNG puts.

  38. 38
    Nicky Says:

    Z – just for clarification it doesn’t have to go to 83.20. In fact has to top out below so could do it right now.

  39. 39
    Nicky Says:

    Trade below the 81.85 intraday low would be the first hint that this wave is done.

  40. 40
    zman Says:

    Nicky – right, that’s what I though you meant.

  41. 41
    Sambone Says:

    Nymex Spikes, Then Pares Gains On DOE Data

    DOW JONES NEWSWIRES
    From MARKET TALK:
    [Dow Jones] Nymex crude, after spiking to a new record $82.51/bbl on the release of DOE inventory data, pares gains. Now +64c at $82.15 after trading around $82.30 before the data. Slipping demand for gasoline and distillates, as well as an unexpected build in gasoline could be weighing against the unexpected draw in crude stockpiles that drove the initial spike. (matt.chambers@dowjones.com

  42. 42
    zman Says:

    TRADE: OUT RIG $105 September calls for $5.40, up 200%. Bought 8/22. First half sold 9/4 for 156% gain.

  43. 43
    Brian08 Says:

    Hey Nicky, quick Q for you…Do you think the Dow tests 14K and then moves off of it or is this a breakout that is gonna continue?

  44. 44
    rammastr Says:

    ZMAN – got out at .60. Thanks. NICKY, are you fighting the S&P al the way to new highs?

  45. 45
    Nicky Says:

    Brian, I think the Dow retests 14k and then we will move sharply lower and retest the recent lows before mounting another strong rally which will take out these highs. The ‘topping out’ process is always very slow! Timeframe is always difficult to nail down but this market should roll over soon ie in the next 1 – 2 days. I then believe we go lower into October before we get the ‘seasonal’ rally which will take us to higher highs.

    Ram – I did update briefly last night as I sense your frustration with this rally (and share it!). I still believe that this rally will top out prior to new highs. Yes I could be wrong – there is an inverted H and S on the SPX chart unconfirmed by the Dow.

  46. 46
    Nicky Says:

    I will also add that Fed cuts typically take a year to feed through to where they are needed – ie this is no quick fix for the housing market!

    Also perversely 10 year note was actually higher after the cut! ie longer term fixed rate mortgages are actually now costing more.

  47. 47
    zman Says:

    Energy stocks looking tired,

    Crude desperately hanging on to 82

    nat gas wants to go lower but there’s that invisible storm out there holding it up

  48. 48
    zman Says:

    woops oil sub 82 and gas fell another nickel ins a heartbeat to down 26 cents

  49. 49
    Brian08 Says:

    Nicky that’s what I kinda figured was the potential scenario…Not that I know much…Was thinking about punting my 132-134 PUTS on the DIA, but in looking at the last rally to 14K we had a very sharp correction back to the 13.2-13.3 level within a week or so, which I would love so I could punt them…I’m just waiting for everybody to realize we are in an “OH F***!” situation and that 50 is signaling that there is something REALLY wrong…

  50. 50
    zman Says:

    oil making a run on even, should probably punt my APA calls and reload lower

  51. 51
    zman Says:

    oil red

  52. 52
    zman Says:

    TRADE: Entering ESV $55 OCT puts for average $1.72. Wall Street thinks I’m dead wrong on this choosing to look through the valley to the green pasture of expected high rates on the other side. It’s posted a three point rally with the market in the last two days which I think will be given back if crude takes a dip.

  53. 53
    Sambone Says:

    12:04 EST

    Nymex Crude Pares Gains, Can’t Hold $82/Bbl

    DOW JONES NEWSWIRES
    From MARKET TALK:
    [Dow Jones] Nymex crude turns negative after it can’t hold above the psychologically important $82/bbl level. Oct crude now +10c at $81.61, falling quickly after prices made a definitive move below $82. (matt.chambers@dowjones.com)

  54. 54
    zman Says:

    …and now it needs to hold 81

  55. 55
    Sambone Says:

    Ingrid firing back up. NHC got a new floater on it. Moving slightly NW, but should hold postion for the next few days. Shear dropping. Watching 93L.
    http://www.ssd.noaa.gov/goes/east/tatl/loop-rb.html

  56. 56
    Sambone Says:

    Fat wave moving off of Africa
    http://www.ssd.noaa.gov/met8/eatl/loop-rb.html

  57. 57
    zman Says:

    Thanks Sambone…Gas traders look nervous. Any change to 93L coming to the GOMEX…they act like they don’t buy it.

  58. 58
    Sambone Says:

    Z – We’ll see in the next 12/24/36 hours. Once again if the center (Nobody can find it at this time) is below mid FL when it gets into the GOMEX, it may have a chance to get going.

  59. 59
    Sambone Says:

    Problem is that it has a cold core and has to go from cold core to warm core which takes time.

  60. 60
    Nicky Says:

    Don’t discount one more pop to the upside in wti. Both Brent and Distillates would look better with another move higher even though wti can count as done.

  61. 61
    rammastr Says:

    ZMAN – ZMAN We are approaching earnings season for some of the energy co’s. Do you have historical game plans that work for specific co’s?

  62. 62
    rammastr Says:

    ZMAN – CHK seems to be weak rel. to its peers. I thought with a pos. market CHK would have taken off.

  63. 63
    Sambone Says:

    COP evacuates non esential workers from platforms in GOMEX

  64. 64
    zman Says:

    Ram – I take earnings season on a case by case basis. Most of the companies I care about don’t report until close to the end of October so it’s a little early to worry about it just yet

    CHK just trading noise, off 30 cents. It’s gone from 31 to 35 with the rally in gas since 8/30 and now gas is coming in a bit and it’s off 30 cents. I’m long it for winter and beyond, not for day to day dribs and drabs.

    Did you get out of the EOG?

  65. 65
    zman Says:

    Thanks Sambone, that’ll probably kill the gas trade but I’m going to watch it a little longer.

  66. 66
    rammastr Says:

    ZMAN – #44.

  67. 67
    zman Says:

    Your welcome. I’m generally not as short term as that and I think not as short term as you seem to be. Unless its a big move, I tend not to focus on the daily so much. A good lesson I learned is to only look at the minute charts when doing a trade. That’s not a rebuke, you just seem very frustrated.

    Nat gas not exactly cracking high on the COP evacs….kind of surprising.

  68. 68
    zman Says:

    Natural gas putting new lows on the day.

    Nicky, got any levels for the gang?

  69. 69
    rammastr Says:

    No frustrations. Just like to be on the right side of any trade, short or long.

  70. 70
    Nicky Says:

    Z – nat gas support is 6.168 and then 6.000. Not much then until previous lows.

    Resistance is at 6.315.

    Just watching distillates which is all over the place!

  71. 71
    Nicky Says:

    As you say nat gas taking no notice of 93L. I find it hard to believe that won’t change before the weekend.

  72. 72
    zman Says:

    Ram – Ok – no frustration. I’ll tell you that I’m not always on the right side of the trade. They’re not all going to work. I look at every trade from the perspective of “this is the first trade in the next 1000 trades I’m going to do (this year). Anyway, you seemed pissed, guess I misread it.

    NG is simply tanking now at $6.20, down .37

    Thanks Nicky….touched you low and bounced.

  73. 73
    zman Says:

    Nicky – hear ya, change before weekend a good possibility, pretty close to backing off my NG trade but it looks lower to me

  74. 74
    zman Says:

    wow, nat gas volume is massive!

  75. 75
    zman Says:

    COP says no impact on production from evacs at this time.

  76. 76
    Nicky Says:

    RBOB remarkably strong and I am not sure why.

  77. 77
    Denise Says:

    Saw that the Canadian Trusts are going to be subject to more taxes in Alberta-does anyone think this should any net effect on ng price or drilling here in the U.S.?

  78. 78
    Sambone Says:

    Z – Did you see Phil Davis’s article from yesterday about “Oil Scam”?
    http://seekingalpha.com/article/47541-the-oil-scam-driving-crude-over-80

  79. 79
    zman Says:

    Nicky – probably just the utilization number dipping below 90%. Stocks would have lent themselves to a down RBOB market today.

    Denise…saw that and good thought. Negative for an already negative environment up there. Probably bad for a certain massive land driller (NBR) with US and Can rigs. Many have resisted moving them south of the border, instead moving a few but warm stacking quite a few. If they come down here you could see land rates come further off than is now expected.

  80. 80
    Nicky Says:

    spx coming off fast now.

  81. 81
    Sambone Says:

    D – I don’t see any effect here in the US.

  82. 82
    zman Says:

    Sambone – I did but I didn’t read it yet. Anything interesting aside from the usual.

  83. 83
    zman Says:

    EOG flat … that WAS a risky trade.

  84. 84
    Nicky Says:

    They don’t look ready to give up on wti or distillates just yet. WTI could finish positive….. again

  85. 85
    Sambone Says:

    Z – Black helicopters. I’m guessing he was short crude.

  86. 86
    zman Says:

    …he’s pretty much a perma-oil-bear

  87. 87
    Nicky Says:

    Distillates now positive – the insanity continues.

  88. 88
    zman Says:

    Nicky – its just an end of day and quite obvious pump to save the chart and 82. I think it goes lower.

    Notice nat gas didn’t buy into it?

  89. 89
    zman Says:

    headline just came across:

    heating oil futures hit new record high

  90. 90
    Nicky Says:

    well thats not true..

  91. 91
    zman Says:

    I just scrolled it back to check.

    It’s a DJ headline: heating oil hits new record high $2.2467/gal

    It’s a record for this contract, no?

  92. 92
    zman Says:

    Oil off 20 cents from the close

  93. 93
    calvino Says:

    Denise,

    what did you hear about the Alberta taxes?

  94. 94
    Nicky Says:

    was much higher overnight

  95. 95
    zman Says:

    Cal:

    http://www.upstreamonline.com/live/article140873.ece

    Nicky, I just meant since today’s close or at least at the last second. It was 82 and then in a flash 81.80, when electronic opens it may go lower.

  96. 96
    calvino Says:

    Z – thanks for that link. A 20% increase in royalties, now I know whence the scarlet screen. Methinks the shareprices do protest too much here.

  97. 97
    zman Says:

    L93, the phantom, not pumping NG in after market either, now 6.14, down .43, 6.5%

  98. 98
    zman Says:

    CAL – now that I know you care about them I’ll keep my somewhat glazed morning eyes peeled for big pix news on them. I thought about it this am but instead got a cup of coffee.

  99. 99
    zman Says:

    Nicky – oh you meant HO, right higher over night, they should have said CLOSING high.

  100. 100
    zman Says:

    Somebody smart figure this out, wheres Brian. Nat gas off almost 7%, UNG down just under 4%. If gas opens flat in the morning is there a mark to market arb opportunity in the ETF vs the underlying. I know it’s not a perfect track but that seems like a big spread.

  101. 101
    zman Says:

    NG at $6.10

  102. 102
    Denise Says:

    Calvino
    A proposal is being made for taxes to go to 33% from 25% acording to the Bk of Montreal
    Oil sands could be hit the hardest could go from 47% to 64%.

  103. 103
    calvino Says:

    Z – thanks. I thought i gave myself away already babbling about harvest, advantage.. the usuals.

  104. 104
    Sambone Says:

    Nymex Crude Pares Early Gains; Heating Oil Falls

    By Matt Chambers and Renya Peng
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures fell from a record intraday high Wednesday as heating oil prices headed lower on a build in distillate stockpiles and as traders locked in gains after crude’s steep run-up in prices.

    Crude ran as high as $82.51 a barrel, a new intraday record for a front-month contract, after the U.S. Department of Energy said crude stockpiles fell last week by more than expected, but slipped back to near Tuesday’s settlement as traders mulled both the weekly inventory report and the recent run-up in crude prices.

    The front-month October light, sweet crude contract on the New York Mercantile Exchange was recently down 20 cents, or 0.2% at $81.31 a barrel. Brent crude on the ICE Futures U.S. exchange rose 8 cents to $77.67 a barrel.

    The U.S. Department of Energy said crude stockpiles fell by 3.8 million barrels to 318.8 million barrels last week, compared with analysts’ expectations of a 1.5 million-barrel fall. The draw is the 10th in 11 weeks and means stocks have fallen 10% in that period.

    Also in the data, which is put out by the DOE’s Energy Information Administration unit, gasoline stockpiles rose by 400,000 barrels, compared with expectations for a 1.3 million barrel fall and distillates, which include heating oil and diesel fuel, rose 1.5 million barrels, beating expectations for a 1.1 million barrel gain.

    “We’re seeing some profit taking — the crude draw was bigger than expected, but fairly in line with what you’ll normally see this time of year, so the speculative funds are taking money off the table” after a big recent run-up, said Brad Samples, an analyst at Summit Energy in Louisville, Ky. “We got a nice build in distillates too, which is bringing heating oil down” from record prices ahead of the Northern Hemisphere winter.

    Front-month October reformulated gasoline blendstock, or RBOB, rose 94 points, or 0.5%, to $2.0697 a gallon. October heating oil fell 2.18 cents, or 1%, to $2.2205 a gallon.

    Positive expectations for energy demand after the Federal Reserve cut rates by 50 basis points Tuesday and concerns that storms could develop into hurricanes in the Gulf of Mexico and threaten oil production supported prices near their record settlement level.

    Prices rose to a record settlement Tuesday after the Federal Reserve cut rates more than expected, capping a 18% gain in crude in the past four weeks. Prices have risen largely on expectations of tight supplies going into winter, hurricane concerns and a weakening dollar.

    The steep run-up in prices leads many to believe that prices have gone to far, too quickly.

    “I think the crude oil market is overvalued by approximately $15 per barrel,” said Tim Evans, an analyst at Citigroup in New York. “I see a considerable risk that prices will fall over the intermediate term. They may go higher first, but the market is already overvalued in a significant degree.”

    The National Hurricane Center said a disturbance off the coast of Florida that is likely to move into the Gulf of Mexico could develop into a hurricane in the next day or two.

    BP PLC (BP) and Chevron Corp. (CVX) both said they were evacuating non-essential staff from the U.S. Gulf of Mexico because of the potential development of Tropical Disturbance 50. Royal Dutch Shell PLC (RDSA) said Tuesday it had evacuated about 300 non-essential personnel from its operations in the area.

    —By Matt Chambers, Dow Jones Newswires

  105. 105
    zman Says:

    Wow – Tim Evans with the $15 crude drop call. Gutsy move Mav!

  106. 106
    Sambone Says:

    Cal – COSWF down 5% on news.

  107. 107
    zman Says:

    OII moving up with the storm fears, same CAM and FTI

  108. 108
    zman Says:

    OII – I bet it’s the Cramer play of the day for Hurricane’s tonight! He said it was his favorite hurricane play the other day.

  109. 109
    zman Says:

    Sambone – what do you think on L93. It now looks to me like it’ll cross, any reason why it wouldn’t? Anything moving down from the SE that would block it? It kind of looks like a front is flattening the northwest corner of it.

  110. 110
    QUARRYMAN Says:

    Z.

    I tuned into the radio show. Never heard y’all (youse for Phil) before, good to hear your voice.

    I bought some VLO Sep 70 puts at .60.

    WOW, nice day trade. I’m wondering if I should close it and run or take 1/2 and wait for VLO to go lower.

    any stream of consciousness? [not guidance:)]

    “Safety Pays”

    P.S.- did you get me NG quip from yesterday?

  111. 111
    zman Says:

    Q – Thanks, they started talking about GOOG and RMBS and I went back to work. We usually stick to oil.

    Nice on the VLO Sept is pretty sketchy with 2 days to go. I’ve been punting stuff I like in my direction just for its lack of time value all week. VLO is my favorite from a fundamental standpoint long. How do you not take good profits off the table with the possibility that a hurricane could come across floria and threaten the GC by the weekend?

    Right NG = nitro. But if I said CH4 nobody would know what I was talking about, lol.

  112. 112
    zman Says:

    Q – I’m trying to decide whether or not to punt on my NG short before the close so I’m sort of in the same boat.

  113. 113
    zman Says:

    Sambone, any chance it gets split with the big chunk running up the east coast?

  114. 114
    zman Says:

    OII running, makes a nice hedge for the UNG puts which I think, in Sambone’s silence, I’ll hold through the night.

  115. 115
    calvino Says:

    Sam – COSWF – big surprise there, the hedgies favorite play and therefor the first summertime friend to be dumped. It scares me to think what they will do to PBR if we get the 15 drop!

  116. 116
    Sambone Says:

    Z – 93L, Moving west at the moment. Remember cold core to warm core takes longer. http://www.ssd.noaa.gov/goes/flt/t1/loop-rb.html

  117. 117
    Sambone Says:

    Z – Had a meeting

    Cal – Yea, COSWF, with the trust tax thing from Halloween to now this Royalty thing, kinda reminds me of Venezuela’s tax structure.

  118. 118
    calvino Says:

    Yea, you would think Alberta would have the brains not to drive the last two drills out of the province. Charge all the friggin royalties you want at 8, but now?? That’s why they are in politics.

  119. 119
    Sambone Says:

    Z – Hold until tommorow is my advice. This thing may be nothing.

  120. 120
    redjack Says:

    If oil retreats, buying OXY Oct 65 puts would make a good trade. OXY and oil move together.

  121. 121
    Sambone Says:

    Cal – COSWF came off it’s low today, down only 3.85%. SU down more.

  122. 122
    zman Says:

    Sambone – thanks. I take a portfolio approach to all my trades any. I may get whacked on UNG and make a killing on OII for the same event! I very much appreciate the input.

    Redjack – true, not a bad call. Did you see the EOG, moves with oil, up 40cents at the close with oil up and nat gas down and they sell mostly gas.

    Should there be a “Chavez Moves To Alberta Watch” tomorrow?

  123. 123
    TTupp Says:

    yea alberta’s economy might be in trouble now that they lost their super right winged Premier (governor), Ralph Klein….

  124. 124
    QUARRYMAN Says:

    [from AccuWeatherPro] Bastardi says:

    As for the system over Florida, my disagreement is with the U.S. model taking it too far north too early. A deepening hurricane hitting New Orleans from the angle forecast here is a major test of the levies. The 1947 hurricane, which had been a Category 5 and was cut down to a 1 after crossing Florida, causes as much water to come back into New Orleans as Katrina. Remember, Katrina was not the perfect track for them. A global model showing the development the way these are should be alarming people, as they aren’t suppose to see tropical developments, but that is no day at the beach. Unlike ’47, and more like a Katrina, this will be DEVELOPING coming off Florida, not in a weakened state with its core carved out. We all know my fear this year, development till landfall. The 6z GFS drives a 986 mb 70-knot storm right in the worst angle possible ..just like 1947, but again my idea spares New Orleans this pain as the model has these herky jerky motions on it and I like what the laser-guided Euro has been doing as far as the more southerly track. I still have a model agreeing with me.

  125. 125
    QUARRYMAN Says:

    He gets a little wordy and Engfishy, BUT, Bastardi has a following and can push a lot of early ‘fear buttons’ on people who influence the oil markets.

    “SAFETY PAYS”

  126. 126
    zman Says:

    Q – he has a huge following, he’s the meteorological equivalent of a rock star and he loves to talk about stocks

  127. 127
    RickWI Says:

    There is no reason to believe that 93L won’t enter the Gulf but so far doesn’t look like it will be a major hurricane.

  128. 128
    QUARRYMAN Says:

    So,

    If Bastardi is right, then what’s the scenario to the market?

    Does it effect gasoline refiners more or natural gas producers? Is it negative to oil service cos?

    to complex for ‘Qman’sRockBrain’ ! 🙂

    “SAFETY PAYS”

  129. 129
    RickWI Says:

    There shall be no comment by me on Calamity Joe other than……..well nevermind.

    Zman, I would not classify Bastardi as any rock start. Even a broken clock is right twice a day is how I’d classify Joe’s forecasts.

  130. 130
    RickWI Says:

    Furthermore, if you traded off of Joe’s daily “what ifs” you’d be broke.

  131. 131
    QUARRYMAN Says:

    Interesting Rick,

    What meteorologist do you monitor?

  132. 132
    zman Says:

    Morning Q – NG still not too worried about the GOMEX storm, most of the tracks show it hugging the coast from Florida to NOLA. Gas off another 0.09 to 6.09, been as low as 6.05 overnight.

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