20
Sep

Thursday – L93, Gas Inventories + Plays In China And Canada

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Commodity Watch:
 
  • Crude Closed Up $0.43 to $81.93 on a last minute push for $82. It's up another 30 or so cents early. Weak dollar plus tightness concerns. I still think this cools in the next week or so back into the mid $70s.
  • Natural Gas Tumbled $0.39 to $6.18 yesterday. It's off a nickel to a dime this morning as L93 so far looks to be a pretty benign disturbance. That could change quickly. See Tropics Watch below for more. Gas will have some round number support at $6 but if we break that I think we could be in for a dip to around $5.80. Storage takes a back seat to the weather today but an   injection over 75 Bcf would like cause a $6 test. 
 
In Today's Post
 
A) Natural Gas Thoughts  
 
B) Tropics Watch
 
C) Stocks We Care About Today: China
 
D) Crude Oil Inventory Report Review - another mixed bag
 
E) Holdings Watch -  took more September profits yesterday
 
F) Odds & Ends 
 
Natural Gas Storage In The Spotlight:
  • The Street: 60 to 70 Bcf Injection. They've been pretty dead on of late.
  • My Number: 75 Bcf. How's that for wishy washy? No really, that's what I'm thinking and it will drive us into a small YoY storage deficit but honestly what happens with L93 (see next Tropics watch) is much more important for gas prices right now unless it fails to strengthen.
    • Cooling degree days tumbled from 69 in the preceding week to 45 for this reporting period. That's more like it for the shoulder season
    • Imports were off by about 1 Bcfgpd week to week.

With the above factors in mind I'd say the over under for gas is probably 65 Bcf with a smaller number yielding a rally. I think the chance of a number than last week's is unlikely given the amount of demand sapping rainfall and the cool snap we experienced during the period. The impact of a pipeline snafu in the Rockies however could trump the ability of producers to get gas into storage and could potentially put a cap on this week's number close to my level. 

Tropics Watch: L93. BP, Shell, COP, TOT, RIG and more have announced they are pulling some non-essential workers off platforms in the eastern GOMEX. It's a strange one and so far it has not affected gas prices in the slightest but that could change at the blink of a weather report. Eleven out of of 14 tracks have it headed in the general vicinity of NOLA and about half of them are predict it will be weak and stay close to shore. Rainfall estimates have been reduced in the last 12 hours and the expected intensity of the storm now points to only a TS or strong TD. Despite the evacuations, GOMEX oil and gas production remains the same. 
 

 
Stocks and Stuff We Care About Today:
 
  • What Goes Up Watch : Chinese Oils: PTR, SNP Between A Rock And A Hard Place. These stocks have been on fire with oil prices. Despite the rise in prices Beijing is keeping oil products prices flat with levels last altered in January (at that was to drop them) in an attempt to curb rampant inflation.

    • The statement on the National Development and Reform Commission: The Chinese Government won't allow any new price changes for the rest of the year. "Any unauthorized price rise is strictly forbidden." Comment: One giant leap backwards for Chinese Capitalism.
    • According to Dow Jones, China has not allowed any increases in retail gas prices in 16 months. SNP said they are expecting cracks of -$5.00 in 3q07, down from a loss of $0.40 per barrel in the second quarter. 
    • PTR represents about 40% of China's refining capacity, SNP is slightly larger so the two together make up the lions share of mainland China's capacity and as such will bear the brunt of the China's forced losses.
    • The two had increased exports to help offset some of the losses earlier this year (they can sell to foreigners at world prices) but in August China reported domestic shortages were increasing and some imports of gasoline were seen. The Chinese government is increasing pressure on the domestic refiners to keep their product in country and thus forcing them to take the hit. SNP has already said it will not be cutting capacity in the face of the price freeze.
    •  
    • Numbers: Estimates are just starting to fall for (SNP) and (PTR) for the current quarter.

china-multiples-091907.jpg

    • I'll be looking at puts on both companies and I while I would expect them to drop on last night's news I plan to scale in early and small. As you can see from the table above, the rally they've had has been a strong one and that's just over the last month.
    • Buffet announced another slight trimming of his PTR shares in a move related investor/pension fund sentiment towards the company and not (that we know of) due to the recent poor refining performance.
    • (PTR) is planning to offer 4 Billion class A shares.
 
  • Alberta Royalties: the proposal is for increasing after payout royalties from 25% to 33% AND introducing a sliding scale severance tax on bitumen (1% rate when WTI is $40 moving up to 9% when oil is at or above $120). This would kind of take the fun out of owning stocks like (SU), (CNQ), (PCZ), (NXY), (SYN.t), (WTO.t) and even (ECA) and surely puts a damper on development stage outfits like (BQI). Comment: Chavez for prez! Analysts are wasting no time in downgrade several of these names. All of the US listed stocks all carry options, even the little squirt so we'll see if we can do a little target practice after the open.
 
 
Crude Oil Inventory Report Review
 
expected-091907.jpg
 
U.S. Crude Stocks are still 8.5% above the five year average but we are now 2% below year ago levels; expect more easing in inventories. The current price isn't justified by this in my opinion but the coming tightness I laid out in last Thursday's piece, combined with the severely backwardated nature of the 12 month crude strip would suggest that inventories will continue to ease into the higher demand fourth quarter period. 
 
crude-stocks-091907.jpg
 
Days of Crude Supply Dropping As You Would Expect.
 
crude-days-supply-0919.jpg
 

 
Gasoline: I was hoping for something to set the refining stocks on their heals a bit and I got it with this number. Looking to go long again some refining issues next week.
  • Production: Minor Bump Despite Drop In Utilization. People like Flynn will say, "see, utilization is falling, buy gasoline." I say gasoline in storage is low but production is pretty robust for this time of year. Week over week U.S. refineries produced an additional 96,000 bopd despite the drop in production. One reason: higher prices. I think RBOB prices will retreat when crude does creating an opportunity to pick up some refining calls that will bounce once utilization really starts cracking lower and blending can't offset all the maintenance downtime. 
  • Imports were flat last week (very slightly down) at just over a million bpd.
  • Demand: Slipping seasonally. Demand fell by just under a 150,000 bpd week to week and was in line with last year's levels and not running ahead by the 1 to 2.5 YoY gains we saw in early summer.
  • Stocks: Pretty Dire. The EIA's Inventory Chart Speaks For Itself:

gasoline-stocks-091907.jpg

 
Holdings Watch:
 
CALLS:
 
  • (RIG). Sold the last half of the my $105 Calls at$5.40 for a 200% gain. Will revisit this story on the long side soon after we get the first major sell off in broader and/or energy market which I expect to come soon.
  • (TSO)  Sold out of my September $50 calls for $0.60 (a 59% loss) upon seeing the inventory report. Glad I did as they ended the day bid $0.10. 
PUTS:
 
  • (UNG): Yes I'm still holding my UNG $39 puts. If the storm looks like it's going to be a real problem I'll toss them for the loss but natural gas has been backing off exactly like I thought when I entered this trade last Thursday. Besides, if L93 turns into something at least I have a double does of (OII) Calls (September and October) to console my self with.
  • (ESV) picked up the October $55s to add to my existing and somewhat kicked in the head October $50s (hey, there aren't a lot of puts that aren't that were bought pre-Ben's 50 point firesale on US debt). Anyway, instead of double or triple the original position which has gotten well out of the money in the span of 3 days, I set my sights on the next higher strike while still holding the original $50s. I'm fairly confident that between now and the end of the 3rd week of October there will be a day or two where everyone hates energy, can't believe they own it and dump the stocks willy-nilly. That'll be may cue to exit the $50s, even for a loss while the then, assumedly in the money $55s will get me out of the dog house. The reasons for going into the position have not changed and estimates continue to come down...I say it's cheap for a reason.  
Odds & Ends
 
Analyst Watch: (PEIX) cut to underperform and (VSE) to hold at FBR, (SYN) downgraded at RJ, (OCNF) (shipper) to Buy at Opco, (PRGN) initiated at Buy at Cantor. 
 
 
WHAT HAPPENS AT ZMAN'S ENERGY BRAIN STAYS AT ZMAN'S ENERGY BRAIN. If you share my trades you are in direct violation of the terms and conditions of this site and subject to account suspension with refund. I don't mind if you send something to someone on a one time basis but you must ask me first. I'm sure I'll say yes. But there are a lot of reasons why it does not benefit you to share the trades the most important of which is increased competition for trades subscribers might like to make. The bigger the crowd, the harder the fill. Doesn't matter on (XOM) but try getting a fill with a few hundred of your closest friends on (FTO) that trades 300 contracts a day and you'll see what I mean. Finally, this is what I do for a living so "giving it away" to your friends and family is stealing from me and my family. And that's just not cool. If you've got someone who would like the site that's GREAT! I suggest they sign up for month to see if they really like. Free rides are for kids on the short bus, nobody else needs one. Thanks for your attention. By the way, how do I know it happens? Because I was sent an email by a non-subscriber asking me about a trade with a CC of the ZEB Blast from a member. 

209 Responses to “Thursday – L93, Gas Inventories + Plays In China And Canada”

  1. 1
    zman Says:

    NG down 22 to 5.96
    HO off a penny at 2.233
    oil hanging on to slight gain at 82.07

  2. 2
    zman Says:

    NG at 5.89, down 29
    Crude off and below 82

    Smith Barney and Citi upgrades CNQ citing recent sell off which might give a nice entry on a put play. Note to the two analysts, a one day 4 point dip is not a sell off on a stock that is up over 50% ytd

  3. 3
    ejones Says:

    Zman, what kind of impact might this row about the royalty tax hike in Albert have on E&P companies?

    http://www.canada.com/nationalpost/news/story.html?id=6bc99b36-9bce-4bc9-87b0-eb163db931a0&k=48755

  4. 4
    rkbos Says:

    Zman,

    Having no dsl service since fri a.m. (thanks/later earthlink)has made it tough for me to keep up here. the APA oct 80s are only my second pass down the zeb wave – WOAH! are we still holding?

  5. 5
    zman Says:

    e – I look at it from an oil sands standpoint in today’s post as they have a higher cost load to worry about but it’s definitely not good.

  6. 6
    ejones Says:

    I’ll look before I leap next time. Thx.

  7. 7
    zman Says:

    RKbos – yep although I came close to punting yesterday and may today. On the one hand they are Octobers so you’ve got time, on the other hand, they’re up 240% on the bid side in 10 days.

  8. 8
    zman Says:

    E – No, it’s a good thought, the biggest E&P with oil sands and drilling that would be negatively impacted on the list is NXY.

    I’m liking the two upgrades on CNQ as an entry point. Think it’ll pump it early a maybe for a day or two but then negative sentiment takes em all lower. I’ll do a little value work to make sure it’s not ridiculously cheap.

  9. 9
    zman Says:

    NG consensus is now 66 Bcf and the range has spread out to 53 to 75. I’m on the top end of that.

  10. 10
    calvino Says:

    Whoever is sending out your alerts to the hoi polloi should stop – this is diluting the trades of everyone who pays for them. What the heck kind of a trader gives away his trades anyway, or is it after they have entered the position, turning it into a pump? I do not play with options lately, and have not traded off your blasts – however you are tempting me.

    No selling pressure on the canucks that I see yet. Penn West and Harvest are up in the pre-market. The legislation is not a sure thing, although the PM is getting macho and promises not to back down – so something is going to happen, though maybe not at the high end like he wants. Now that I know you are going to be shorting my positions – I better clear out before that train rolls over me! Or maybe I’ll just wait for the dip to wet my beak a little and hit the longs side. I never thought it would come to this between us!

  11. 11
    zman Says:

    So today’s big plays are negative Canada oil sands and negative on China. Both pretty risky but they’ve had a great run.

  12. 12
    Sambone Says:

    3:02 AM EST

    Crude Tad Down, Supported By Supply Concerns

    Dow Jones Newswires

    SINGAPORE — Benchmark crude oil futures prices slipped Thursday in Asian trading, as some traders pocketed profits after prices hit new record highs overnight.

    Yet concerns about tight supply firmly supported prices.

    “This may be just a correction, and those who have opened shorts could have a hard time later,” said Rikio Ishikura, a broker at Fimat Japan.

    At 0635 GMT, the October crude oil futures contract on the New York Mercantile Exchange was down 3 cents a barrel to $81.90 a barrel.

    October Nymex heating oil lost 40 points to trade at 224.13 a gallon, while October Nymex gasoline was up 42 points at 209.76 a gallon.

    The November contract for Brent crude on London’s ICE exchange fell 27 cents a barrel to $78.20 a barrel.

    Crude oil prices in New York settled at a new record high overnight after U.S. government data showed crude stockpiles last week fell by more than expected.

    The U.S. Department of Energy said crude stockpiles fell by 3.8 million barrels to 318.8 million barrels last week, larger than analysts’ expectations of a 1.5-million-barrel fall.

    It was the 10th fall in 11 weeks for U.S. crude stocks, which have declined 10% during the period, according to DOE figures. Stockpiles at Cushing, Oklahoma, the delivery point for Nymex crude futures, fell 1.7 million barrels to 18.3 million barrels, the lowest level since December 2005.

    Eyes were also on the possible formation of another hurricane near the U.S., which could lead to production outages and push up oil prices.

    The National Hurricane Center said Wednesday that a disturbance off Florida that is likely to move into the Gulf of Mexico could develop into a hurricane.

    If this doesn’t lead to a substantial output disruption, oil prices may undergo corrections in the near term.

    “Our feeling is that the market is particularly vulnerable to a significant price correction if the weather risk begins to fade again,” analysts at MF Global said in a daily note to clients.

    —By Jun Yang, Dow Jones Newswires

  13. 13
    calvino Says:

    Forgot – the loon is parity now.

  14. 14
    Sambone Says:

    Z – BQI is in Saskatchewan, not Alberta. So IF the Alberta pushes through the tax/royalty increase, more investment would go to Saskatchewan. They want the production, because they are alot poorer.

  15. 15
    zman Says:

    Thanks Sambone…see what a little bit of knowledge will get you? trouble.

  16. 16
    calvino Says:

    If I was going to play the sands short, i’d hedge a bit in with a diversified producer. Also Energy Alberta put in for two uranium reactor permit today, ostensibly to heat the gunk. 2007 and we are still building out nukes and gunk – I never would have thought.

  17. 17
    zman Says:

    I’m looking at the big 4 right now:
    SU, CNQ, PCZ, ECA

    PCZ press releasing an increase in working interest to one of its Alberta projects today.

  18. 18
    calvino Says:

    True, there are several names with sizable Saska production, which is tilted toward black gup anyway, rather than gassy. Alberta just helped BC and Saska.

  19. 19
    Denise Says:

    Been thinking about Canada-I am a novice but aren’t a lot of these trusts held by yield loving retiree’s? After the halloween surprise the move out continued for some time. Also wouldn’t it benfit our domestic energy reit’s?
    Also at the margin another support for Ng?
    Any thoughts anyone?

  20. 20
    zman Says:

    SU and CNQ seem to be the two big standouts on tall valuations here and analysts are looking for something like 10% haircuts to forward earnings.

  21. 21
    calvino Says:

    Tar is $40 to recover. What made the tar merchants so inviting was that hedgies decided to play musical chairs and pile in. You know what happens to the last one out – since you can get in with lower valuations with people whose recovery costs are half.

  22. 22
    zman Says:

    PTR –
    They’re offering another 4 Billion shares

    Buffett continues to ease off his load.

    Estimates are falling

    Refining margins there stink

    They’re up 30% in as many days

    They’re rallying again this morning on oil

  23. 23
    calvino Says:

    Whoa – this is the sort of moves one sees in equity – 1.5% in one day for the loon!!!

  24. 24
    zman Says:

    Denise – Definitely yes to your first and third questions? I’m not sure how much of an impact as far as your second but potential the MLPs and Royalty Trusts like SJT would benefit some but more I think from gas price support than from a shift of investors from north to south of the border. Just my 2 cents.

    NG retook 6 for a moment.

  25. 25
    calvino Says:

    Didn’t the Chicoms just extend their price controls on gasoline and clamp down on exports?

  26. 26
    zman Says:

    Cal – that’s what I wrote about in the post. Does anyone read the post?

  27. 27
    sane Says:

    I do

  28. 28
    zman Says:

    just kidding Cal but I had a whole section on the chicoms today,.

  29. 29
    sane Says:

    Cal, I also saw that Energy Alberta filed permits for 2 reactors.
    If they do go through with it, it could lower operating costs for tars who would be hooked into the loop.

  30. 30
    zman Says:

    PTR and SNP oblivious to the price controls story, run with up oil. Watching but both opening up about $3

  31. 31
    zman Says:

    Sane – in 6 to 10 years

  32. 32
    Denise Says:

    Any thoughts on oil if the Saudis stop using the dollar as their peg?

  33. 33
    sane Says:

    Yeah not a short timeframe, but if they see steam is readily available for cheaper than nat generated steam, it might spur some more development of the sands which usually takes time.

  34. 34
    Sambone Says:

    Bloomberg – “Saudi Arabia may drop its currency’s link to the dollar”

    http://www.bloomberg.com/apps/news?pid=20601083&sid=akxbUYV16uVw&refer=currency

  35. 35
    zman Says:

    Denise – it’s been threatened for a long time and would take time but it’s well known OPEC has been casting off dollars for a long time now.

    Venezuela says it just went to the Euro.

    Don’t really know how to think about but I think it will take a long time to accomplish. Did you see a new story?

  36. 36
    zman Says:

    Sane – why don’t they go geothermal? Just too much needed? Go down 12,000 feet in lots of places and you’ve got hot rocks. Water in one well bore, steam out the adjacent

  37. 37
    zman Says:

    Thanks for the link Sambone, that story screams inflation to me.

  38. 38
    Sambone Says:

    Off subject – Is anybody seen what the 10 year Treas is doing today? Wow!

  39. 39
    zman Says:

    the thirty year is off 0.82%, wow

  40. 40
    sane Says:

    Z, I completely agree about the geothermal, but I think that it has more to do with the temperature of the steam. Most geothermal is about 300F ( Unless you are in a geo hotspot ) whereas nuclear can run 700F or higher. I am a big supporter of geothermal, especially for electricity generation

  41. 41
    zman Says:

    Sane – ok, right hot but not hot enough unless you happen to be on a thin spot.

    Given well costs though there is no reason we don’t produce electricity en masse via closed loop systems. Talk about green. And the earth quakes it causes, very small. Seriously, there are some “kooks” out there working on this and I hope they get it working.

  42. 42
    sane Says:

    Yeah it is like drilling an oil well with a 50 year life. Seems kinda tarded there is not more of a push for it.

  43. 43
    zman Says:

    TRADE: Put this one in the super risky category. SEPT PTR $155 puts for $0.45. This is a funny money only trade, based on the fundamental message in today’s post regarding price controls and other PTR news and my gut. Very small. I will likely lose all my dough on this one.

  44. 44
    sane Says:

    I think the big setback is the closed loop system on a large scale. Putting a large enough U-tube 12000 feet down is kinda tough, but doable.

  45. 45
    Denise Says:

    z-For the first time they did not lower their rates in lockstep with ours.
    Some (pretty smartpeople)are saying they will join other Middle East countries like Kuwait and that this is a sign.

  46. 46
    Denise Says:

    z-ptr is restricted-might be kind of crowded

  47. 47
    calvino Says:

    Sane correct -geothermal not warm enough. It could be done with CSP and wind – if the desire was there. That would be a fiscal policy initiative, and we are in the throes of the monetarists now. The greenback says thanks monetarists.

  48. 48
    zman Says:

    Denise: restricted from mainlanders? sorry don’t follow.

    Geo thermal – saw a professor on the science channel who’s done some test down to 15 that work well, problem with funding though. Could be a quack.

  49. 49
    Sambone Says:

    Denise – If Petro countries delink, run, don’t walk from US dollars. Gold, FXE, FXF, ect.

  50. 50
    zman Says:

    This doesn’t look that bad when you look at the rain totals and the intensity and the tracks. All point to no damage to facilities, maybe a quick shut in or two but not really targeting the heart of production if it does go to NOLA. Winds not strong enough to damage much aside from dingy at this forecast.

    http://www.crownweather.com/tropical.html#93L

  51. 51
    zman Says:

    Sambone – you long the GLD?

  52. 52
    sane Says:

    Sambone,

    Yeah then big ben will have to really ramp up rates.

  53. 53
    calvino Says:

    I am not long gold, however I do have an interest in ‘black gold’

  54. 54
    zman Says:

    I sold my black gold interest back in July (kick, kick, kick)

  55. 55
    calvino Says:

    I like your trading focus, which keeps me from macroeconomic flights of fancy – however, would the future possibly be priced in energy units?

  56. 56
    calvino Says:

    Yea, I sold Southern Pacific in the spring myself – and then took a running kick at a fire hydrant.

  57. 57
    zman Says:

    Cal – I try for a balance of both hence the company specific reports but I have been feeling a little trady of late, šŸ˜‰

    future priced in energy units or water

  58. 58
    Sambone Says:

    Long GLD, FXF, SKF (Getting my head handed to me), SJH, FXE for hedges.

    This really scares me today.
    http://www.telegraph.co.uk/money/main.jhtml;jsessionid=4QWAEP3LANZTLQFIQMGCFFWAVCBQUIV0?xml=/money/2007/09/19/bcnsaudi119.xml

  59. 59
    zman Says:

    OT: anyone use any particular brand of flat panel swing arm they like?

  60. 60
    Denver Says:

    Nice call on ESV yesterday Z

  61. 61
    calvino Says:

    Keep with the trady stuff – your heating oil call would get you your own desk at a trading house. BPG may be becoming interesting – I like the acreage – in case gas will ever be worth anything in the future

  62. 62
    zman Says:

    Sambone – that does have a very high pucker factor. If Nicky weren’t playing tennis I’m sure she’d be echoing our comments from Tuesday: they’re going to regret that cut.

  63. 63
    calvino Says:

    This is ridiculous – hula Hank is on TV encouraging all taxpayers to call their lender before they default. Why don’t you go to the chicoms with your hand out again Hula, since you outsourced a couple of million jobs there with your pals

  64. 64
    Sambone Says:

    10:14 AM EST

    Nymex Crude Pauses After Record Run-Up; Oct Expiry

    By ANNA RAFF
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil’s latest run-up to record highs took a pause Thursday, but any correction is expected to be short-lived and shallow due to the belief that fourth-quarter demand will further strain tight petroleum supplies.

    Light, sweet crude for October delivery was steady in early New York trade ahead of its expiry later in the day. The contract recently was 12 cents higher at $82.05 a barrel. The November contract was 21 cents lower at $80.64 on the New York Mercantile Exchange.

    Crude oil has finished at all-time record highs for three days in a row after decisively breaching $80 a barrel for the first time last week. A confluence of factors have contributed to the price surge. Last week’s meeting of the Organization of Petroleum Exporting Countries refocused the market’s attention on global supplies, which show no signs of slacking. U.S. inventories of crude oil and gasoline are declining, and stockpiles of heating oil are 13% below the five-year average ahead of the winter heating season. And storm activity has picked up in the Atlantic and Gulf of Mexico late into hurricane season, creating a persistent threat to energy infrastructure.

    The Nymex heating oil contract has hit record highs together with crude, but showed signs of softening Thursday. Nymex October heating oil was recently trading 93 points lower at $2.236 a gallon.

    “Everything is a little bit soft today,” said Addison Armstrong, an analyst with TFS Energy Brokers in Stamford, Conn.

    A disorganized system of thundershowers moving over Florida “doesn’t look like it’ll change much and won’t impact prices today,” Armstrong said. “We are going to have some pressure because of expiration of the October crude contract, and products weaker.”

    While heating oil and crude rose partly on expectations of a cold winter that would drive demand, prices may reverse course in the midterm if traders pay heed to the latest weather forecasts. Most of the U.S. will likely see above-normal temperatures in October through December, the National Oceanic and Atmospheric Administration said Thursday.

    NOAA’s monthly update noted “increased change of above-normal temperatures over most of the United States. The only exceptions are along the Canadian border from Montana westward and in the Southeast along the South Atlantic coast,” NOAA said.

    If other forecasts for a warmer-than-normal winter follow, it could weaken crude further, but the market feels confident in a solid floor of $74-$76 a barrel, said an energy trader, who spoke on the condition of anonymity.

    “The market rose too sharp, too fast with too little information,” the trader said. “There’s pressure to correct.”

    Nymex October gasoline is trading 66 points higher at $2.100 a gallon. Interest in the contract has waned because the U.S. peak driving season has already passed.

    —By Anna Raff, Dow Jones Newswires

  65. 65
    zman Says:

    Denver – almost makes up for the $50s I still hold but thanks.

    Cal – I’m going to use that quote in the marketing packet, lol.

  66. 66
    QUARRYMAN Says:

    Z.

    What’s your exit limit on the PTR spec

  67. 67
    Nicky Says:

    Morning all (just back from tennis Z! and catching up with the thread). #58 Samborne – that is very very frightening. Way to go Ben!! FWIW Dollar index should go to 40 over the next few years!!!!!!!

  68. 68
    Denise Says:

    z-ptr no shares available to borrow for shorting-

  69. 69
    Nicky Says:

    Note October WTI is up but November down.

  70. 70
    zman Says:

    Thanks Sambone, that NOAA forecast would lead me to think gas will be stuck in the $5.50 to $6.50 for awhile.

    Q downside to 0 as its a bet. Upside, I’ll be happy with 25%+. Problem is oil won’t fall with the dollar getting car jacked on a daily basis. Maybe it will if people start listening to Greenspan’s consumer spending comments and that NOAA forecast which would loosen the expected tightness. Of course, it’s a 2 day bet so they have to wake up to reality pretty quick for me.

  71. 71
    zman Says:

    63 Bcf in line gas is down 12 at 6.05 at report

  72. 72
    Sambone Says:

    Nicky’s buddy, PF

    http://www.321energy.com/reports/flynn/current.html

  73. 73
    zman Says:

    Denise: I just do puts. Like to know that all I can lose is 100%. Although in the case of a $150 stock I guess you’d have to be in a coma to lose more than that.

    Gas looks disappointed with the number, that’s odd but ok with my UNG puts. Gas 6.025

    Morning Nicky!

  74. 74
    zman Says:

    NG starting to rally, down 9 cents now

  75. 75
    calvino Says:

    tsx – nyse crosslisted shares now trading at parity – no more arbing that spread. it’s a strange sight on the screen though and has me confused.. don’t know which one is what.

  76. 76
    Nicky Says:

    Distillates and Brent as mentioned yesterday looked in need of one more leg up and so far we are not getting it! We are however getting another leg up in wti – both October and November now. It needs to go above 81.19 November and 82.50 in October and we haven’t quite made it yet.

  77. 77
    Sambone Says:

    BP, COP, Shell shutting production in the GOMEX

  78. 78
    Nicky Says:

    Nat gas – looks to have completed iii of i of iii. So we are most likely in a iv retracement. Resistance is at 6.165, 6.256.

  79. 79
    zman Says:

    Cal – LOL, very weird, kind of like when we went from fractions to decimals, messed me up for weeks.

    Thanks Sambone, looks like shell is biggest as they’re shutting in ALL GOMEX, 370,000 boepd.

  80. 80
    zman Says:

    Nicky, sorry if it’s a repeat ? from yesterday but what if we get through $6

  81. 81
    calvino Says:

    I hope that turns my screen of red another color

  82. 82
    calvino Says:

    The fundamentals of our economy is strong, unemployment is low and the corporate sector looks like its in good shape – spoke the armadillo who never met a fiscal policy he did not hate.

  83. 83
    Nicky Says:

    Samborne – just get our tropical update on tv and all the computer models show this L93 staying east of New Orleans and pretty close to land. If that is the case there will be little impact on the rigs. Any thoughts?

  84. 84
    Nicky Says:

    Z – nat gas has traded as low as 5873 this morning. Needs another leg below this to finish i down. Until then it cannot be counted as impulsive and confirm the bearish case. At the moment we appear to be tracing out a small correction which is iv of i of iii.

    Clear as mud I know!

  85. 85
    zman Says:

    Well, OII seems to like this potential storm.

  86. 86
    zman Says:

    Nicky, no it’s helpful. Thanks.

  87. 87
    calvino Says:

    green popping through, looks like a turn on the screen

  88. 88
    Sambone Says:

    N – Currently I just don’t think this system is going to do anything to the platforms, but remember Humberto.

  89. 89
    Sambone Says:

    Here is a rather large file on the platform locations in the GOMEX for future use.
    http://www.gomr.mms.gov/homepg/lsesale/Visual1.pdf

  90. 90
    zman Says:

    NG slipping back down through $6

  91. 91
    Sambone Says:

    APC just shut down

  92. 92
    zman Says:

    thanks, that’s another 145,000 boe pd. If I didn’t know better (LOL) I’d think the headlines were designed to rally prices. The APC one specifically mentioned their new Independence Hub, as if ALL production didn’t tell you that.

    I guess they’ve started calling L93, tropical disturbance 50 now.

  93. 93
    rammastr Says:

    ZMAN – PTR SEPT 155 PUTS – you wild man. Sounds good!

  94. 94
    zman Says:

    Ram – THOSE AREN’T FOR YOU!

  95. 95
    rammastr Says:

    O.K.

  96. 96
    zman Says:

    It looks to me like natural gas traders are looking through this minor disturbance and focusing on that warm 4Q weather forecast. Gas breaking down through 6 yet again.

  97. 97
    zman Says:

    Bush says has no knowledge of Hunt Oil Deal with Iraq.

    http://www.upi.com/International_Security/Energy/Briefing/2007/09/19/kucinich_wants_inquiry_into_hunt_iraq_oil/1707/

  98. 98
    calvino Says:

    canada tanking..

  99. 99
    Webloner Says:

    What the hell is going on in Canada I got two plays ENT and PDS and they sank like it was wet sand.

  100. 100
    Sambone Says:

    12:12 PM EST

    Nymex Nov Crude Goes Positive; Storm In Background

    DOW JONES NEWSWIRES
    From MARKET TALK:
    [Dow Jones] Nymex crude is choppy and the second month is strengthening a bit as weather forecasts call for the disturbance to the west of Florida to stay over water for longer than originally expected. The longer a storm stays over warm water, the more likely it is to attain tropical storm or hurricane strength. The system “will not likely be important,” says Tim Evans of Citigroup. “We have seen some production shut in for precaution but it will not become a major storm. I don’t think the oil market is particularly focused on the storm. It’s a background story.” Nymex Oct crude, which expires Thu, +46c at $82.38/bbl. Nov turns positive, now +3c at $80.88. (anna.raff@dowjones.com)

    Reported earlier:

  101. 101
    Sambone Says:

    ENT stopped paying.

  102. 102
    zman Says:

    Cal and WL – right and the US is acting like business as usually. Could it be Canadian products won’t sell so well with their dollar strength?

  103. 103
    zman Says:

    Nat gas off 2.4%, UNG off 0.2%. I think I’ll just stick to the futures as this would have been a killer trade in that arena.

  104. 104
    Sambone Says:

    Z – You watching the bond mkt? Not sure I’ve seen this type of swing. Have you?

  105. 105
    zman Says:

    No…and No but I don’t watch it that closely, doesn’t it do this every time a fed chairman testifies? šŸ˜‰

  106. 106
    rkbos Says:

    webloner,

    re #99,you may have alerady read of/knew this –

    from Rigzone:

    Panel Calls for Oil Sands Royalties Hike

    http://www.rigzone.com/news/article.asp?a_id=50382

  107. 107
    zman Says:

    Scenario one keeping gas just over 6

    http://www.accuweather.com/news-story.asp?partner=accuweather&traveler=0&article=2

  108. 108
    zman Says:

    Sambone – you see that blob down by Honduras?

  109. 109
    Nicky Says:

    It seems to be sinking into the markets that this is now going to be an inflationary problem. What does he do next when the markets tank anyway?

  110. 110
    Sambone Says:

    Z – Yup, but alot of shear. I’m more interested in the wave that just came off of Africa.
    http://www.ssd.noaa.gov/met8/eatl/loop-rb.html

  111. 111
    zman Says:

    Nicky – All but the US markets you mean? Trading in US indexes looks dead, complacent, out to a very long lunch.

    Sambone – Hear ya, Africa wave

  112. 112
    zman Says:

    oil making yet another run quietly higher, up 42 at 82.35

  113. 113
    QUARRYMAN Says:

    Z, Sam,

    Impressive wave coming off Senegal. Here’s AccuW’s Henry Margusity take on the sub-tropical storm over FL:
    As I explained yesterday, the system in the Gulf will most likely be classified as a subtropical storm in the next 24-36 hours. I think the fact is that the system is associated with a large upper-level low and the fact the system may have some characteristics of a cold core system. But the problem is that it really does not matter what they upgrade the system to, the impact of the weather will be the same. The Gulf Coast from the Florida Panhandle to will have gales and heavy rain. Most of the models are taking the system into Louisiana which seems reasonable given the overall pattern. They will be flying a recon plane into the the system today, so we may have a tropical depression by the end of the day.

    “SAFETY PAYS”

  114. 114
    Nicky Says:

    It won’t be long Z before the reality hits the US indices. Nasdaq not buying into the rally you notice.

  115. 115
    zman Says:

    Nicky – I agree just not really seeing it yet although the indexes keep threatening and I suspect once they break the fall will be straight off a cliff.

  116. 116
    sane Says:

    Am I the only one still scratching their head today?

  117. 117
    zman Says:

    Sane – about how many things. I’m confused about a lot. At least the Dow looks lower soon. And gas is rolling over although UNG could care less. And there’s lots more so no, you are not alone.

  118. 118
    QUARRYMAN Says:

    Nicky,

    Do you follow the XLF? This index has been hugging 33 as a bottom for some time. Now it’s 35. The exodus of global retained earnings from the USD is scary.

    Is this a short?

  119. 119
    calvino Says:

    Lots of forex traders are scratching their heads.

    ENT stopped divs two days ago. I have been nibling at Prime West. They already took back about a quarter of the mugging. This should be hitting the tar miners, not the diversifieds, who might get a tax break out of this. Looks overdone.

  120. 120
    Sambone Says:

    Sane – I’ve been scatching my head for 12 months. Now Nicky and Zman are smarter than me, but Energy, I think it’s holding up today, because the US dollar continues to fall. Overall market – “Praise tha lord and Ben Bernanke”, “Party like it’s 1999”, “Problems? What problems?”

  121. 121
    zman Says:

    NG down 3%, UNG flat. What the?

  122. 122
    zman Says:

    Nevermind, the strip is up tiny, which is strange given NOAA forecast but oh well, will wait a little longer before closing out this loser to see if the strip will wake up and fall.

  123. 123
    calvino Says:

    The weather is mugging you Z

  124. 124
    calvino Says:

    The Soviet Socialistic Rebpublic of Alberta has titled the proposal ‘Our Fair Share.’ Here is the fairness
    Tar 47% to 64%
    Oil 44 to 49
    NG 58 to 63

    Sounds fair to me, but then I would vote for Hugy, if he ever allowed elections again.

  125. 125
    zman Says:

    yep, that and oil

  126. 126
    calvino Says:

    About 15 billion of equity wiped out of the TSX and the Venture, I am guessing – fairly quickly.

  127. 127
    calvino Says:

    Unemployment in Alberta going to move up at a fair pace – and down in Saska in sequence. Waive goodbye to the heavy machinery heading east on the Trans-Canada, Minister Oberg.

  128. 128
    TTupp Says:

    is ung supposed to track the underlying?

  129. 129
    zman Says:

    yes, loosely

  130. 130
    TTupp Says:

    to say the least. you must be pissed about your ung puts….

  131. 131
    TTupp Says:

    although it looks like its continuing the downtrend it started in july

  132. 132
    zman Says:

    yep, the strip is up slightly and they’re pricing off that presumably. The spread from Oct to Nov jumped by about 25% today. I’m waiting to see if a gap down bails me out in the morning at this point.

  133. 133
    TTupp Says:

    WOW– canadian dollar at parity for the first time since i was negative 4 years old

  134. 134
    calvino Says:

    did you just wake up tup?

  135. 135
    calvino Says:

    I usually don’t pin my hopes on a gap – too good to be true type of thing.

  136. 136
    zman Says:

    Cal – oh I know better. But the OII is more than offsetting the loss on the same weather. Still think the storm is all rain and no blow.

  137. 137
    Nicky Says:

    Broader markets look in need of another move to the upside and then down they should come.

    WTI – watching closely now. We have got our pop to a new high on Oct and Nov. Now they have to stay below 83.37 and 82.05…..

  138. 138
    Nicky Says:

    Samborne – most definitely not smarter than you.

  139. 139
    zman Says:

    $69 to 8/22/07 on $82.60 9/20/07 – pretty much straight up

    yes, I puttered UNG, definitely me not smart as Sambone.

  140. 140
    Sambone Says:

    N – I’m difinetly not the brigthest star in the heavens! LOL

  141. 141
    zman Says:

    83

  142. 142
    Sambone Says:

    83

  143. 143
    Nicky Says:

    #137 error as we had not made new highs on the November contract but we have now.

    News or expiry out of interest?

  144. 144
    Sambone Says:

    No news that I can see, Nicky

  145. 145
    TTupp Says:

    cal- no had stuff to do in the AM

    Z- what do you think of OII long here, or maybe when it come off the high of the day, and SU

  146. 146
    calvino Says:

    This is off the topic, although Fuel Cell does use nat gas NOT hydrogen, with about double efficiency rate of conventional combustion. They just broke ten – uncharted territory. The enormous short position, about a quarter of the float, may be advantageous to the other side. Disclosure, I am long.

  147. 147
    zman Says:

    Tupp, I’m not adding to my calls.

    SU I’m thinking short.

  148. 148
    Sambone Says:

    Only thing I can find news wise is MMS reporting 360,169 b/d oil, 1288 mmcf/d gas off line in GOMEX

  149. 149
    calvino Says:

    ok tup, i have been in a rant about it all day – it is unbelievable.

  150. 150
    zman Says:

    E&P and Majors not really buying into the crude price.

  151. 151
    sane Says:

    Z, I don’t think they have been buying into the price as of late

  152. 152
    TTupp Says:

    Z re #8– NXY is super globally diversified…. not that concentrated in ALTA

  153. 153
    TTupp Says:

    cal you canadian too?

  154. 154
    TTupp Says:

    oh do you stil have your OII calls?

  155. 155
    zman Says:

    still have the September 60s from mid August and the October 75s picked up on the 17th. šŸ™‚

  156. 156
    zman Says:

    Oil up 1.80, going for $85 today???!!!

  157. 157
    calvino Says:

    Yea, I invested in all kinds of stuff in Albertastan.

  158. 158
    calvino Says:

    yea, the oil slick that lifts all boats. the canuxs took back most of comissar Oberg’s expropriation

  159. 159
    Jason Says:

    Z – Re 121 – Found this on the UNG website “The investment objective of UNG….that is the near month contract to expire, except when the near month contract is within two weeks of expiration, in which case it will be measured by the futures contract that is the next month contract to expire…” Is it tracking Nov. now?

  160. 160
    Sambone Says:

    Cal – “Albertastan”, your a “Funny guy”.

  161. 161
    zman Says:

    Jason, yes thanks, figured that out. And the Oct and Nov contracts decided to split company today.

    Oct down 18
    Nov up 8

  162. 162
    Sambone Says:

    83.77

  163. 163
    Nicky Says:

    Wow Ben better put that in his pipe and smoke it – wti at nearly 84!

  164. 164
    zman Says:

    NG closing at 6 even (down 0.18), out months up 8 to 20 cents

    Crude closing at 83.84 (up $1.91), strip not up quite half as much

  165. 165
    zman Says:

    The Saudis should put Ben in charge of OPEC

  166. 166
    cadillac Says:

    Cal

    In your 146 comment “This is off the topic, although Fuel Cell does use nat gas NOT hydrogen, with about double efficiency rate of conventional combustion. “They” just broke ten – uncharted territory. The enormous short position, about a quarter of the float, may be advantageous to the other side. Disclosure, I am long.”

    What company (They) are you refering to

  167. 167
    Nicky Says:

    Looks like a blow off top to me. Nat gas refusing to join the party.

  168. 168
    sane Says:

    Woot Woot

    All aboard the inflation train.

  169. 169
    zman Says:

    Dow breaking down a little.

  170. 170
    Sambone Says:

    Sane – See #120, “Problems?, What problems?”

  171. 171
    zman Says:

    Beating a dead horse: Nov NG was 30 cents lower this morning but it looks like it is the contract of choice to play this storm, thus the divergence in October and November. And why UNG is so strong.

  172. 172
    Nicky Says:

    Brent makes new highs. Only distillates does not but its close.

  173. 173
    Sambone Says:

    Nymex Nov Crude Goes Positive; Storm In Background

    DOW JONES NEWSWIRES
    From MARKET TALK:
    [Dow Jones] Nymex crude is choppy and the second month is strengthening a bit as weather forecasts call for the disturbance to the west of Florida to stay over water for longer than originally expected. The longer a storm stays over warm water, the more likely it is to attain tropical storm or hurricane strength. The system “will not likely be important,” says Tim Evans of Citigroup. “We have seen some production shut in for precaution but it will not become a major storm. I don’t think the oil market is particularly focused on the storm. It’s a background story.” Nymex Oct crude, which expires Thu, +46c at $82.38/bbl. Nov turns positive, now +3c at $80.88. (anna.raff@dowjones.com)

  174. 174
    zman Says:

    84.05

  175. 175
    calvino Says:

    Fuel Cell = FCEL, located in Danbury,Connecticut, the former State Senate seat of Governor Jodi Rell, who is about to give them 70MW of mandated capacity in the state, which will put them on the big boys radar – let us hope.

  176. 176
    calvino Says:

    Z – who said I needed to buy particle board furniture craftsmen in China to hedge inflation when we got tar and methane right here.

  177. 177
    TTupp Says:

    Cal where are you from?

  178. 178
    calvino Says:

    New Haven, Connecticut – the Elm City aka the model city.

    speaking of the oil patch.. True just got beat like a rag doll on no news I see except as a sympathy beating along with the rest of Canada. Ok but half their prod is oil in Saska, including a steam upgrader AND they only get gas from Albertastan, avoiding the real shin kick that commisar Oberg gave to tar.

  179. 179
    calvino Says:

    Disclosure – I am long True.

  180. 180
    cadillac Says:

    Cal

    Now that I reread your post it makes sense. I thought you were talking about Fuel Cell technology in general.

    I, like you, think that this could be a huge game changer. I also beleive its closer than some think. If the final solution is using natural gas…then look out… demand will increase substantially. I would liken it to what happened to Corn/Ethanol. However, I think it will be much longer lasting because if it is as efficient as promised it could be the solution for the next 100 years completely replacing the Internal Combustion Engine.

  181. 181
    zman Says:

    CNBC weather girl says 28% of ATLANTIC OIL AND GAS production shut in. Where do they find these people? MySpace? FaceBook?

  182. 182
    BigJim Says:

    There seems to be a disconnect between oil price and oil stocks. Anything oil today should be flying off the shelf. But it is not. Seems to me the only reason they(oil stocks) are holding up is because of oil prices. Other than that they would be down. If oil cracks it could be interesting. If I am missing something, please tell me. Opinions are invited.

  183. 183
    Nicky Says:

    CNBC putting today’s rally down to the potential storm in the Gulf – what total BS. It ain’t even a tropical storm yet! The energy market survives a Code 5 storm and they think a tropical storm is going to cause that much damage? Speculation is all this is. First 10 bucks will come off in a heartbeat.

  184. 184
    zman Says:

    Nicky – amen

    BigJim, – I think you’ve got it right

  185. 185
    Sambone Says:

    Nicky’s good buddy is quoted;

    http://www.bloomberg.com/apps/news?pid=20601087&sid=aBaTJbgi9UJ4&refer=home

  186. 186
    calvino Says:

    Facebook – yes, that is where they find them. I was getting nightmares from the bimbo that comes on at 4 – kept reminding me of the smile a large mouth gives you when you pull the hook out.

  187. 187
    zman Says:

    he’s pointing to high oil and saying it’s a re evaluation of how much the housing market crisis was going to effect oil demand and therefore this move is justified ?!

    He was a bear not 2 weeks ago!!! What a waffler. Nicky, you got to get a some new friends, lol!

    Cal – roflmao!

    Out for 20 minutes.

  188. 188
    Sambone Says:

    Z – Since I don’t watch the “Talking Heads”, why do you call them the “Weather Girls”?

    Big – This oil market is being run by the “Crowd”. It’s all speculation, nothing else. When they exit all boats will go down, including the oil stocks, etc. So I agree with you.

  189. 189
    calvino Says:

    dollar down – oil up. storm, what storm.

  190. 190
    Sambone Says:

    Z – PF, That’s why I love the guy, reminds me of Cramer. Very entertaining.

  191. 191
    calvino Says:

    oil costs the same as it did yesterday – but the greenback in your pockets just got lighter

  192. 192
    rammastr Says:

    NICKY – Why are you a fan of PF?

  193. 193
    zman Says:

    Sambone – they get all giddy standing in front of a big chart point to it and babbling what someone else just told them, getting it half wrong, and it just reminds me of the old days when non-meteorology types like Vanna White explained the weather to you back in the 70s by saying, “and then this big thing here is going to swooop in bringing lots of wind so get out your kites and sun will smile on us by the weekend, over to you sports guy”

  194. 194
    Sambone Says:

    Ram – It’s me, just joking around. Nicky can’t stand the guy.

  195. 195
    Nicky Says:

    Ram- I can’t stand him! They are being sarcastic because they know this. All he does is ramp the market.

  196. 196
    Nicky Says:

    CNBC showing Oct wti contract down big time into settlement. ie 70 odd bucks from the close. Is this right? My charts stop updating at the close on expiry day.

  197. 197
    BigJim Says:

    Thanks everyone for your opinions.

  198. 198
    calvino Says:

    It’s best to turn the volume down and pay attention to the things that matter when Erin is on.

  199. 199
    Nicky Says:

    this has to be a joke: my chart now showing october crude down 522!

  200. 200
    Sambone Says:

    N – Mine is showing currently $83.32, up 1.39

  201. 201
    rammastr Says:

    OKAY.

  202. 202
    Nicky Says:

    attempt at TA!:

    The fact that Oct expired taking out 83.37 is a bit of a problem. (wave iii cannot be the shortest which it would be). However November is still intact as it is still below 82.05. Distillates, RBOB (for this wave) and Brent all posted higher highs. October spiking above 83.37 could be an anomaly if everything turns down in short order. WTI trading under today’s lows of 80.27 will say the top is in.

  203. 203
    Nicky Says:

    Samborne – even that is well below the closing highs.

  204. 204
    kaman Says:

    bought USO Oct 62 puts at $1.85

  205. 205
    zman Says:

    nice idea kaman

  206. 206
    Sambone Says:

    Z – Off subject, almost “Tini time” Roger that!

    How’d you do Saturday? Did you limit out?

  207. 207
    zman Says:

    Saw no geese. Shot the only dove we saw. Lame.

  208. 208
    Sambone Says:

    Been there, done that!

  209. 209
    zman Says:

    may bag some squirrels tonight.

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