10
Oct

Wednesday – No Oil Report Today – CVX & VLO Warn

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The EIA will report oil and natural gas inventory reports simultaneously on Thursday. Chevron and Valero both warned last night. Neigther should be a surprise as they are just telling analysts what they already know. In Chevron's case the news is a little more bitter than in VLO's on a fundamental basis but sense I still own the half of VLO I didn't sell yesterday. More below...

New Feature Watch: Sector specific tabs for E&P, Refining & Cracks, Coal, Dry Bulk and more. These will go along side our other tabs like the weekly natural gas storage report and outlook as a handy weekly reference source. See the Refiners & Cracks tab at upper left for an example but remember this site will constantly evolve so more features will be added to each of the new tabs in time. I did some reorganizing last night and added the basic editions of the Refining & Cracks and Dry Bulk tabs at upper left.

In Today's Post:

  1. Chevron Warns
  2. Commodity Watch
  3. Holdings Watch
    1. Current Holdings
    2. Recent Closings
  4. Crack Spreads
  5. Stocks We Care About Today
  6. Odds & Ends

Chevron Warns 3Q To Be Sharply Lower. Wow, shocker. Exxon better fess up quick.  Just another example of one of the many reasons why the "windfall profits" crowd should be set adrift someplace where cars run on ground up unicorns and rainbows.

How Is This Different From COP's Warning Last Week? Well, in a nutshell it's worse.

  1. Conoco knows how to organize a press release for one thing. CVX starts off by stating that "net income is expected to be significantly below the record $5.4 billion earned in the second quarter 2007." It then continues it's self sabotaging tirade by stating "The lower projected earnings are mainly the result of a sharp decline in refined-product margins for the downstream business and the impact of nonrecurring items." It then launches a lengthy explanatoin about how their gains were bigger last year than this year and how they have more charges this year.
    1. Note to management: The gains talk can go in the last paragraph for those who care to read about it. They are non-recurring items and should not be a focus here.
    2. 2nd note to mgt and this goes for COP as well: why compare 3Q to 2Q? Seems like YoY makes a little more sense.
  2. Refining Margins were worse than I'd have thought
    1. On the west coast they were well below year ago levels
    2. In Europe they were just below $0. For (COP) Europe was worse than year ago levels but still positive.
    3. In Singapore they were up but this is not much of their business
  3. Chemicals did not save the day but were referred to as "industry indicator margins for the full third quarter in general were slightly higher than the second quarter."
  4. CVX which is also suffering from Majoritus Upstreamus Contractus (a syndrome that is exhibited by companies with Google sized market caps but declining E&P volumes) and trades at 11x current 2008 earnings numbers. (COP) trades at a more reasonable 9x 2008 numbers. Just to round out the picture Mr Exxon trades at 13x.
  5. The funny/sad thing is (COP) will get hit again, however briefly, because one their competitors is going to have a worse third quarter than they will. What's even funnier is that the energy complex will fall back a bit despite the fact that most of the names have nothing whatsoever to do with refining and are actually growing their production lines quite nicely. 
  6. One last thing, man these big guys are droll with their updates. Read this and see why 9 out of 10 of the most boring people I ever met were Majors analysts. Just kidding ... they were all boring.

Where's The Silver Lining Watch?:  Point 5 above. I've been looking for a big red down day to enter some favorite E&P names prior to earnings season. The Chevron "news" may provide the start of that move.

Commodity Watch: Flat to Up

  • Crude Oil: Bounced $1.26 to $80.24 yesterday on the back of a weakening dollar and an EIA forecast of strong fourth quarter demand. This morning oil trading about a quarter over yesterday's close.
    • Nigeria Watch: Two oil workers were released unharmed after being held by Movement for the Emancipation of the Nigerian Delta (MEND) rebels for 12 days.
  • Natural Gas: Pretty much flat yesterday around the 6.85 mark but up a nickel to a dime this morning in early trading.

Holdings Watch

CALLS:

  • (VLO): Sold half of my VLO $70 October call position for $2.65. This is one I doubled up on when it went the wrong way initially. Up 80% in 12 days on a position I thought was probably a wipe out. Thankyou Citi-Group for seeing things my way and thank you rumor mongers for starting the TSO buyout rumor. And then the not so good news: They warned today and my thoughts on that are contained in the Stocks We Care About section below but I will not sell into the early panic- the stock should open down $2 to $3 and I'll be monitoring it closely to see how/if it cleans up and where I need to set stops.

  • (TSO) - still holding the $47.50 and $50 November calls. Tesoro is the subject of a takeout rumor and I may give back half after this little run exhausts itself over the next day or so and let the house money play the rest. It's still cheap and the fundamentals for the  refiners with West Coast exposure continue to improve week after week. Bernstein raised it to an outperform from a neutral today (bad timing to raise your rating on a day when a couple of big dogs warn but that's the business).

PUTS: No Action

What I'm In Now: - I have missed kissing a lot of names of late which tells me the market may be getting ahead of itself or I am getting a bit behind. I think it's a combination of both but I'll not be overly aggressive chasing this move.

open-positions-100907.jpg

What I've Closed In October

october-closed-100907.jpg

Crack Spreads -Drifting off a little bit the last two weeks save PADD V (West Coast and Pacific Northwest) which continues to improve. On the whole, 3Q cracks were not nearly as bad as the media or analysts looking for sell orders would have you believe and two of the five regions were actually up QoQ while the two I just mentioned turned in the weakest performances. Again, the third quarter is history and with the improvement will come another round of buy ratings.

cracks-100507.jpg

Stocks We Care About Today:

  • VLO - warned margins will hurt fourth quarter operations. Continuing operations eps of 1.30 to 1.40 ex special items is now expected, Earnings from non-continuing operations are to be $0.75 which would yield an apples to apples comparison to earnings estimates of $2.05 to $2.15 versus the Street's $1.92. Unfortunately some of the the Street numbers exclude the Lima facility earnings (the discontiuned ops part) and some include it in their 3Q estimates as estimates now range from 1.45 to 2.53. Obviously everyone will be pulling their 3Q numbers in but the initial headline is not as bad as it appears. With that said it will need to shape up quickly for me to hold on to my VLO 70s for any length of time.

  • (HK) - said yesterday at an investor conference they expect to announce the sale of their Gulf Coast assets soon for $700 to $900 million. While the company doesn't break out specific Gulf Coast reserves they should be 20% or less of total company reserves as of YE 2006 (and even less now) so this would yield a sale price in the range of $3.20 to $4.10 per Mcfe ($700 to 900 / 1.1 Tcfe X 20%)...very respectable for these kind of assets. This will allow future production wedge from their nascent Fayetteville Shale play to shine on top of the more modest but still impressive growth from their North Louisiana assets. To see what I think of them click here and yes, I'll be buying Novembers or late in time for the 3Q release on 11/5. My favorite line from the CEO's presentation, "We're going to sell the company, I just don't know when."
  • (FTI) - Lands $200mm subsea contract with (PBR) for subsea tree installations at two of the Brazilian's Walker Ridge developments (ultra-deepwater Gulf of Mexico). This is one of those that I watch and don't own as I've been waiting on the right days and always seem to miss it. I lump it in with CAM and OII as a group that are facing a tsunami of deepwater demand. It's not exactly likely you can just build this kind of expertise over night. There will likely be growth among the FPSO (floating production storage and offloading) refit business as well as the shuttle tanker builders and operators as more of these very remote fields come into service far from shore. 

Odds & Ends

Analyst Watch: (AOG) cut from Buy to Hold at Keybanc, (GMR) cut from to hold at BS, (TXCO) and (BZP) picked up by Morgan Keegan at outperform. (WLL) and (RRC) get PT boost at Keybanc as does shipper (ESEA) from Ferris Baker Watts.


 

120 Responses to “Wednesday – No Oil Report Today – CVX & VLO Warn”

  1. 1
    Sambone Says:

    7:52 am EST

    Oil Steady As Fundamentals Support, Winter Eyed

    By David Elliott
    Of DOW JONES NEWSWIRES

    LONDON — Crude oil futures struggled to break away from unchanged levels Wednesday morning in London as the market weighed concerns of tightening global inventory levels against the threat of moribund winter demand.

    Traders said the market, after the previous session’s rally, is now stuck in the middle of the recent range and although fund buyers are providing support, there’s a chance waning short-term fundamentals could prompt another test of the downside.

    “I look upon this as a rally to sell into,” said Rob Laughlin, senior broker at MF Global in London

    At 1140 GMT, the front-month November Brent contract on London’s ICE futures exchange was down 6c at $77.43 a barrel.

    The front-month November contract on the New York Mercantile Exchange was trading $0.08 higher at $80.34 a barrel.

    ICE’s gasoil contract for October delivery was down $1.00 at $680.75 a metric ton, while Nymex RBOB gasoline for November delivery was down 17 points at 201.85 cents a gallon.

    Laughlin’s sentiment has been echoed throughout the market with some investors saying the recent gains are being driven by fund buyers rather than any fundamental factors.

    This opinion stems from continued concerns over the health of the global economy and, in particular, the potential impact on oil demand should economic growth slow.

    Suggestions from forecasters that the coming winter in the northern hemisphere could be warmer than average have added question marks to the demand picture while events in the supply picture are equally unfriendly to the bull view.

    The lifting of Shell’s force majeure on oil exports from the Forcados field in Nigeria show supply from West Africa’s largest producer is recovering while a ramp up in exports from Turkey’s Ceyhan port highlights a ramp up in production in Iraq. Iraqi Kirkuk oil is piped to Ceyhan for export.

    Nevertheless, the bulls are adamant the longer-term fundamentals underpin oil prices at current levels.

    Contrary to Laughlin, analysts at Goldman Sachs advise using any dips in the oil price as a buying opportunity and shrug off concerns over the global economy.

    “We maintain that a one million barrel a day decline in demand below our expectations — which would erase nearly all growth relative to year-ago levels — would be required during the fourth quarter of 2007 to return the oil market back to balance,” it said in a note to clients. Goldman maintains WTI will reach $85 a barrel by the end of 2007 and could spike to $90 a barrel.

    News of a fall in European oil inventory levels has bolstered sentiment for Brent too.

    Euroilstock announced Tuesday that European distillate inventories declined in September by 5.25 million barrels or 1.3% from August estimates, according to Michael Davies, an analyst at Sucden in London. European gasoline inventories fell by 5.2% to 6.8 million barrels, he added.

    Davies feel this helps to paint a positive picture for the oil market.

    “Oil prices remain well supported by concerns over tight fuel supplies and prospects for an increased demand next year,” he said.

    The release of North Sea loading programs Wednesday morning shows little change to production from the region with loading plans for most of the grades unchanged from October.

    —By David Elliott; Dow Jones Newswires

  2. 2
    zman Says:

    This part of the above is pretty important as OEDC inventories are often hard to get a handle on aside from the US , Japan a few bits of Europe. These are some pretty big declines.

    Euroilstock announced Tuesday that European distillate inventories declined in September by 5.25 million barrels or 1.3% from August estimates, according to Michael Davies, an analyst at Sucden in London. European gasoline inventories fell by 5.2% to 6.8 million barrels, he added.

    On the Goldman bit about tightness in the market I have to agree. It’s coming as production is lower and demand is most certainly up. You should not see it in US inventories in October but look for a fall below recent crude stocks in November, Dec, Jan that will put us below the recent low.

  3. 3
    Sambone Says:

    Weather – nothing

  4. 4
    jy Says:

    First warning seen from Rocky Mountain gas producers re pricing and takeaway capacity constraints. Gasco (GSX) press release this morning:

    “…Gasco has elected to curtail its Utah production operations, which constitute approximately 100% of its net production, due to low gas prices which averaged $2.93 per MMBtu during the quarter. Significant price differentials associated with limited pipeline capacity and increasing regional supply has resulted in low Rocky Mountain prices, specifically in the Uinta Basin. Given the current takeaway capacity, Gasco has delayed completions in new wells and up-hole recompletions in existing wells. The Company expects to increase activity during November and December as natural gas prices are expected to rebound with increased winter demand..”

  5. 5
    zman Says:

    Thanks JY – I think several people over there have already curtailed and EOG announced 50 mm/d shut in a few weeks ago in the region if memory serves.

    Don’t you know those guys are dying to have the Rockies Express open.

    BBG will be another big beneficiary of increased take-away capacity from the Rockies.

    Mark …did you see Rockies Express phase III was delayed up to a year by FERC issues the other day? I’m not sure I read that right but it was in the EIA’s nightly piece.

  6. 6
    redjack Says:

    Z..per my comment of the surge in volume of the VLO 67.5 puts….somebody was trading on the news before it was the news..

  7. 7
    zman Says:

    RJ – apparently so. Please keep pointing those out to the board!

    TSO should warn next as both COP, CVX, VLO have sited weak W Coast margins. 3Q Estimates have come down sharply since Friday (from 1.22 to $1.08) so I’d bet TSO’s IR team is working hard to coax analysts lower; maybe a PR won’t be needed.

  8. 8
    zman Says:

    What’s gotten into NG this morning – back over $7

    maybe it is this
    http://www.accuweather.com/news-story.asp?partner=accuweather&traveler=0&article=0

    but that’s actually not good for demand as it’s kills some cooling load but is not cool enough to get people to turn on their furnaces. Maybe it’s a sentiment thing…”oh my, I forgot that after it is hot for several months, it gets colder for a few”

  9. 9
    Sambone Says:

    9:03 am EST

    Nymex Crude Steady Around $80; Market Seeks Direction

    DOW JONES NEWSWIRES
    From Market Talk:
    1256 GMT [Dow Jones] Nymex crude is steady, with the market still weighing which direction to take crude oil when it breaks out of its recent trading range around $80/bbl. Nov crude +9c at $80.35. EIA forecasts for winter demand Tue were supportive of prices, as is a weak dollar, but many analysts say there is downside risk from a warm winter, ailing US economy. (MCE)

  10. 10
    zman Says:

    S – what a great headline…”market seeks direction”

    Check out NG up 21 to 707 b/c winter is actually going to happen.

    VLO acting pretty well considering. Nice rebound in progress.

    TSO coming green quickly

  11. 11
    zman Says:

    I’m not adding or selling VLO right now, just watching. This rebound was awfully quick on light volume, round 2 of panic sellers is probably around the corner.

  12. 12
    zman Says:

    DRYS short term momentum shift?

  13. 13
    Nicky Says:

    Morning all.

    Crude looking very undecided. Lots of support at 79.90 area.

  14. 14
    zman Says:

    Bear Stearns upgrade of TSO today was due to an expected rebound in West Coast margins…ah the speed of the brokerage industry.

    Bear also upgraded the Bulk shipping industry from market underweight to market neutral…nice call dude!

    Morning Nicky – #9’s headline says it all.

  15. 15
    Nicky Says:

    Distillates again lots of support around where we are now at the 21800 area.

    RBOB support falls between 19800 and 20000.

  16. 16
    Nicky Says:

    Only thing supporting oil right now is that BS from Goldman this morning calling for oil at 85 or higher by the end of the year and that all dips are buying opportunities. Yeah right – not by any chance an opportunity to support their long side only fund???? Just where does all that open interest in the December calls come from???

  17. 17
    zman Says:

    Don’t hold back Nicky. Did your buddy have anything interesting to add this morning?

    TSO looks to be battling over buyout rumor vs the possibility that they warn next.

  18. 18
    Nicky Says:

    The reasons they give are a tightening supply/demand picture.

    Hmmm no mention of the NOAA forecast only yesterday for a milder winter than usual in the US or the Atlantis offshore field increasing production by 200kbd by the end of the year along with the OPEC increase of 500kbd from beginning of November, not to mention that we are now going into shoulder season which typically sees a fall of over 500kbd.

  19. 19
    Nicky Says:

    Broader markets:

    SPX has support at 1558. A move below
    1547 would suggest a decent correction is underway.

  20. 20
    Nicky Says:

    If you mean PF Z then I have yet to read him! But I could do with a laugh so will take a look.

  21. 21
    zman Says:

    DRYS up 20% week to date. hmmm

    the rest of the bulk shippers are up 5 to 20% as well. In some cases they are no longer cheap GNK, EGLE but they continue to rally multiple %s on a daily basis. This may be a “buy the rumor, sell the quarter” event for some.

  22. 22
    Sambone Says:

    9:38 am EST

    Nymex Crude Steady Near $80 On Strong DOE Outlook

    By MATT CHAMBERS
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures were steady Wednesday, holding near $80 a barrel amid forecasts for a strong global fourth-quarter oil deficit and healthy winter demand.

    But the threat of downward revisions to fourth-quarter demand, either from slowing economic growth or a warmer-than-normal winter, is weighing on prices and preventing them from moving out of a settlement range between $78.25 a barrel and $83.90 a barrel they have been stuck in since Sept. 12.

    The front-month November light, sweet crude contract on the New York Mercantile Exchange was recently up 4 cents at $80.30 a barrel. Brent crude on the ICE futures exchange fell 5 cents to $77.44 a barrel.

    The Department of Energy said Tuesday that it forecasts global fourth-quarter crude oil demand to be 1.82 million barrels-a-day above supply, slightly up from a month-earlier expectations of a 1.78 million-barrels-a-day deficit. Forecasts that crude oil will hold above $80 for the rest of the year are largely based on expectations for a deficit.

    Still, some analysts are questioning those forecasts.

    “We will look for further downward revisions in demand through the balance of this year,” said Jim Ritterbusch, president of trading advisory firm Ritterbusch and Associates. “The widely publicized projected tightening in fourth quarter oil balances may have been exaggerated and the combination of softening consumption and increased availability of OPEC barrels may result in fundamentals more appropriate of $70 than $80.00.”

    The Organization of Petroleum Exporting Countries recently agreed to add another 500,000 barrels a day of production from Nov. 1 but surveys show they have actually already come close to achieving the addition.

    Traders will look to the International Energy Agency’s monthly report and the DOE’s weekly inventory data, both due Thursday, for further indications of whether the forecasts for a deficit, and $80 oil prices, are justified.

    In the DOE data, analysts surveyed by Dow Jones Newswires have a mean expectation for a 1 million barrel build in crude oil stockpiles. Gasoline stockpiles are seen falling by 300,000 barrels while distillates, which include heating oil and diesel fuel, are seen falling by 600,000 barrels. Refinery use is expected to fall by 0.1 percentage point.

    Front-month November reformulated gasoline blendstock, or RBOB, fell 81 points, or 0.4%, to $2.0121 a gallon. November heating oil rose 11 points to $2.1864 a gallon.

    —By Matt Chambers, Dow Jones Newswires

  23. 23
    scoop006 Says:

    anybody home

  24. 24
    zman Says:

    DRYS up another 5% to all time new high of 121.50

    Hey Scoop – yeah just doing some research and watchin the VLO second wind, what’s up

  25. 25
    scoop006 Says:

    debating trading out of OCT rig 110 to NOV. 115

  26. 26
    zman Says:

    can’t hurt, should be positive on the 110s

  27. 27
    Brian08 Says:

    $37 on the ask for those OCT 85 in DRYS…Good nite nurse!!!

  28. 28
    zman Says:

    don’t remind me…

  29. 29
    Brian08 Says:

    Yeah but profit is profit…Can’t be pissed about that…Who woulda thunk that the MO’ guys woulda gotten ahold of this guy like they have…Be nice to be on the right side of the short when this guy breaks down…

  30. 30
    zman Says:

    Brian – exactly. That’s the attitude to have. I NEVER kick myself over taking a profit and I’m not about to start b/c 100,000 lemmings are jumping into a stock that they know has some ships and sends something in those ships to a place where a lot of people, like a billion something people, live called CHINA.

    I may take puts for a swing here but it’ll be quick as this is the opposite of catching a falling knife (more like blocking a shotgun with one’s mouth) … need to work on the phrasing of that. Plus, it is still fairly cheap, though less so and well run and growing and I don’t like shorting those kind of stocks. Still, this is a CHINA sized moved if you know what I mean and it has to close up every day to keep the lemmings from jumping ship, hahahaha

  31. 31
    Brian08 Says:

    I hear you about the “shotgun analogy”…Every time I say that I won’t get in the way of MO’, I still friggin’ do it…Guess we have to wait for this guy to finally start breaking down…I have a feeling once it happens it’s gonna be REALLY quick and ugly (from my noobish view anyway)…Kinda like the smaller refiner shorts this July-August…That one was quick and brutal for the LONGS…

  32. 32
    zman Says:

    B – agreed re the comparison. I always say (but don’t alway do) that I don’t need to be in for the first 10% from top or bottom of a move in a group.

    If these guys were internet pricey it’d be a no brainer January put much lower strike deal. But they aren’t and the business is very good. That should stop me right there. But the velocity of the move is staggering and you have to believe that if Cantor put a 114 price target in place last week their director of research is going to tell them to find a new reason to list a higher target or cut their rating soon. It may take a week or two but you can bet management wants to make two trades, the buy and then the sell. Just something to think about from someone who has had to justify higher and higher price targets in a former life. Hang the multiple out there too far and you look like a loon…plus he’s already a friggin hero at present.

  33. 33
    zman Says:

    Possibly some veracity to the TSO takeout rumor as the stock is up a buck on a day when not one but two refiners warned.

    Maybe its real. I may take half of the Novembers off the table if it gets silly this afternoon and play with house money for the potential takeout.

  34. 34
    Brian08 Says:

    I thought about that with AMZN and boy did that one blow up in my face…

    Tough to get in the way of a business expansion like this…

    And yeah unless this analyst wants to look like an idiot by non-sensically raising his price target I can see a note coming out saying that this thing mighta gotten out ahead of itself…

  35. 35
    zman Says:

    This situation is one of the reasons many firms went from the simply (and too confining) buy, hold, sell system to strong buy, add, hold, sell, abandon all hope system. It lets the analyst off easy.

  36. 36
    redjack Says:

    XTO is making a move…

  37. 37
    zman Says:

    Wow, COP shrugged off pretty much all of the Chevron effect.

    TSO up $1.40 / VLO has paired it’s losses by 2/3 rds

    CHK trading just over 37 again…about to rock.

    ESV is running a bit and I may add Nov 55 puts soon.

    XTO no news I see but the break out is unmistable. will look at a little more but it’s one I like but only loosely track.

  38. 38
    rammastr Says:

    ESV seems to be outpacing RIG. Did one or the other change?

  39. 39
    zman Says:

    what do you mean by change?

  40. 40
    rammastr Says:

    Stock coverage, fundamentals in general.

  41. 41
    zman Says:

    you mean in the last 24 hours? not that I see.

  42. 42
    rammastr Says:

    O.K. ESV seems like it is trying to break out of a downtrend. It will brobably resume downward.

  43. 43
    zman Says:

    It may break that down trend and if it does I’ll punt the 55s at this point and possibly reposition in the Novembers.

    take a look at the daily chart of the two:

    http://finance.yahoo.com/charts#chart2:symbol=esv;range=1y;compare=rig;charttype=line;crosshair=on;logscale=on;source=undefined

    they are diverging with RIG outperforming.

    Now look at the last five days chart:

    http://finance.yahoo.com/charts#chart3:symbol=esv;range=5d;compare=rig;charttype=line;crosshair=on;logscale=on;source=undefined

    they are neck and neck.

    Yesterday and today I’d say ESV has outpaced but that’s a pretty tight window .

    I think I’m a little more patient here than others…maybe too patient but my conviction has not changed though I may have to wait longer than I’d like and the Octobers may die worthless while I look to November.

    Last week VLO was in much the same which was a source of great worry by some but goes relatively unnoticed into the green this week. Along with COP, TSO …

  44. 44
    zman Says:

    Bulks are way off their highs.

  45. 45
    Greg Says:

    Hey Zman: Hope all is well. I just can’t find the time to get over here enough.

    Got a newsletter hyping PSEG, a small and cheap Columbian oil E&P? Have you heard of them, like them? Sorry if this has been discussed before.

    Greg

  46. 46
    zman Says:

    Sorry I don’t know them. If you want I can have a look but it’ll be tonight as I hate doing that stuff off the cuff (think it got Denise out of BPZ/BZP in front of an upgrade today).

  47. 47
    irished Says:

    Thinking of DU on btu nov 50 BE=2.75. What is your projected sell price?

  48. 48
    zman Says:

    Sorry, what is DU?

    Bulk shippers rolling over with the market…saw that GNK roll but did not act. arrgggg

  49. 49
    irished Says:

    Zman
    sorry in NYC language that is DU=buy more shares. Believe you had recommended buying BTU nov 50’s
    Thanks.

  50. 50
    zman Says:

    DU = double up, sorry to be slow. Right, I’m in the Nov 50s now at 2.25 and may add again soon but I wanted to take a look at the coal section of the STEO – short term energy outlook that came out yesterday and have not yet had the chance. Should be positive with inventories falling more and production backing a bit for the domestic producers. Can’t see an argument not to add here.

  51. 51
    zman Says:

    Missed my FTI from the post this morning though I had several chances…it, CAM, and OII off to the races yet again.

  52. 52
    irished Says:

    Zman
    Thanks

  53. 53
    Nicky Says:

    Energy pretty much flatlining looks more bullish than bearish right now.

  54. 54
    Sambone Says:

    Z – #35 “abandon all hope system”. That’s when I buy em.

  55. 55
    zman Says:

    Sambone – sometimes yes , sometimes those guys are right, LOL.

    Note to the group: After several email requests I’ve added a list of terms and acronyms that I use in the posts at upper left under the Z’s Dictionary tab. Feel free to make suggestions for additions as it is no where near complete.

  56. 56
    zman Says:

    I’m am so please with the reaction to the VLO warning “news” I just can’t tell you!

  57. 57
    zman Says:

    BP just telling us they had a fire on the North Slope (Alaska) last weekend that cut production by 30,000 bopd. They expect repairs to take 2 weeks.

  58. 58
    Denise Says:

    Cramer Alert- says he would buy cvx and cop because of refining margin improvement-but flip or flop in this case on vlo-thinks it’s too close to 52wk high and wouldn’t buy now

  59. 59
    rammastr Says:

    ZMAN – Thank you for the info and your patience.

  60. 60
    zman Says:

    DRYS red

  61. 61
    scoop006 Says:

    #55 EXCELLENT

  62. 62
    rammastr Says:

    Have seen premiums uglier than DRYS?

  63. 63
    zman Says:

    RAM

    Did I sound patient? Man, I didn’t mean to sound patient. LOL 😉 I’m finding the ESV exceedingly frustrating myself so I understand completely what you are getting at. So far it’s a loser.

    Denise – thanks for that. Cramer = Flipflop will be added to the dictionary.

    Scoop – most of the emails were from my dad, lol.

  64. 64
    Denise Says:

    Z-Do you think some of the smaller refiners might be worth a shot?
    WNR or ALJ
    Thx

  65. 65
    zman Says:

    RAM – no lie, that’s part of what kept me out of the put, that and that light at the end of the tunnel possible being a train factor.

    Bill has this right, he bought the stock and sold calls.

    Denise – I was looking at both of those earlier. Think they may warn too but then reverse that day. I like ALJ from a value standpoint anyway. Options spreads are wide.

    WNR estimates are weird now and it is expensive and thin and can run like a scaled cat. Plus, the option spreads are better than ALJ.

    HOC could be a runner too but bad spreads and a history of having that stock prove me stupid are keeping me out.

  66. 66
    rseidman Says:

    Z:

    Are we still in NBR put?
    When would you sell?
    Thanks,
    Bob

  67. 67
    zman Says:

    wow crude up 50 to 8070

    HO doing 1.5x that move.

  68. 68
    zman Says:

    RS – yes I am and not for a little bit yet. If it goes through 30 I’ll like add the Novembers 30s and wait for a bad day to punt the Octs.

  69. 69
    Nicky Says:

    Right now this looks like no more than a 3 wave correction off yesterdays lows. Thats not to say it can’t turn more bullish and no doubt inventories tomorrow will determine. But we either take out yesterdays lows or the highs of the 28th September.

    I am seeing some consensus for more bearish inventories than expectation Z – any thoughts?

  70. 70
    QUARRYMAN Says:

    Z.

    I’m wondering, why is there no trading volume on the WLT Oct 25s [WLTJE] ?

    They’re in the money and current month.

    There’s $1.40 appreciation in bid over the last trade.

    I’m wanting to take some profits, do I have to lowball the ask price to coax a trade?

    Q.

  71. 71
    Nicky Says:

    WTI:

    Open Interest showed a further 31k contracts added yesterday, mainly length and mainly to the December contract.

  72. 72
    zman Says:

    Q – fairly low open interest at 159 is part of the problem. Your best bet is to forget about the TMV and pick a price you want and exit. On a more liquid issue you might pick off the mid ate 5.10 or even try 5.15 if A) you have size and B)someone is paying attention and C)the stock will get a little bounce but at this point, they’ve sucked all the TMV out of the option and you are a nickel SHY of intrinsic.

    Nice trade.

  73. 73
    Nicky Says:

    I am seeing consensus of between 70 and 90 bcf build for nat gas tomorrow. That would be pretty bearish I would say.

  74. 74
    zman Says:

    N – sorry, I haven’t seen anything along those lines. I’d bet its coming from a statistical look at the month of October and nothing other than that though. Crude inventories rise in November. Tomorrow is only expected to see 1 mm increase so maybe that’s the sentiment, that it should be bigger based on history.

    70 to 90 would be bearish indeed. I’m thinking 60ish with the lingering cooling load and higher week over week electricity generation and only a slight bump in imports week to week but I’m often wrong.

  75. 75
    zman Says:

    90 would probably clobber gas.

  76. 76
    zman Says:

    HAL to break 40 probably unlocks some new buying

  77. 77
    Sambone Says:

    1:49 pm EST

    Nymex Crude Steady Near $80 On Strong DOE Outlook

    DOW JONES NEWSWIRES
    From Market Talk:
    [Dow Jones] Nymex crude oil finally shows some direction, heading higher after flip-flopping around Tue’s close for most of the session. Nymex crude +41c, or 0.5%, at $80.67/bbl. Prices have been stuck in a range between $78.25 and $83.90 for most of the past month and the market is waiting to see if predicted fourth quarter tightness will eventuate. (matt.chambers@dowjones.com)

  78. 78
    zman Says:

    TSO has officially broken out from this trough which began back when we were short in July.

    Up $2 to $54. Maybe CVX buys them.

  79. 79
    scoop006 Says:

    Z- Your TSO call was simply amazing

  80. 80
    zman Says:

    eventuate….comeon, is that really a word?

    SLB going nuts, maybe they are getting the VZ business.

  81. 81
    zman Says:

    Fair warning: I’m seriously considering taking half off the table in the TSO 47.50 and 50 November CALLS. Up 200 and 225% respectively I see little reason to not play with house money. Nine out of ten takeover rumors and there is a fuse that burning regarding just how long people will wait until they start losing faith.

  82. 82
    Nicky Says:

    WTI – looking at the chart if crude completed this move at 8175 it sets up the h and s perfectly.

    Z – inventories – normally one would see a build in both crude and rbob and a draw in distillates at this time of year although last year we saw a draw in rbob which was due to the changes in grade specification.

  83. 83
    zman Says:

    Go COP Go…way to shrug off the CVX ick

    TSO = “we’re going ballistic Mav”

    BTU performing well, extending yesterday’s break out a bit

    You just know XOM has to warn next…

  84. 84
    Nicky Says:

    Wow they certainly jammed that into the close.

  85. 85
    scoop006 Says:

    Check out BHI +$3.+ & OCT95/NOV100calls

  86. 86
    QUARRYMAN Says:

    Z. Re: WLT

    Thanks.

    “We” are not done yet. I’m taking profits back to 50% on my trading portfolio, purging all of the OCTs, and hoping this ATH market will vent a bit.

    Then I want my Ante-expiration buying opp. for OTM calls for fractions and do beaucoup contracts for a little Friday diversion.

    Cheers.

    Q.

  87. 87
    QUARRYMAN Says:

    I may have to ‘COP’ a double in half the position when the price nudges over 88. Then the rest can ride until Nov.

    Good trade call for you, my friend.

    Q.

  88. 88
    redjack Says:

    unusual volume in Diamond Offshore Nov 95 and Dec 90 puts…

  89. 89
    zman Says:

    Thanks RJ – I think given their valuation and their greater exposure to the JU market than a combined RIG / GSF that’s not a bad call. I had looked at going long them but it’s forward growth appears to be less locked in and is definitely slower now that they’ve had a big spurt this year.

    WOW – VLO / TSO / COP

    OIH at all time him, approaching 200

    heck even RIG.

    ESV/NBR little thorn in my side though, still looks down channel to me but they will buy anything today.

  90. 90
    zman Says:

    NEB just warned Canadian volumes to fall. Here it comes folks. This is the reason for the rally in the service and gas names. Without Canadian pipeline imports we are paying a lot more for gas next year.

    Canadian natural gas output could fall in the next two years by as much as 15% because oil companies have cut back on drilling to cope with high costs, middling prices and a strong domestic currency, the country’s energy regulator said.

    This is actually bad news for guys like NBRs as more producers throw in the drilling tolw up there but people won’t sort out names for days.

    Best names to play are APC, EOG, SWN, KWK, XTO, CHK etc

  91. 91
    rammastr Says:

    ZMAN – You mentioned XTO as a favorite before. It is at its 52wh. Wait or go?

  92. 92
    rammastr Says:

    This is not a request for a reco….blah, blah, blah, – sorry

  93. 93
    Denise Says:

    Z-what about simple old ung?

  94. 94
    zman Says:

    Trade: Out Rig OCT 110s for $4.80. Still hold the $115s which are down about 28% to my average cost.

    These are bid $4.90 now

  95. 95
    zman Says:

    I like it, it may be a little hot right now. I need to do some valuation work including it to see how much I like it but it’s one that will move well with higher gas prices.

    Also left out HK and PQ

    The UNG – Denise, another one I’m gun shy on. I was right on gas last contract expiry and got mugged by ung anyway. You are bravery than I!

  96. 96
    zman Says:

    TSO up $3.20 @ 55.20 (6.3%) wooooohooooo.

    Thanks Bear Stearns for noticing that those west coast cracks were improving!

  97. 97
    scoop006 Says:

    #95 XTO?

  98. 98
    zman Says:

    TRADE: CHK January 40s for $1.10

  99. 99
    zman Says:

    Scoop – Si – XTO

    I know CHK better and it still has not moved today. Adding to my Jan position with some 40s

  100. 100
    irished Says:

    zman
    VLO is up 340%+. Am I wimp if I do not wait for sell signal? What number are you waiting for please?
    Thanks.

  101. 101
    zman Says:

    Subsea guys – all up 5% and I’m flat footed there. arrrgggg.

    FTI
    CAM
    OII

  102. 102
    zman Says:

    Irish – I was just thinking about banging out of it. There is no sell signal by the way. I don’t do that.

  103. 103
    zman Says:

    well I missed the vlo sale, oh well, hope to sell into strength on the morrow.

  104. 104
    zman Says:

    Nicky – if you are still about, those expectations look pretty squirrelly for tomorrow. I wouldn’t be suprised to see bearish actuals on both crude and products, looks to me like analysts/traders/ and the five blind monkeys who come up with those numbers just bastardized last weeks actuals despite the season.

  105. 105
    QUARRYMAN Says:

    OMG!! I leave the room for a meeting and come back to find VLO at 74!

    What’s going on?

  106. 106
    scoop006 Says:

    Z- Nice trading day. With all your recent picks how did BHI escape you.

  107. 107
    irished Says:

    Z outstanding job again. Thanks

  108. 108
    zman Says:

    Q – I thought all you wanted was 72?! LOL.

    Scoop – I still don’t trust them not to warn.

  109. 109
    zman Says:

    Irish – a blind monkey with a set of darts could have made money in energy today…unless he was short but THANKS!

  110. 110
    Magadan Says:

    Looks like someone blown out a big chunk of TLM Oct 20’s @ .25 just before the close on the bid side.

  111. 111
    TTupp Says:

    Z- does oii have any direct competitors? whats the fwd multiple lok like in it arena? is it reasonable or inflated on the hurricane season?

  112. 112
    TTupp Says:

    Z- re #7, aren’t west coast margins the best of the bunch?

  113. 113
    TTupp Says:

    test

  114. 114
    scoop006 Says:

    BARRONS-” OFFSHORE DRILLERS CAN KEEP COASTING” VALUES RIG@ $130

  115. 115
    kaman Says:

    Z- (re: #80) I got it! In the “eventuate” something you shouldn’t have…induce vomiting. Or just read Phil Flynn.

    Sorry, going back to my charts now…

  116. 116
    zman Says:

    Ok, that was funny. Thanks for the laugh!

  117. 117
    texana Says:

    z i’m trying to work the #’s from the HK gom sale to get a npv or possible buyout target price. i say chk just for the fayetteville shale but they would love to have all that acreage along the quachita thrust belt especially west tx where they have recently made several deals for acreage. others dvn, nfx(woodfrd sh)and my pf clr with there new found stock wealth and desire for gas exposure. est 23.36—–give ur picks & price and we’ll race, thx tex

  118. 118
    zman Says:

    Texana – LOL, It goes for more than that. I’ll work something up over the weekend but it’ll be over 25.

  119. 119
    texana Says:

    z 1 more hk q if ur long the stock u get a mlp drop down, but if u own options u don’t actually get anything. is that correct r to simple an explanation ? thx tex

  120. 120
    zman Says:

    Texana – assuming they get the MLP done and the stock drops as those assets come out I’d bet you are correct. However, they will continue to own the lions share of the MLP so I doubt their stock will drop much. Also, there should be a record date so you’ll have notice and can sell the option. This is one however where I’m going to buy stock and then trade options around the position, like NFX.

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