11
Oct

Thursday – Simultaneous Oil & Natural Gas Reports

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OK, yesterday was fun. You are not supposed to have that much fun on a daily basis. Holding (VLO), (COP) and (TSO) calls through warnings from (CVX) and (VLO) turned out to be the right move and this morning it looks at least initially like there will be a little follow on move. I will be using this recent strength to exit my remaining October positions in the next few days.  

Z's Dictionary has been added under the subscriber area at left. Chock full of energy and other lingo, it's a work in progress and always will be so please feel free to make suggestions for additions.

Big Question Watch: Who warns next, (XOM) or (TSO) or (BHI)? For a day in which two industry stalwarts warned yesterday certainly was a lot of fun. The real question is will anyone care. Valero soared 3% yesterday to a new three month high after it's warning. (COP) has rallied to recover all the losses from it's 3Q warning last week and then some. Normally, I'd say "stop the madness, these companies should be sold" but in this case the near and long term fundamentals for the stronger players here (VLO, TSO, and COP) outweigh the impact of a quarter we knew was going to be a downer. With that said, I'm very likely to exit the VLO OCT $70 calls prior to the EIA report

Commodity Watch: Up!

  • Crude Oil: Rose $0.21 to $81.51 yesterday. This morning crude is trading up another $1 on a labor strike in Nigeria.
  • IEA Trims 4Q Global Oil Demand Forecast.  From 87.8 to 87.64 mm bopd. According to the IEA, oil inventories in the OECD fell by 21 million barrels in August to equal 53.5 days of demand, below the five-year average.
  • Nigeria Watch: (CVX) reports workers have gone on strike at six of their facilities in the country. These usually don't last very long.
  • BP announced mid day yesterday they had another fire on the North Slope (Alaska) last weekend that cut production by 30,000 bopd. They expect repairs to take 2 weeks.
  • Turkish airstrikes on Kurdish guerrillas near its border with Iraq over the last four days. Turkey would like to set up a buffer zone between itself and its enemies the Kurds and Iraq in general so they may come charging across the border in the oil rich North where exploration efforts are just taking off. Can't we all just get along?
  • Ecuador Watch: In a bid to resemble big brother Hugo, Ecuador's Attorney General said the country should tear up contracts with oil companies that have not paid or have delayed payment of a windfall royalty to the state. The royalty was signed into law after Correa came into power and requires that oil companies turn over half of profits deemed "extra." 
  • Natural Gas: Added $0.15 to $7.01 yesterday as cold air filtered into the northeast. This morning NG is trading a =few pennies higher in early trading.
  • NEB Watch: The National Energy Board, Canada's answer to the EIA, said yesterday afternoon that Canadian natural gas production could fall by between 7 and 15% over the next two years from 17.1 Bcfgpd at YE06 to between 14.5 to 15.8 Bcfgpd by 2009.This is pretty important "news" since we get almost 20% of our annual supply from sources North of the border.

Imports From Canada Have Held Up Pretty Well Despite Expectations of A Fall:

canadian-pipes.jpg

 

From an Upstream synopsis of the report:

 

Companies drilling in the Western Canadian sedimentary basin, the main production region that encompasses the western provinces and Northwest Territories, had already been battling with natural production declines. However, a number of big-name companies chopped their activity by the middle of last year as labor and oilfield service costs jumped, the Canadian dollar moved toward parity with the greenback and natural gas prices fell, the board said. Comment: How long can production hold up in the face of declining activity? 

canadian-rig-counts-100307.jpg

 

EIA Oil Inventory Report Expectations (from the Dow Jones Survey):

expected-101007.jpg

Z Comments: Fishy (or at least lazy) Looking Expectations. This report looks a lot like last week's actuals. Recall that last week analysts were expecting:

  • a draw in crude and got a 1.2 million barrel build. So now they see a 1 million barrel build this week. I should note that the 1 mm barrel build in the table above is truly an average this week and by no means consensus as there are some analysts looking for much large increases and decreases in crude inventories.
  • builds in products and they got withdrawals, especially in distillates which is pretty counterintuitive for this time of year as we should be increasing our make or so one would think. So this week they see draws as per the table above (note the bigger draw in distillates)

Refinery utilization is expected to ease by 0.1% to 87.4%. They should always say +/1 2 points on this number as they rarely get it close to right.  We should start moving back up soon.

Natural Gas Storage Report

  • Consensus Range: 70 - 90 Bcf Injection. This seems high to me as you'll see in a minute. 90 would probably send gas quite a bit lower although any move is going to be tempered by a fear of 1) further curtailments from the Rockies, 2) that report from the NEB.
  • My Number: 60 Bcf. While CDDs eased slightly week to week and imports edged up 0.4 Bcfgpd electricity generation increased by 2% week to week providing a healthy boost to cooling load in a season that is not supposed to be seeing this much.

Stocks We Care About Today

  • (BTU) - is spinning off some W. Va. and KY. coal assets. The spin-off, expected to occur at the end of October, will allow Peabody to focus on expanding global operations -- it already mines coal in Australia and Venezuela -- and increase its presence in the western United States and the Illinois Basin, the company said.The spin off will occur at the end of October and will result in a shareholders receiving shares in a new company that will trade under the symbol PCX.
  • (PTR) - Berkshire state hacked back to 3.1%

Holdings Watch:  

CALLS:

  • (RIG) - Sold the OCT 110s for $4.80; a two day 96% gain. Still hold the $115s which are down about 28% to my average cost.
  • (CHK) - Added the January 40s for $1.10; last bid $1.10. Still hold the October 32.50s (not for long) and the January $37.50s.

PUTS: No action. Unless you consider getting your butt whipped in (ESV) to be action and then I'd say there was lots of it. Both ESV positions rallied with the OIH as it posted fresh all time highs. 

Odds & Ends

Analyst Watch: will add in comments later.

Nuclear Watch: It just gets harder to build new ones with news like this. So what's a little tritium in your drinking water, that's just as good as fluoride, right?

Stupidity Watch: The link above regarding Turkey also contains details on a non-binding resolution on the floor of the US Congress that was passed in the House Foreign Affairs Committee that "labels the mass killings of Armenians by Turks around the time of World War I as genocide." Z Comment: I'm no supporter of genocide or any atrocity but there is no point to this bill's timing other than the fact that as the article points out 70% of the air cargo for the US effort in Iraq currently comes through Turkey and the passage of said bill will greatly peeve off the Turks.  I'm sorry but Turkey is not the Ottoman Empire any longer. It is one of the better allies the U.S. has (had?) in the region. Before the U.S. Congress goes around passing judgment on other countries for happenings almost 100 years ago it might want to look at the current environment and bear in mind what is and what is not a constructive course of action. Unfortunately I think that is exactly what they did and THIS was their choice. Congress might also want to ask the American Indian if they want a non binding resolution declaring the activities of the U.S. government (yep, same one since 1776 to present) as genocide. Seems like they might qualify too. I apologize to any Armenians who can't see my point of view but this resolution can only cause further problems in the region.

190 Responses to “Thursday – Simultaneous Oil & Natural Gas Reports”

  1. 1
    scoop006 Says:

    Stupidity Watch, Right On.

  2. 2
    zman Says:

    Analyst Watch: EPEX cut to underperf at BMO, who cares. Otherwise, nada.

    Scoop – that hacked me but I won’t get into it here anymore.

  3. 3
    Sambone Says:

    8:59 am EST

    Nymex Crude At $82 On Turkey-Iraq Tensions

    DOW JONES NEWSWIRES
    From MARKET TALK:
    [Dow Jones] Nymex crude pushes past $82 amid worries over possible Turkish military action in northern Iraq against Kurdish militants. A US congressional panel decided Wed to recognize Turkey’s WWI-era killings of Armenians as genocide, possibly reducing US influence in discouraging Turkish action. Analysts also say prices are supported by a report from the International Energy Agency, which says crude-oil inventories held by industrialized countries covered fewer days of demand at end-Aug vs month earlier. Nymex Nov crude +80c at $82.10. (elizabeth.landau@dowjones.com)

    Reported earlier:
    LONDON — Crude futures pushed higher to break out of recent rangebound trading Thursday morning in London, boosted by technical buying and fears over potential Turkish military action in Northern Iraq.

    The crude market retained the momentum that had left closing prices just shy of intraday highs Wednesday, and despite a slight stutter following the publication of the latest IEA monthly oil report, both Brent and WTI traded at their highest levels since the start of the month.

    At 1136 GMT, the front-month November Brent contract on London’s ICE futures exchange was up $0.66 at $79.26 a barrel.

    The front-month November contract on the New York Mercantile Exchange was trading $0.75 higher at $82.05/barrel.

    The ICE’s gasoil contract for November delivery was up $14 at $697.75 a metric ton, while Nymex gasoline for November delivery was up 145 points at 204.81 cents a gallon.

    Market participants said Turkish-Kurdish tensions had climbed to the top of the list of current geopolitical concerns influencing the market.

    Turkish Prime Minister Recep Tayyip Erdogan told CNN-Turk TV Wednesday that a decree to allow cross-border military operations into Iraq might be sent to Parliament Thursday.

    Adding to those concerns, a decision by a U.S. congressional panel to recognize Turkey’s World War I-era killings of Armenians as genocide Wednesday threatened to dilute Washington’s influence in deterring Turkey from embarking on potential incursions into Northern Iraq to tackle Kurdish separate militants.

    “The Turkish military is getting more and more impatient with the Kurdish militants based in Iraq and the likelihood of Turkish cross border action into Iraq is increasing,” said Olivier Jakob at Petromatrix.

    “Such actions are likely to be limited in scope but will still add some geopolitical premium when and if such a crossing occurs.”

    But others suggested that the latest developments were being seized upon as a means of driving prices higher. An increase in open interest over the first half of the week, particularly in Nymex WTI, hinted that funds may be renewing their interest in crude futures, with a weak dollar providing an additional incentive for investors, some said.

    “With the dollar where it is, it’s encouraging funds to look at the commodity sector,” a broker said.

    That increase in open interest could lead to further climbs, he said, despite recent expectations that the end of hurricane season and the start of refinery maintenance season would sponsor moves in the opposite direction.

    With technical buying sparking Wednesday’s bullish finish, further technical support was seen to be helping extend gains Thursday.

    “Trading above the last three day’s ranges certainly helps, but ultimately we’ve really got to get through the highs of the end of September — that’s the target,” said Fimat analyst Julian Keites.

    A key influence of where crude prices would move next is expected to come from the second of the day’s data releases, the Department of Energy’s weekly report, offering some indication of inventory levels and clues for the outlook for winter fuel stocks.

    The average of a Dow Jones Newswires survey of analysts, crude oil inventories are expected to gain 1 million barrels, while gasoline inventories are seen falling 300,000 barrels. Distillates, which include heating oil and diesel fuel, are seen falling by 600,000 barrels.

    Meanwhile, in its latest monthly oil report published earlier Thursday, the International Energy Agency kept its world oil demand growth forecasts for this year and next unchanged but expressed concern over OECD oil stocks that have fallen below a five-year average despite rising supply.

    The IEA left its estimate of world oil demand growth for this year and the next unchanged at 1.5% and 2.4%, respectively. It reduced its demand forecast in the fourth quarter by 320,000 barrels a day to 87.6 million barrels a day, and cut its implied need for oil from OPEC in the fourth quarter by 100,000 barrels a day.

    Indications that OPEC would be making good on its announced increase in output quotas from Nov. 1 came from Asian refiners overnight. They reported that Saudi Aramco has said it will load full contractual volumes of crude oil to the region in November.

    Aramco had been cutting term supply volumes to Asia below full contractual volumes since November of last year, following OPEC’s decision in the previous month to cut output.

    —By Nick Heath; Dow Jones Newswires

  4. 4
    zman Says:

    CHK rapidly approaching 24 month high.

    DRYS at another all time high

    RIG to 115

    ESV needs to stay below 58 (probably not going to do that)

    COP up another 1%.

  5. 5
    zman Says:

    BTU liking the spin off, up another 4%

  6. 6
    zman Says:

    RAM – I know you still have the ESV puts; tell me you’ve still got the BTU calls.

  7. 7
    zman Says:

    CHK within 2 dimes of a 24 month breakout.

    Very green screen. RIG starting to rally now, nearing 116. Back in black on my Oct 115s.

    Since no one is about in here I’ll be doing a short MN1.com broadcast around 9:25 CST

  8. 8
    jiveyjr Says:

    thnx for the heads up on the broadcast…

  9. 9
    zman Says:

    jivey – we’ll see if it happens, they said they could only spare 5 minutes b/c they’re doing a book interview and I almost told them to shelve it but I thought, what the heck, it’s pretty slow in here.

    Independent refiners seeing a little profit taking pre inventories

  10. 10
    aaatest Says:

    test comment

  11. 11
    scoop006 Says:

    Write a book then they can devote back to back segments to you

  12. 12
    zman Says:

    wow, rig just lost all its gain.

    Scoop, maybe I should just can it.

  13. 13
    Denise Says:

    Z-Care to make a few what if’s on NG?
    If Canada were to cut production (lets say the low end of 7%) and lets assume a normal winter/summer temps-what range would you estimate Ng would stay in?
    Thx
    Also what about all these skrocketing fertilizer plays? Makes me think of long dated puts?

  14. 14
    scoop006 Says:

    Any moves prior to inventory report

  15. 15
    TTupp Says:

    Z- do you know why slb got its po yesterday? im holding calls and wondering if its gona bounce back down from this resistance

  16. 16
    TTupp Says:

    Z- you on the crackberry today?

  17. 17
    zman Says:

    Denise,

    I haven’t look at the nitrogens in awhile but that’s not a bad idea.

    On a 7% hit (over two years) and keeping in mind that Canadian industrial demand is growing I’d throw out a $6 long term average floor.

    Scoop – thinking about dumping the Oct calls as they’ve done well and are extremely sensitive now. Probably won’t do it.

    Tupp – what’s a PO? They’ve had a heck of a run of late.

  18. 18
    zman Says:

    APA at all time high

    Service running, RIG rebounding

    At least NBR is flat. Thinking about BHI puts now…will wait on a possible surge from inventories or act if they are oil bearish.

  19. 19
    TTupp Says:

    that should read “what happened to SLB”

  20. 20
    Nicky Says:

    Morning all – lets party like its 1999!

    Z – that Nigerian strike was actually announced yesterday and behind yesterdays rise in oil.

    Today’s rise is down to the IEA report which basically said they don’t see demand dropping.

  21. 21
    Sambone Says:

    10:04 am EST

    Nymex Crude Reaches $82 On Iraq-Turkey, IEA Report

    By ELIZABETH LANDAU
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude-oil futures rose past $82 Thursday as tensions between Iraq and Turkey flared up.

    Prices were also boosted by the latest International Energy Agency report, which showed that industrialized countries’ crude inventories fell in the third quarter, a period during which they usually rise.

    The front-month November light, sweet crude contract on the New York Mercantile Exchange was recently up 80 cents, or 1.0%, at $82.10 a barrel. Brent crude on the ICE futures exchange rose 64 cents to $79.24 a barrel.

    Front-month November reformulated gasoline blendstock, or RBOB, rose 1.78 cents, or 0.9%, to $2.0514 a gallon. November heating oil rose 1.76 cents, or 0.8%, to $2.2348 a gallon.

    Fears that Turkey may strike against Kurdish militants in northern Iraq supported prices, analysts said. A U.S. congressional panel decided Wednesday to recognize Turkey’s World War I-era killings of Armenians as genocide, possibly reducing U.S. influence in discouraging Turkish action.

    The flare-up probably won’t impede the flow of oil, but the conflict is one factor pushing up crude prices, said Addison Armstrong, an analyst at TFS Energy Futures.

    “I don’t think this Turkey thing is that big of a deal, but a lot of people are hanging their hats on it,” Armstrong said. “The oil market does tend to react to these things.”

    Fundamental support to the market was lent by the IEA, which Thursday reiterated its forecast for 1.5% global oil demand growth in 2007 and 2.4% growth in 2008. The EIA also said that crude-oil inventories held by member countries of the Organization of Economic Co-operation and Development covered fewer days of demand at the end of August compared to a month earlier.

    “Suggestions of a stronger than normal OECD stock draw during the third quarter may have fueled some additional price support,” according to a note issued by Ritterbusch and Associates of Galena, Ill.

    Traders also awaited U.S. inventory data from the U.S. Department of Energy, set to be released at 10:30 a.m. EDT. Many analysts expect an decrease in supplies of refined products and an increase in crude stocks. A surprise draw in crude could further boost prices, Armstrong said.

    Crude oil stockpiles are expected to build by 1 million barrels for the week ended Oct. 5, according to a Dow Jones survey of analysts.

    Distillate stockpiles, which include heating oil and diesel fuel, were seen falling by 600,000 barrels. Gasoline stockpiles were expected to fall by 300,000 barrels, while refinery utilization was seen falling 0.1 percentage point to 87.4%.

    Analysts also noted that the dollar continues to weaken, though it gained modestly after a report showed the U.S. trade gap narrowed in August. The euro was recently trading at $1.4176.

    Prices have surpassed the intraday highs for Monday and Tuesday. This, together with other price-supportive factors, lead some analysts to speculate that crude futures will rise to new all-time highs, surpassing the record of $83.90 reached on Sept. 20.

    “Obviously if we had some huge surprising inventory build, perhaps prices will stall, but the market is looking for any kind of bullish news’ to continue higher, said Tom Bentz, director and senior analyst at BNP Paribas Commodity Futures.

    —By Elizabeth Landau, Dow Jones Newswires;

  22. 22
    Nicky Says:

    It is going to take one heck of a bearish report to stop this bullish momentum.

    WTI looks in total surge mode.

  23. 23
    zman Says:

    Morning Nicky – yeah I know, I was just trying to hype it, lol. just kidding, so was BP but I like to put a little color in the commodity watch.

    Did you see the comments on the fishy numbers in the expectations?

    T – ohhhh. I think they are caught up in this whole, Chavez needs help on the service side now that he’s punted the majors from the Orinoco.

  24. 24
    Denise Says:

    Z-re BHI-Najarian pointed out a few days ago unusual call buying and read late yesterday there was a hal for bhi rumor?

  25. 25
    zman Says:

    heard the xxxxx for BHI rumor. Wouldn’t think HAL could pull off an accretive deal for those guys…

  26. 26
    TTupp Says:

    btu now appears to be the rapist

  27. 27
    Nicky Says:

    Hi Z – yes note your comments on inventories.

    All markets just seem in ramp, super spike mode right now. I am not sure the traders will care about inventories anyway – they aren’nt watching the fundamentals after all. Oil is just a speculative bubble right now.

  28. 28
    Nicky Says:

    They got what they wanted –

    a draw in crude of 1.7

    Build in rbob of 1.7

    draw in distillates of 600k

    build in nat gas of 73

    refinery utilization at 87.8

  29. 29
    zman Says:

    colosal waste of time

    1.7 draw crude (expected build)
    87.8% utilization, that’s a bit high
    gasoline up 1.7 wow
    dist draw of 0.6

  30. 30
    Nicky Says:

    Crude and rbob were the opposite of expectations and distillates more or less in line (slightly better) and nat gas in line.

  31. 31
    zman Says:

    that should recover RIG and COP a bit,

    no trade bhi

  32. 32
    Nicky Says:

    CNBC saying the US is filling its SPR – saying this is responsible for the high prices.

  33. 33
    zman Says:

    …according to the report SPR volumes were unchanged week to week at 692.8 mm.

  34. 34
    Nicky Says:

    Also have an analyst on saying how outrageous it is that the government are doing this.

  35. 35
    Nicky Says:

    very small amounts apparently but continual.

  36. 36
    zman Says:

    they have been adding last several weeks but added none this week. That’s the problem with their “live” guests – they only know the main numbers by the time they go on air. Their guest told them to mention it pre number and then they run with it as does he.

  37. 37
    zman Says:

    Cushing built again, bet they don’t talk about that!

  38. 38
    zman Says:

    West coast finished gasoline fell again,

    CARBOB – California RBOB fell again as well.

    No sale of the TSO NOV calls for me.

  39. 39
    TTupp Says:

    is the slb move attributable to the rumors around? even though its the biggest?

  40. 40
    zman Says:

    November crude up $1.50 to $82.75

  41. 41
    Nicky Says:

    I think wti could surge to about $88 on this run.

  42. 42
    Sambone Says:

    N – My target is 87.

  43. 43
    zman Says:

    T – I’m not sure

    N – if that happens APA / DVN/ EOG / APC all screaming buys here. oh yes and XOM, SU and everything else that sells oil as far as an options trade goes.

    OIH at all time high of 200

  44. 44
    Sambone Says:

    Weather – Nothing at this time

  45. 45
    Denise Says:

    Cramer column suggesting Jan calls on FTI, CLB, OII . Says there cheap tech stocks selling well under twice there growth rate. Advocates buying calls because they have not pulled back.

  46. 46
    TTupp Says:

    if that alberta thing gets squashed would it be safe to say that su will go much higher? tlm might be in for a nice run here Z

  47. 47
    rammastr Says:

    No more puts!

  48. 48
    zman Says:

    Denise: can’t disagree with the FTI and OII and I’d add CAM

    T – definitely. I’ve got some longer dated calls on TLM due to Jimbo’s persistence, see it’s breaking 20.

    Stocks look a little bewildered with crude topping 83 now

    RAM – I hear ya. You still have your BTU?

  49. 49
    TTupp Says:

    yea no more puts is right! i just fired out my hes puts right after the report. i got lucky since it was down on the day for some reason

  50. 50
    Nicky Says:

    CNBC now seem to be obsessing about the SPR.

  51. 51
    zman Says:

    It was flat I tell ya!

  52. 52
    rammastr Says:

    Yes, but I bailed on the short term DRYS and CHK, therefore, bummer.

  53. 53
    TTupp Says:

    might DD on oii, anyone think this is a good move?

  54. 54
    zman Says:

    RAM – and ESV and NBR stinking up the room as well

    T – I’m just not chasing these extended breaks on FTI / CAM / OII – all subsea. They are very mo-mo which is nice as long as they keep going up everyday. I would want to talk you out of it because I like OII a lot and it probably goes up another 10 points by next Friday, lol, and I’m kicking my self for missing it after my sales in September.

  55. 55
    TTupp Says:

    a caution to anyone looking to be long drys opts, IV is at an all time high

  56. 56
    zman Says:

    Ahhhh, TSO back to green after a 1 point dip on the numbers.

  57. 57
    Nicky Says:

    I hear you Z on SPR.

    I see there was a 400kbd fall in imports over the week – unlikely to be the start of a trend.

    Heat actually saw a build with diesel accounting for the decline as demand there bounced 5% – again unlikely to be a trend.

    Cushing stocks now stand at 4 week highs.

    But it doesn’t matter – the bulls are firmly in control!

  58. 58
    zman Says:

    cushing only matters when they have no other straws

  59. 59
    rammastr Says:

    Buy VLO on this weakness?

  60. 60
    zman Says:

    I’m not, just watching. Gulf coast and midwest regions saw builds in gasoline and distillates and gulf coast saw a small build in crude, could soften products a bit there. Would not be Octobers either as I’m looking to loose the rest of my 70s somewhere in here. Should of popped them last night before the bell.

  61. 61
    rammastr Says:

    Anything?

  62. 62
    Nicky Says:

    RBOB looking a touch weaker but distillates and wti still consolidating at the highs.

  63. 63
    Nicky Says:

    They are debating the SPR issue on CNBC now.

  64. 64
    QUARRYMAN Says:

    GuyZ.

    What do you think of the XLE Jan 78 puts?

    They’re around 4 now, Let this thing ride up a another point or so on the XLE, then buy some protection?

    or ‘When the BIDus DRYs up and the Chinese market PTRs out, it’s time to COP a trade and then look out VeLOw’

    … I know [groan!] but you catch my drift.

    Q.

  65. 65
    zman Says:

    Not right this minute, looking to punt some stuff on strength (Oct COP if it will come up a bit).

    NFX has some big call volumes that’s interesting Jan 60s

    Looking at November and beyond RIG

    HK keeps drifting higher and I may go there today just b/c I’m sick of seeing it drift up.

    May add some EOG and some more CHK later if they will fall a bit.

    APC and APA as well but they ran hard at the open

    SWN looks like it’s about to play catchup.

    and then there’s HAL and the 3 subseas where I’d like to enter

  66. 66
    zman Says:

    Q —–ugghhhh . They’ve taken my put button away. Seriously, not a bad idea but I’m with Nicky on a run to new highs on crude.

    Very good point re IV on DRYS. I was looking at puts there for a trade but I mean come on, that’s just suicide right now too.

  67. 67
    QUARRYMAN Says:

    I don’t SWN, what’s a close analog co. to compare charts to –I’m trying to follow the ‘catchup’ reference.

    Also, I’m interested in HAL, have you been posting about them that you can refer me to?

    [No comments on the lame puns–I’m used to my teenagers’ rebukes!]

  68. 68
    Popeye Says:

    Semi OT: Container shipments into the port of LA/LB are off for the first time breaking the trend.

  69. 69
    zman Says:

    HAL – big name last month, nothing really lately but they’re still cheap and closing the gap (a little on SLB)

    SWN – fayetteville shale player – 100% NG best comp is a KWK. Catchup in the sense that they are one of the fastest growing E&Ps out there and they are not trading at their all time high.

  70. 70
    zman Says:

    Popeye – THANKS, not OT at all. Is that fresh news or day old? Gotta link?

  71. 71
    Popeye Says:

    Not breaking news Z. It has been in the LA Times and local news.

  72. 72
    TTupp Says:

    just sold a boatload of DRYS nakkie calls, deliciously priced

  73. 73
    zman Says:

    TRADE: Entering RIG November $115 CALLS for $5.55. Small to start

  74. 74
    zman Says:

    Popeye – Thanks. Please let me know if you see more. Still at the beginning of learning this industry.

    Wildman Watch: TTupp

  75. 75
    zman Says:

    SU nickel off all time intra day high of 100.11

  76. 76
    TTupp Says:

    “covered sales and owning underlyings is for housewives” no offence to anyone hahaha. excuse me today guys i drank an entire pot of coffee

  77. 77
    QUARRYMAN Says:

    I’m out of my OCT 110 RIGs at 6.70

    and that is a, ha hmmm: 171% gain!

    I’m rolling 25% over into the NOV 115s.

    ThankZ!

    [You’re gonna have to go into shameless promotion sound bites like PSW and WW]

    Q.

  78. 78
    Nicky Says:

    Somewhat extraordinarily CNBC now questionning why the bearish fundamentals are being ignored????

  79. 79
    zman Says:

    T – me too on the coffee and that was before 8 local

    Q – I’m afraid I will be half way out of pocket next Friday. Brother in laws wedding in Delaware.

  80. 80
    zman Says:

    Note to a bored board: I will be out from about 10am CST Thursday (all day) and then in and out on Friday. I’ll have the crackberry so will post via that when not on planes.

  81. 81
    QUARRYMAN Says:

    Too bad.

    I hope you’re on line for the next triple witching Friday… Dec. 21?

    Should be fun.

  82. 82
    TTupp Says:

    Z- does oii trade with a commodity?

  83. 83
    Sambone Says:

    11:26 am EST

    Crude Pushes Past $83; Surprise US Crude Stock Draw

    By Elizabeth Landau
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures rose past $83 a barrel following the release of U.S. government data showing a surprise drop in crude inventories.

    The rest of the weekly report from the federal Energy Information Administration was mixed. Gasoline stockpiles unexpected rose in the week ended Oct. 5, as did refinery utilization rates.

    The front-month November light, sweet crude contract on the New York Mercantile Exchange was recently up $1.70, 2.1%, at $83.00 a barrel. Brent crude on the ICE futures exchange rose $1.42 to $80.02 a barrel.

    The November gasoline benchmark contract, reformulated-gasoline blendstock, rose 3.46 cents, or 1.7%, to $2.0682 a gallon. November heating oil rose 4.51 cents, or 2.0%, to $2.2623 a gallon.

    Crude oil stockpiles fell by 1.7 million barrels to 320.1 million barrels. Analysts had expected a 1 million-barrel-build, according to a Dow Jones Newswires survey.

    “The draw in crude was overwhelming,” said Tony Rosado of IAG Energy Brokers in Ft. Lauderdale, Fla. “The market is paving back up to contract highs.”

    The front-month Nymex crude contract hit an all-time intraday high of $83.90 on Sept. 20.

    A combination of lower refinery inputs and a drop in imports influenced the draw in crude, said Phil Flynn, senior market analyst for Alaron Trading Corp. in Chicago.

    This is also a sign that refiners “don’t want to have the cost of keeping extra crude on hand,” Flynn said, referring to a recent reversal in future pricing patterns that make it costly to keep crude in storage. “This has been a trend recently: that the industry seems to be less afraid of a disruption in supply.”

    Gasoline stockpiles unexpectedly rose by 1.7 million barrels to 193 million barrels, which is still “pathetic,” Flynn said. Gasoline inventories remain very thin despite the increase. Analysts had expected a draw of 300,000 barrels.

    Distillate stockpiles, which include heating oil and diesel fuel, fell by 600,000 barrels, in line with expectations.

    Gasoline stocks normally build at this time of year, and the 200,000-barrel build of stocks at the Nymex delivery point of Cushing, Okla., also sent negative signals, said Tim Evans, an analyst at Citigroup.

    Refinery use rose by 0.3 percentage point to 87.8%, contrary to predictions of a slight, 0.1-percentage-point decrease.

    –By Elizabeth Landau, Dow Jones Newswires

  84. 84
    zman Says:

    TRADE: Out OCT $32.50 Calls at $5.10, nice 144% move since 9/5 entry. Still hold the Jan 08 37.50s and 40s.

  85. 85
    zman Says:

    T – OII – not really that I can tell. Mostly just up on the long term fundamentals of the global deepwater development market. Are you familiar with what they do?

  86. 86
    apbd Says:

    Z:
    #84 CHK ???
    apbd

  87. 87
    zman Says:

    Sorry, yes CHK, and I wasn’t in a rush to sell but it’s that time of month and the Octobers mostly have to go for me around now. Personal rule of mine except with a few special cases and uber risky trades.

  88. 88
    TTupp Says:

    yea i am, read up. super diversified bus. segment wise, and geographically wise and , industry wise.

  89. 89
    zman Says:

    RIG approaching 118…wonder if Cramer jumps back on the bandwagon now that the chart is shaping up.

  90. 90
    Sambone Says:

    I just picked up some more BQI on a trade.

  91. 91
    Nicky Says:

    It goes without saying that the trend is firmly up in the energy market.

    Next target for crude would be the 83.76 contract high. Important support at 81.90.

    Distillates now has solid support in the 22400 region.

    RBOB at 20500.

  92. 92
    zman Says:

    Sambone – not a bad idea.

    SU approaching 101

    NFX and pretty much all the E&Ps on fire.

    VLO going green

    TSO up nice: its the west coast cracks I tell ya!

    HAL up 1.10 wow

  93. 93
    zman Says:

    N – would you call that RBOB level pretty solid at 205

  94. 94
    zman Says:

    DRYS and the other drybulks look somewhat tired. Charts are obviously pretty overbought

  95. 95
    Nicky Says:

    20500 has provided support and resistance several times now Z.

    I will give you some more levels in a sec but as it has underperformed today it is the equivalent key level I would say.

  96. 96
    Nicky Says:

    RBOB – 20 dma is at 203.59. The really major support level remains at the 19800 area.

    Resistance above today’s high is at 20840.

  97. 97
    Nicky Says:

    Also the uptrend line of this leg up from 2nd October comes in at around 20000 which is back into the major support area.

  98. 98
    Nicky Says:

    WTI – 83 currently providing support. After that it would be 82.50.

  99. 99
    zman Says:

    Nicky – TY

    No Sane with API #s today.

    PQ breaking out yet again. Will have to bit bullet and purchase for earnings sooner rather than later or it’s going to be at 15. Ditto HK except it will be at 20

  100. 100
    zman Says:

    Sniffing at the Nov 20 HK Calls. If anybody wants to sell me theirs I’ll meet you half way

  101. 101
    Sambone Says:

    Nicky’s favorite all around guy!

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

  102. 102
    Nicky Says:

    Ah Samborne – CNBC have just quoted some of his bullish waffle!

  103. 103
    zman Says:

    Sambone – thanks for the laugh. He said a couple of months ago he had gotten into trading energy options. From his piece it sounds like he would be negative on the refining patch. How rear view mirror of him.

  104. 104
    Sambone Says:

    Don’t you “Just love him”? LOL

  105. 105
    zman Says:

    CHK just hit the 24 month high, good day tomorrow and its a breakout off a 2 year, very dissastisfying period for shareholders.

    Oil stocks look nervous about the crude close today. If it holds $83 I’d bet oil stocks pop after 2:30 est

  106. 106
    Nicky Says:

    After 22400 distillates has support at 22200, 21800 and then 21500.

  107. 107
    Nicky Says:

    Crude looks ready to take another look to the upside – taking everything else with it.

  108. 108
    QUARRYMAN Says:

    What’s the rationale for buying Chesapeake?

    Underfollowed/valued relative to peers?

    Getting a fresh look?

    ST play?

  109. 109
    zman Says:

    They go for the record tomorrow barring world peas breaking out

    Q – CHK: two words Aubrey McClendon.

    92% gas, huge acreage position, excellent management(very savvy), great hedge position, big grower relative to its peers, it is at a discount although not an extreme one on P/CF. They have around 11,000 drill locations in inventory now after years of making acquisitions. They are now in the process of PUD conversion (spending capex to shift reserves from the PUD to the proved developed producing category (PDP).

    TRADE: CAM $110 October CALLS for $0.80. No guts, no glory. This is about as risky as I get. If it opens down tomorrow these will be toast. Only for money I don’t like.

  110. 110
    zman Says:

    I’ll probably take a beating on that trade, oops, already am.

  111. 111
    zman Says:

    Wow, how to lose half you money in just under 20 minutes by Zman. Crickey.

  112. 112
    redjack Says:

    all the energy stocks are soaring…when do you sell?

  113. 113
    Denise Says:

    Not sure if it matters but I am reading increased comments about the Russia Central Bank having liquidity problems-accepting credit as collateral and lowering min reseve requirement

  114. 114
    zman Says:

    Not all of them. I sold some CHK earlier. I think tomorrow on many more of the Octobers b/c I think they try for the record on crude tomorrow.

  115. 115
    zman Says:

    Denise, could be the reason the Dow is halving its gains from earlier.

    COP got carjacked while I wasn’t looking.

  116. 116
    zman Says:

    Anybody got another reason why the broad market just went red from up 100?

  117. 117
    Sambone Says:

    Market – maybe, just maybe reality is sinking in.

  118. 118
    zman Says:

    if that’s the case its sinking back out again.

  119. 119
    rammastr Says:

    Still like the CAM trade?

  120. 120
    zman Says:

    no

  121. 121
    zman Says:

    not given the mkt action of the last 30 minutes, tell me what the driver for the huge swing in the dow and maybe I’ll reconsider.

  122. 122
    rammastr Says:

    Thanks. No dig intended. Had to step away. Some energy stocks got red fast.

  123. 123
    Sambone Says:

    I know why the market is going down, Hillary is on TV.

  124. 124
    zman Says:

    Ram – no dig taken, lol.

    Sam – Is she “stealing all my money…it’s my money and you’re stealing it” – know the movie?

  125. 125
    zman Says:

    TUPP – awesome play on DRYS calls!

  126. 126
    Denise Says:

    Seems like any excuse will do.The overbought oscillators of the chartist I read were really high on both exchanges last night.
    Z-Thank you for that NEB NG GAS COMMENT YESTERDAY-paid for my subscription
    It was feeling kind of trumpetey this am and I turned cautious. Got lucky

  127. 127
    rammastr Says:

    Look out below. Something is causing reversal very fast!

  128. 128
    Sambone Says:

    Z – Don’t recognize it.

  129. 129
    zman Says:

    more sellers than buyers I’d bet.

  130. 130
    Sambone Says:

    Nothing on the wire as far as I see to do this, maybe program trades?

  131. 131
    rammastr Says:

    Oh I know. We are getting too close to Cramers high for the year, so his legions must be selling a little soon.

  132. 132
    texana Says:

    out clr & nfx with gains rolling more into hk & oii

  133. 133
    rammastr Says:

    HK JAN 20’s around .95 or so?

  134. 134
    zman Says:

    bouncy bouncy bouncy…don’t call it a come back but big oil looks to be

    If the site goes down at 3 est its not my fault…support issues being worked on then…it could “break” the site.

    CAM minute chart looks like a black diamond run

    Texana = Nice work!

    Denise – glad to hear it!

  135. 135
    zman Says:

    HK – I had an order in earlier on the 20s but it walked on me when I tried to split the spread. I scrubbed it for now.

  136. 136
    calvino Says:

    Z, yesterday was not so much fun for me, ergo my absence from the comments section. I would use the analogy you coined yesterday – the opposite of catching a knife is swallowing a shotgun blast. BIDU is no squirrel load either – they came at me with 00 buck. I had to gut a big chunk of my portfolio just to hold the short overnight, and then off to the races with a gap today. Anyway, about 90 mins ago, Senior Nasdaq realized he might need the rest of the economy just in case, and BIDU turned around rather sharply. I booked the profit and promise to drop a bill into the childrens’ charity colletion box tomorrow at Dunkin Donuts. I have been hedging my bets with my change, but tomorrow, I will give thanks.

  137. 137
    Sambone Says:

    US Stocks Hit New Highs After Wal-Mart Hikes Forecast

    DOW JONES NEWSWIRES

    2:23 (Dow Jones) US stocks seeing a pretty vicious selloff, with the DJIA and S&P tumbling from record territory — and briefly turning negative — and the Nasdaq Comp getting dragged down by tech names. Earlier, the Dow and S&P were comfortably in record territory. GM and Wal-Mart still higher on the Dow, but weakness is creeping in elsewhere, with Boeing, Caterpillar the worst. Google, Apple, RIM, Intel all weighing on the Nasdaq. Tech is the worst sector, with consumer discretionary also weaker. Big Board volume, though, just about average. DJIA up 17, S&P 500 up 1, Nasdaq Comp down 13. (PJV)

  138. 138
    zman Says:

    Cal you mista luckee. hahahaha

  139. 139
    zman Says:

    N – did you notice they managed to close oil just over 83 at the bell?

  140. 140
    TTupp Says:

    drys got tanked from the market, but i still think its a good call lol. no was the 130’s will close in the money by next fri

  141. 141
    Sambone Says:

    The crowd – “Expectations have gotten very low on the Street and I think there are signs that we’re in a bull market right now because bad news is interpreted as good news and good news is being interpreted as really good news,” said Nicholas Raich, director of research at National City Private Client Group in Cleveland.

  142. 142
    zman Says:

    T – you wrote calls right? nice work

  143. 143
    Sambone Says:

    3:06 (Dow Jones) There’s been a lot of “bad news is good news” talk on the
    Street, and that notion has driven a lot of stocks higher lately. Market seemed
    to be on that wavelength again this morning, when it rallied despite retail
    sales reports that were tepid at best, and a trade deficit report that showed
    sagging consumer demand. Market seems to be coming around now to realization
    that bad news actually is bad news; calling it good news is just skirting around
    the edges of reality. DJIA down 52, Nasdaq Comp down 32, S&P 500 down 6. (PJV)

  144. 144
    TTupp Says:

    the guy on the other end has already lost half

  145. 145
    Nicky Says:

    Hi Z – just taking a look at the charts. Distillates looked very weak I thought and RBOB only bounced in the last 10 minutes but was weak anyway. I thought the close lacked conviction.

    Broader market – it made it to the area I stated a few days back. There was a really amazing cycle which called for a reversal today or tomorrow. I will try and post it…

  146. 146
    Nicky Says:

    Google was up 1400, now down 1200. thats just today!

  147. 147
    rammastr Says:

    SAM – That is too logical for my thinking. Could this be the crap hits the fan finally (is this flaming?)?

  148. 148
    zman Says:

    flaming is personally abusing someone so I guess you could technically be flaming the fan.

    OIH sinking like a stone.

  149. 149
    rammastr Says:

    Add more RIG?

  150. 150
    rammastr Says:

    NICKY – What do you mean by amazing?

  151. 151
    Nicky Says:

    The cycle:

    While
    the 5-year (60 geometric months) anniversary of the
    2002 low – and thus the ‘5th birthday’ for the current
    bull market – just took place, tomorrow is a more
    important anniversary.
    October 11th is the 17-year anniversary of
    the October 11, 1990, post-Kuwaiti-invasion stock
    market low. The stock market experienced a kind of
    irregular – or running – correction from the 1987
    peak to the 1990 low and then began its massive,
    1990’s bull market on October 11/12th. What would be the ultimate
    irony is if the S+P managed to set a double-top on
    the 17-year anniversaries of the 1990 high (July
    17th) and the 1990 low (October 11th) before
    expectations for a 1-3 year bear market really take
    hold.

  152. 152
    Nicky Says:

    This sell off is broad based – commodities included. Gold has fallen too.

  153. 153
    zman Says:

    Add RIG? Not me my friend. I’m watching the broader and still waiting on a real reason for the 200 point swing. There’s a catalyst out there but it’s easy for people to say things like good is bad news and bad news is worse news. Glad I sold the Octobers.

  154. 154
    Nicky Says:

    Ram – just posted the cycle in #151.

  155. 155
    Nicky Says:

    The target was 1574 on the spx although I thought we may get to anywhere between 1577 and 1588 to be honest. Almost made it there today.

  156. 156
    Sambone Says:

    Ram – Ya know, I’ve been a bear so long, I don’t know what to think. This market is like 1999. Everyday up, up up. What I do know is that the us$ continues to fall, 10 year treas bond yield continues to go up, the consumer is spending less, we have rising inflation (See oil and food), petro countries getting tired of losing money, etc, etc, and so on. That’s reality in my book. So is the beginning of the end? Ask Prince since he wrote the song.

  157. 157
    rammastr Says:

    Where do I retrieve?

  158. 158
    zman Says:

    was it just me or did retail sales look like crap this morning.

    RAM was 157 for me…if so do not understand.

    Hey, are we a green light for purchases into the close. Energy looking stronger again. I’ll pass although COP is tempting again.

  159. 159
    Nicky Says:

    Sam- what is amazing to me is that every time the market tops like this there is never usually a catalyst – it just sort of quietly happens. But of course as you say the fundamentals have supported a fall for months if not years.

    The earnings stuff is such rubbish this quarter when everyone has lowered guidance so much they can’t help but beat.

  160. 160
    zman Says:

    Nicky – spot on with your comment on lowering estimates. Isn’t this the first quarter since 2002 with down expectations for the S&P500?

  161. 161
    Nicky Says:

    Z – yes retail sales were crap and the retailers are tanking this afternoon. Walmart was good until they looked closer and then it was bad!

  162. 162
    Nicky Says:

    what chance I wonder of the same reality sinking into the energy market?

  163. 163
    zman Says:

    We’re target (TGT) people around here but even they lowered guidance.

    Hold on now, valuations are quite a bit lower on the energy names. If you mean oil that’s one thing but don’t be spreading that poison about the oil stocks until I’m out of my positions. 😉

  164. 164
    kiaora Says:

    Hi All, Here’s the catalyst for the selloff this pm..
    “ECB governing council member Axel Weber said rising inflation in the euro zone may require additional policy action, according to Dow Jones Newswires. The comments appeared to raise concerns on Wall Street that U.S. inflation could prevent the Federal Reserve from making another rate cut.”

  165. 165
    zman Says:

    kiaora – thankyou. See, a catalyst that’s all I wanted to know about. Funny how says it’s concerned, very concerned, about inflation but then acts like its not a problem.

  166. 166
    Sambone Says:

    Hmmmm, Lower estimates? If the economy really is slowing, wouldn’t earnings come down? The S&P has what a 18 multiple on it, so earnings are growing by 18%. Hmmm, if the consumer which comprises 72% of our economy slow spending, isn’t that a sign of recession?

  167. 167
    Nicky Says:

    Apparently JP Morgan downgraded Baidu too – that took Google with it. Baidu down 9% on the day now.

  168. 168
    Popeye Says:

    Sambone re:156, I’m with you but I feel like I’m left out in the cold while everyone is making money. I just can’t bring myself to pull the trigger and I’m sure not going short in this market (again).

  169. 169
    Nicky Says:

    Trust me you don’t need a catalyst for this. There are catalysts all around us and yet the market has ignored them all. So why would a catalyst now take the market down?
    Fundamentals really do not play a part in any of these markets as people just believe what they want to believe.

  170. 170
    Nicky Says:

    Looks like a key reversal in the Dow – just!

  171. 171
    zman Says:

    Sambone – Yes, but I’d argue that they will still drive from shop to shop not buying anything. And the energy stocks, which are about 20% of the S&P500 now trade at a much lower multiple as a group.

    Nicky re Baidu – analysts, can’t round em up and shoot em…or can you.

    Popeye – that is exactly how I’ve felt with the E&P’s racing the last few weeks and me under exposed there. Very frustrating. If you’ll note, the big cap E&P names all went red and are already back up a dollar +. APC, APA, EOG, DVN …only the ones with Rockies exposure might, and probably won’t, have a bad quarter.

    Nicky – I just meant a catalyst for the market dipping today. It’ll probably be forgotten by tomorrow anyway, just wanted a reason for me to think about how far it would go today.

  172. 172
    Nicky Says:

    and in the spx

  173. 173
    rammastr Says:

    157 was NICKY. Where is the chart/info.

  174. 174
    scoop006 Says:

    Nicky #169 No truer words were ever spoken.

  175. 175
    Nicky Says:

    Z – maybe finally it all went too far. Baidu has quadrupled this year. Google up 3000 points in two days – insanity like 2000.
    The internals have not been good on this last leg up. Smacks of distribution by the big boys.

  176. 176
    calvino Says:

    re #148 Flaming is what’s going to happen to Merryl Grinch for that 740 call on GOOG. Actually there were about four other upgrades, of such not negligible amounts, as a $100. If I was in the analyst buisness, I would not want to touch a $100 upgrade with someone else’s ten foot pole. Either I should have not been making the first call , or….

  177. 177
    Sambone Says:

    It’s Tini time, but one last thought on this market. I believe a “Black swan” will happen.

  178. 178
    Nicky Says:

    Ram – #157 – sorry not sure what you mean? the cycle information is posted in
    #151. If you are talking levels then I just posted them over the last few days. I have been talking 1574 for a week or so and yesterday I am pretty sure I mentioned the 1577 – 88 level although I can’t even remember my own name right now so I may be wrong!

  179. 179
    calvino Says:

    re #163 Z – I had told you on Tuesday, that noone in their right mind will want Tesoro at 11x, when you could have a real stock like bidu at 180x.

  180. 180
    Nicky Says:

    What is a Black Swan Sam?

  181. 181
    zman Says:

    Cal – that’s funny.

    Black Swan = http://en.wikipedia.org/wiki/Black_swan_theory

  182. 182
    zman Says:

    Saw a story that avian flu is mutating to a much more “human spreadable” variety. Could be that, a large meteor, zombies, etc…

  183. 183
    Nicky Says:

    So he is predicting an event?

  184. 184
    zman Says:

    I think he’s mentioned it as a concern but the timeframe is open-ended

  185. 185
    Nicky Says:

    Asian markets will be interesting tonight. They have had a big run this week.

  186. 186
    calvino Says:

    yes, the asian markets will be interesting. with zhou xiachuan on his way out and ThyssenKrupp and Salzgitter AG submitting anti- dumping petitions at Brussels. EU might not want to tarry with their studies too long because Krupp = mettalgessenchaft and if german unions say nein, EU might say kaput. arcelor is also making noises in similar vein since they can not make any profit. Dieter Ameling, president of the German Steel Federation and chairman of the Steel Institute VDEh advised China that instead of exporting steel produced at the expense of the Chinese environment, they would do better to remove their uneconomical and heavily-polluting capacities from the market in order to prevent the current dispute from becoming a long-standing trade conflict.

    does not happen in one day, however we may yet see the good old mark. meanwhile the hang seng is bounding upwards and skywards in wild anticipation of all that a-share money being liberated. what if it does not happen?

  187. 187
    Brian08 Says:

    Hey Z, had a CHK related question…I read their investor presentations from time to time and in their last one (and others I have read) they give their NAV based on the price of NYMEX natty gas…The NAV that they project is always substantially above the price they are trading at…

    For example at $7 gas they project a NAV of about $45…

    Do you have any ideas of why there is such a disparity?? Is management overvaluing their assets or having incorrect calculations (I highly doubt this)?? Does gas have to be at $7 for a year for them to have that NAV?? Is the market undervaluing the company this badly???

  188. 188
    Brian08 Says:

    Edit to 187,

    $7 gas = NAV $45/SHARE

  189. 189
    QUARRYMAN Says:

    Z.

    Are Oct Cam 105s a good idea now?

  190. 190
    QUARRYMAN Says:

    CHK Oct 37.50 Calls for .20?

    50x for a week, could triple!?

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