23
Oct

Rebound Tuesday

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Housekeeping Item: New members please take note of the wealth of new tabs added at upper left site has gone private. These include relative valuation tables for a number of energy sub industries which will be update weekly, a quarterly earnings calendar for many of the names we bandy about on the site, as well as the usual statistical sector specific stuff and company reports. Also, we added a few new watches including an "After The Bell Question" Watch which as the name implies tries to address questions raised after I've checked out on the prior day.

Commodity Watch:

  • Crude Oil. Bye, Bye November Contract. The November crude contract went  out with a wave of profit taking after bouncing off the $90 mark last week.This left talking heads and reports alike scrambling to find reasons for the sell off: peace loving Turks, a new catch and release program sponsored by MEND in Nigeria.The December contract is trading up $0.50 at $86.50 this morning.
  • Joint U.S. / Turkey Operations Against Kurdish Rebels Contemplated by Secretary Rice. Turkey continues to mass troops along the border.
  • MEND gave back all 7 hostages taken from a supply boat off Nigeria on Saturday.
  • MEND then kidnapped 2 children of (TOT) employees in Port Harcourt this morning.
  • Natural Gas. Gas traded off yesterday in sympathy with oil and broke through $7 on the front month contract. The winter strip  remains near $7.75 The 1-5 day forecast calls for much colder than normal temps in the nation's midsection (right in the heart of gas consuming and producing country) but then a return to warmer than normal weather for at least the next 30 days. Gas is up slightly this morning.
    • By the way the gas storage tab has been updated and it still looks to me like we will fall shy of the 3.5 Tcf mark at peak storage this season.

Natural Gas Weekly Fundamentals Watch

  • Imports: Flat with the prior week at 10.2 Bcfgpd which is also roughly in line with year ago figures. After a strong (record) showing this summer LNG imports continue to dwindle under pressure from demanding European and Japanese importers. LNG imports fell to yet another new low for 2007 of 0.8 Bcfgpd, which is less than a quarter of the peak volumes seen this summer and down 0.4 Bcfgpd from year ago levels. 
  • CDDs - down to 15 in the past week which is still ahead of the normal range but falling away from having much meaning for cooling load.
  • HDDs - increased to 43 but is still about a third below last year and normal for this time of year.
Waste Not, Want Not Watch. Wellington Energy plans to build a 24 mega-watt manure fired power plant in Florida. Manure fired plants are becoming increasingly popular given the current manure glut in the U.S. In fact net margins approach 100% in election years.

Refiners...Showing Some Signs Of Life.

  • I re-entered (VLO) calls yesterday and still hold a couple of sets of (TSO) calls. Valero continued to fall with falling oil prices and depressed crack spreads. U.S. Gulf Coast cracks fell below $5 last week as oil hit new highs and products failed to keep up and I would expect a deceleration in the downward move and then sideways to rebound trading for cracks in the middle part of the country (see table and graphs below).
  • On the left coast, margins have continued to improve as expected and TSO's multiple has recovered somewhat on the back of this improvement and a persistent buyout rumor.
  • (SUN) is now in my sites for a trade with east coast refining margins improving and a chart that looks ready to run. Longer term I don't care for them as they sport net margins little better than a grocery store and less than half those of many of their peers.
  • Among the smaller, more expensive names I'm most interested in (ALJ) and (FTO) for long entries but will likely wait for the quarter. (WNR) is capable of great volatility but again I wait out earnings here and listen to the conference call before making a decision. 

refiner-multiple-102207.jpg

Cracks Are Fighting High Oil Prices And A Seasonally Slow Period At Present

cracks-101907.jpg

Holdings Watch: Positions and performance have been updated through yesterday on the Zeb Perf tab.

CALLS:

  • (OII) $75 NOV CALLS for $2.75. Last bid $2.15. The stock has been subject to some pretty severe profit taking of late ($84 to $70 in a week and a half) and the fundamental picture remains very strong. The move was exacerbated by SLB's cautious tone last week on international project delays which should have little if any bearing on them, oil's quick retreat from $90, the quiet end to hurricane season, and a technical break on the chart which caused a bit of a panic yesterday. I may be early here as the chart could drop another $8 to the next level of support but it is a very volatile name and can quickly recover this territory on good news. They report earnings on Nov 1 and all systems should be go for a beat. 
  • (VLO) $67.50 CALLS for $2.65. Last bid $3.20.

Odds & Ends

Analyst Watch: (SPWR) to overweight at Lehman. (FSLR) initiated at overweight at Lehman and sell at Merriman. Banc of American initiates coverage on the land drillers: (PKD) at buy; (PDC), (GW), (HP), and (NBR) at neutral. FBR boosts (HAL) price target from $45 to $48.

After The Bell Question Watch:

  • Z Any thoughts on XOM prior to earnings ~ Scoop006. Yes, I think it's interesting they didn't warn like COP, CVX and most people that owned a refinery or two during the third quarter. Not much will be expected from them on the production growth side (upstream) of the business and while I'd expect them to make some cautionary statements about oil being unreasonably priced and the refining segment facing a challenging fourth quarter I'd also expect them to mention the buyback again. I continue to hold (COP) as the much cheaper U.S. major alternative to Exxon.(
  • When is it time to short PTR? ~ Mimster90. That's the million dollar question! And you can add (CEO) and (SNP) to the list as well. PTR is around the corner from raising $9 B in an A-share Shanghai offering. Right now I'm not ready to step in front of the associated euphoria of the deal which is still not expected to hit investors hands until November 5. But I am working up a valuation piece on it and its Chinese cohorts and will keep you posted. There is certainly no fundamental reason for the doubling of the company's market cap over the last two months other than more buyers than sellers.


 

 

 

 

90 Responses to “Rebound Tuesday”

  1. 1
    Sambone Says:

    7:55 am EST

    Crude Rises Turkey Ceasefire News Proves Unfounded

    Dow Jones Newswires

    LONDON — Crude oil futures climbed higher in London trade Tuesday morning, as buyers sought to take advantage of two successive days of lower closes and Monday’s news of a possible ceasefire between Kurdish militants and the Turkish government proved unfounded.

    The oil market failed to find signs of direction initially Tuesday, despite Asian and European equity markets moving higher and the U.S dollar handing back some of Monday’s gains against the Euro.

    But with news emerging to dash hopes of a swift resolution to the ongoing tensions between Turkey and Kurdish rebels in northern Iraq, the balance of fundamentals tipped towards in favor of the bulls, prompting a fresh wave of buying interest.

    “Equities are helping a bit but I just think there’s a lot of people out there that are using the dip to buy,” a London-based broker said. “Also the Iraq business doesn’t look to be done and dusted as the headlines yesterday would have had you believe.”

    At 1127 GMT, the front-month December Brent contract on London’s ICE futures exchange was up $0.47 at $83.74 a barrel.

    The front-month December contract on the New York Mercantile Exchange was trading $0.46 higher at $86.48 a barrel.

    The ICE’s gasoil contract for November delivery was up $4.25 at $726.50 a metric ton, while Nymex gasoline for November delivery was up 120 points at 214.54 cents a gallon.

    Geopolitical concerns continued to focus on the hostilities between Kurdish militant groups based in northern Iraq and Turkish armed forces Tuesday.

    Following the killing of 12 Turkish solders by the militant Kurdistan Workers’ Party, or PKK, Sunday, the crude markets are closely monitoring signs of any possible escalation in the conflict.

    Despite reports that the PKK would call a ceasefire Monday, the militant group said instead that a unilateral rebel ceasefire it declared in June was still in place.

    But Turkey’s foreign minister rejected any ceasefire by Kurdish rebels Tuesday, seemingly scotching any hopes for a swift resolution to the impasse.

    “Ceasefires are possible between states and regular forces,” Ali Babacan said. “The problem here is that we’re dealing with a terrorist organization.”

    Turkish troop levels along the Turkey-Iraq border were continuing to build up Tuesday, adding to concerns that the situation could erupt.

    Despite lower closes on Friday and Monday, crude market participants would not rule out a return of higher closes Tuesday. But signs that the bull trend is still intact would require some confirmation in order to preserve technical support for prices, while some suggested that further correction could lie in store.

    “Technically the upward momentum is not yet dead but it will need an urgent confirmation today,” said Olivier Jakob of Petromatrix, after the recent moves left shorter-term moving averages turning negative he said.

    “We think the energy correction may have more room to run,” said analysts at MF Global. “Crude markets still remain relatively overbought, and have yet to experience a decent pullback that usually follows such a substantial run.”

    But with concerns over future supply demand balances, particularly for the current quarter, continuing to underpin crude prices, the scope for considerable moves to the downside remained limited, suggested Peter Beutel of trading advisory firm Cameron Hanover.

    “We still believe that the only factor that can end the long-term bull market is a recession,” he said. “It will be months or even years before supplies catch up with demand, so only a sudden decline in demand can give supplies the cushion they need to catch up to and outstrip consumption.”

    Latest clues as to the health of the world’s largest consumer of crude’s stock levels are due out Wednesday, with publication of the U.S. Department of Energy’s weekly oil inventory report.

    Crude oil inventories are expected to build by 300,000 barrels according to a Dow Jones Newswires survey of nine analysts, while gasoline inventories are forecast to build by 1.1 million barrels. Distillates, which include heating oil and diesel fuel, are seen building by about 200,000 barrels.

    Meanwhile, the seven oil workers who were kidnapped from an offshore oil field in the Niger Delta were released Monday after two days in captivity, police said.

    The three foreigners and four Nigerians were seized Saturday night after gunmen in more than 30 speedboats attacked the EA field, operated by Royal Dutch Shell PLC (RDSA)

    The first major attack since Nigeria’s president Musa Yar’adua began a peace process in the region five months ago, the incident served as a reminder to the crude markets of the potential disruption that militant groups operating in the region can wreak, and counters hopes that production halted due to such attacks can resume sooner rather than later.

    —By Nick Heath; Dow Jones Newswires

  2. 2
    Sambone Says:

    9:24 am EST

    Nymex Crude Higher On Turkey, US Stock Market

    DOW JONES NEWSWIRES
    From Market Talk:
    [Dow Jones] Nymex crude is slightly higher on the first day the Dec contract trades as the front month, but still below the Nov contract settlement at expiry of $87.56. News that Turkey’s foreign minister would reject any ceasefire offered by Kurdish rebels supports prices. This “doesn’t mean there’s an imminent threat of attack anytime soon,” says Phil Flynn, senior market analyst for Alaron Trading Corp. He says the Dow Jones Industrial Average, which ended slightly up Mon, also supports prices. “If the stock market goes up, I could see very easily see the (crude) market get up toward $87 or $88,” he says. Conversely, a selloff in stocks would send negative signals for crude prices. Nymex Dec crude +26c at $86.28. (elizabeth.landau@dowjones.com)

  3. 3
    rammastr Says:

    Scoop – What a gift DRYS was yesterday morning – oh well.

  4. 4
    zman Says:

    DO running on special dividend. Having a supportive effect on RIG

    Chinese oils flying again.

    SLB getting a bit of a deadcat bounce and HAL matching tick for tick.

  5. 5
    rammastr Says:

    I hope the cat doesn’t bounce too high.

  6. 6
    zman Says:

    Hear ya RAM – still could go either way.

    OIH gains are pacing SLB at up 2%. Onshore drillers underperforming, deepwater elements outperforming. OII getting a nice 4% rally.

  7. 7
    zman Says:

    Crude approaching flat, NG off another dime. If the broad market loses any strength these gains will quickly reverse.

    Nice to see BTU rebounding. I round tripped a double there. Same on COP who has earnings out tonight. I will add a second piece to my position there today. It suffered from an ill-timed JP Morgan downgrade yesterday.

    VLO – edging lower with oil this morning. I may punt this one as it was disclosed their Delware refinery has been leaking propane for several years. Stock could go lower if the liability looks large.

  8. 8
    Nicky Says:

    Morning all. Z – any thoughts on inventories tomorrow. I have seen a couple of analysts who think the consensus maybe a bit light so they may come in more bearish than expected.
    The expectation is for a build of 0.3 in wti, 1.1 in rbob and 0.2 in distillates.

  9. 9
    Nicky Says:

    Nat gas breaking through the key 6.745 level. Next major support is 6.230.

  10. 10
    zman Says:

    N – have not yet looked at…will soon.

    NG – $6.23 would see more curtailment announcements.

  11. 11
    QUARRYMAN Says:

    Hey Z.

    “Dead Cat Bounce” for SLB and HAL. What about RIG? I’m still holding RIG Nov 115s at half value.

    Also, what’s your opine on BTU and WLT?

    Also, just entered a position on VLO then read your last post.

    Q.

  12. 12
    zman Says:

    Q – I entered VLO yesterday, the the govt said it is investigating a log running propane leak. Have not seen anything on it as to value yet and does not appear to be knocking the stock today. Just watching the news flow for now.

    WLT – I’m not playing for now, staying with very liquid names (for the options) in this market. BTU I like, came off with the energy stocks last week.

    RIG is up 1.7% but you can’t call it a dead cat bounce for a stock that only fell $10 from a Thursday high of $118. They have earnings soon and should be able to say good things about recent contract rates and the continued long term viability of the deepwater market. It’s not a bad thing when people are offering you long term (3 year + contracts) starting 3 years from now to make sure they’ll have a rig available.

  13. 13
    aitrader Says:

    BP Q3 profit declined by 29% according to Bloomberg.

  14. 14
    zman Says:

    VLO started at “Top Pick” with $98 price target. Never heard of Tristone? That’s why the stock isn’t up.

    BP has a lot going for it (despite every over headline to the contrary) but its had good run.

  15. 15
    Denise Says:

    Morning-FYI I am hearing Dorsey Wright went negative on the market this morning

  16. 16
    Nicky Says:

    RBOB takes out yesterdays lows. WTI and distillates need to do the same to turn this more bearish – until then the jury is still out.

  17. 17
    zman Says:

    OII up $5.25. About $0.30 from closing the gap down yesterday morning.

    Denise – got a link?

    Nicky – funny to see (or not see) the lack of chatter re $100 oil after just 2 1/2 red days.

  18. 18
    zman Says:

    CHK swapping out some convert notes for stock. They love to mess with the balance sheet …this is an over-reaction as it’s actually good for the company.

  19. 19
    Denise Says:

    No-only by subscription-(wish I had one)for those of you not familiar they are very highly regarded technical analysis firm-used widely
    Also I guess I am sounding doom and gloomy-but I keep reading more and more a about the possibility of the”Hindenburg Omen”
    Marketwatch has a great article-can’t seem to paste it sorry-

  20. 20
    zman Says:

    Thanks D, will look about a bit. Lots of doom and gloom around unless you sell Ipods, Iphones, or Macs or you deliver them and then you are immune.

    OII competing for Mars mission space suit contract.

  21. 21
    aitrader Says:

    Watch out for the Hindenburg Omen

    ANNANDALE, Va. (MarketWatch) — According to a little-known technical indicator known as the Hindenburg Omen, the risk of a stock market crash right now is high.
    Should we pay any attention to this indicator?
    “Yes” is the answer from quite a few of the investment newsletters I monitor. Indeed, in recent days so many advisers have referred to the warnings that the indicator is emitting that investing blogs are all abuzz.
    And, naturally, more than a few of you emailed me to ask that I devote a column to it.
    Let me start by reviewing the Hindenburg Omen. The core idea behind it is that it’s bearish whenever there are a large number of both new 52-weeks highs and new 52-week lows on the New York Stock Exchange.
    From what I can tell, it was created in the 1970s by a fellow named Jim Miekka, who was editor of a newsletter called the Sudbury Report. Credit for christening this indicator the “Hindenburg Omen” goes to Kennedy Gammage, who used to edit a newsletter called the Richland Report.
    Why would a large number of both new highs and new lows be bearish? Peter Eliades, editor of the Stockmarket Cycles newsletter, recently provided an answer: “Under normal conditions, either a substantial number of stocks establish new annual highs or a large number set new lows – but not both.” When there are high levels of both, “it indicates that the market is undergoing a period of extreme divergence… Such divergence is not usually conducive to future rising stock prices. A healthy market requires some semblance of internal uniformity, and it doesn’t matter what direction that uniformity takes. Many new highs and very few lows is obviously bullish, but so is a great many new lows accompanied by few or no new highs. This is the condition that leads to important market bottoms.”
    In terms of genealogy, the Hindenburg Omen is a descendant of an indicator called the High Low Logic Index, which Norman Fosback, editor of Fosback’s Fund Forecaster, devised in the early 1970s. According to Gammage, the Hindenburg Omen is also “derived from a New High – New Low indicator developed by Gerald Appel many years ago.” Appel, of course, is the editor of the Systems & Forecasts newsletter.
    Both Fosback and Appel have good track records, so I tried to contact both of them Tuesday to see what reactions they might have and whether they believe that the market will soon crash.
    Fosback had not responded by the time I filed this column. But Appel told me that while the simultaneous appearance of many new highs and new lows is not a positive development for the market, one should not exaggerate its bearishness. The market’s prospects following such a development are “sub-par,” but not “calamitous.”
    Appel also pointed out that there have been some noteworthy cases in which a large number of both new highs and new lows have not presaged a market decline. He mentioned in this regard the situation prevailing prior to the bull market taking off in 1982.
    To be sure, Miekka, Gammage and other devotees of the Hindenburg Omen have always insisted that the new high/new low data must be interpreted in the light of several other indicators, and that in conjunction with them the false signals are kept to a minimum.
    According to Robert McHugh, editor of McHugh’s Financial Forecast & Analysis, the two other indicators that have traditionally been looked at when interpreting the new high/new low data are the NYSE 10 Week Moving Average (it must be rising), and the McClellan Oscillator (it must be negative). (The McClellan Oscillator is a measure of market breadth.)
    However, even in conjunction with these other preconditions, according to McHugh’s calculations, a simultaneous large number of new highs and new lows has not always presaged a market decline. McHugh has proposed adding yet two more preconditions:
    “New 52 Week NYSE Highs cannot be more than twice New 52 Week Lows; however it is okay for New 52 Week Lows to be more than double New 52 Week Highs.”
    “There must be more than one signal within a 36 day period, i.e., there must be a cluster of Hindenburg Omens (defined as two or more)”
    According to McHugh, the market historically has declined 87% of the time once all five of these preconditions have been met. And the market has actually crashed 27% of the time.
    All of these preconditions were met in September, which is why so many advisers are worried.
    The proliferation of these preconditions makes it very difficult for a statistician to offer much insight, for several reasons. First, with each new precondition, the number of historical precedents shrinks. McHugh, for example, counts just 22 cases since 1985 in which all of his preconditions were met. Unfortunately, with a sample size this small, it’s impossible to draw firm statistical conclusions.
    The second problem with piling precondition on top of precondition is that it runs the risk being ad hoc and arbitrary. After the fact, of course, with the benefit of 20-20 hindsight, it’s always possible to pinpoint one or more factors that, if they had been taken into account, would have led to a better prediction. But rarely does such an approach lead to a successful market timing system.
    The proof of the pudding is in the eating, of course. But it is a statistical sleight of hand to back-test a system’s performance over the same period that was used to jerry rig it in the first place. The only real proof of the pudding comes when testing a system over a different period than the one used to devise it.
    This is why statisticians usually insist on real-time tests of any system that is jerry-rigged to fit past data. And given how rare it is for all five preconditions associated with the Hindenburg Omen to occur, it will take years for us to know whether these five preconditions, taken together, truly represent an increased probability of a market crash.
    So the best a statistician can say is that we should wait and see. This response no doubt is profoundly unsatisfying, given the prospect of an imminent crash.
    But think of it this way. There are other newsletters among the 180 or so that I monitor that currently are as bullish as the devotees of the Hindenburg Omen are bearish. And they have devised market timing systems that have just as much superficial plausibility as the Hindenburg Omen, but which currently are quite bullish.
    Take your pick.

    http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BDA451070-3B84-4BCE-ADAD-11B3D26FDE87%7D&siteid=mktw&dist=

  22. 22
    Sambone Says:

    Z – I have it (Dorsey Wright), and Denise is correct. “It is always gut-wrenching to change your posture from offense to defense. But as we have always said, “What Is, Is.” The reality is that the bulk of our market indicators are on defense — for how long, we don’t know”

  23. 23
    Denise Says:

    My favorite writer just posted he is going monster short-D Kass

  24. 24
    zman Says:

    Thanks for the post AI.

    Anybody got the bull / bear count on newsletters. It’s a contrarian indicator.

    WTI about to test 85. E&Ps and refiners uniformly red, service mixed and falling.

  25. 25
    Popeye Says:

    Looks like the SII got a pop from the CC.

  26. 26
    O.W. Says:

    maybe some DRYS puts here as a hedge, Z ?

  27. 27
    zman Says:

    N – Dow Jones showing 0.3 million build, Bloomberg saying 0.8 mm. I think if you get a report over 2 on oil you’ll see it at $82 by week’s end.

    Hard to tell but it looks like slightly more refiners are back on over the last week which could forestall another number like last week. more in a bit…

  28. 28
    O.W. Says:

    I know dry bulk is hot right now, but we could see a significant drop short term despite fundamentals, if we are toppy here in the XLE arena

  29. 29
    zman Says:

    SII – have not yet looked …saw it rally on the number, come back to even with the market. will need to listen to replay to hear their thoughts on N Am drilling.

    DRYS premiums too nasty for my blood. It has run a lot though and would likely take a tumble if the mkt does (insert “well, duh” here). But I looked at it both long and short of late and you have to either be very right (pick a way out of the money option) or be willing to pay those premiums. I’m not convinced of a mkt crash at this point but Denise and Nicky might have some good hedges.

    VLO just put in a critical technical hold.

  30. 30
    Sambone Says:

    11:21 am EST

    Nymex Crude Dn On Light Trade Ahead Of DOE Data-Analyst

    DOW JONES NEWSWIRES
    From MARKET TALK:
    [Dow Jones] Nymex crude falls 1%, losing about $1 amid light trading volume ahead of DOE weekly inventory data Wed, says Tim Evans, an analyst at Citigroup. Oil is worth $65-$70 a barrel based on the current supply and demand situation, Evans says, adding that he is “agnostic” on whether the bubble of high prices is about to burst in coming days. Traders may “come to their senses and realize there’s no serious tightness in this market, or ignore that and hyperventilate over geopolitical issues or isolated tight spots in the market,” he says. Dec crude -88c at $85.14, after hitting a low of $84.95. (elizabeth.landau@dowjones.com)

    Reported earlier:
    [Dow Jones] Nymex crude reverses much of its slight gains after tanker tracker consultant Petrologistics reports that OPEC oil production is expected to rise this month ahead of the Nov 1 deadline to increase output, says Tom Bentz, director and senior analyst at BNP Paribas Commodity Futures. Crude may “test the $85 level and possibly even $84” in the coming days, Bentz says. Nymex Dec crude +2c at $86.04/bbl after reaching $86.79. (elizabeth.landau@dowjones.com)

  31. 31
    zman Says:

    OW – among the dry bulks, how about EGLE on the put side, smaller vessels, less upside to earnings estimates, more expensive and it’s had a nice move. See multiples on dry bulk tab.

  32. 32
    Brian08 Says:

    Z–

    OII, faaaaaaaaaaaaaaaantastic!!

  33. 33
    QUARRYMAN Says:

    VMC – Vulcan Materials

    I just want everyone to notice that VMC is near it’s 12 year low.

    As I’ve said before this is a good co. to accumulate… not necessarily a trading opp… but a calendar spread of selling VMCKQ (Nov 85) at 4.10 and buying VMCAQ (Jan 85) at 7.20 is what I’m doing.

  34. 34
    QUARRYMAN Says:

    Excuse me, I mean 12 mo. low. on VMC

  35. 35
    zman Says:

    Q – question for you. If the economy goes into recession (and I don’t believe it but who cares what I think, it’s what the market believes that matters) I assume that road construction will do what it will do, in other words be unaffected. Is that right? Second ?, same premise, how much of their business, aggregates goes to commercial construction, b/c that’s going to slow/stall if we actually stop growing and people decide they don’t all have to have a second home in a high rise downtown.

  36. 36
    O.W. Says:

    Thanks, Z, EGLE does look more attractive on that side of the trade, indeed.

  37. 37
    zman Says:

    Brian – thanks….one of the few bright spots in an otherwise dreary day.

    Confounded by the unnatural resilience of SU. Anyone heard any rumors that oil sands are on the shopping list for PTR once they do their offering? It would make a lot of sense.

  38. 38
    Sambone Says:

    Z – Rumor has it that Alberta will not raise the tax.

  39. 39
    QUARRYMAN Says:

    America’s infrastructure is literally crumbling, bridges falling, water and sewer piping pushing average age of 75 yrs+.

    Politics change, elections years make commitments for local jobs and spending.

    The road construction component of quarries are remarkably immune to recessions.

    Road building is #1. Concrete is #2 consumer of stone.

    Commercial has supplanted much of governmental spending in past 10 years, but as I said, America’s road infrastructure is crumbling and the need is a feel-good political fix.

    I don’t have a firm figure on the % of commercial construction. It varies widely from locality to locality and quarries are an amalgam of local economies. I’d pull a copy of the last VMC annual report to gauge that.

    Q.

  40. 40
    rammastr Says:

    ZMAN – Just about every city in the U.S. is updating their infrastructure. Whether it’s cement or steel beams, there seems to be always a demand for essentials. We had a post about a massive pipeline project. It’s company’s like TS that make good margins on specialty steels. Governments at all levels need to keep the economy moving so the common theme always seems to be to maintain roads, bridges. They don’t need to buy new heavy equipment, but they have to buy certain materials.

  41. 41
    zman Says:

    Sam – thanks, yeah know that one. Decision on 10/31 one way or the other, but this looks like something more. Got back to green yesterday but it gained and I went back into red. May dump soon as I think Alberta will do something in between on the tax.

    Q – thanks, if you don’t mind letting me know that % that would be fantastic.

    thanks Ram – there was a big highway bill a few years back that drove a big boost in business for everything from VMC to those guys that make the lift trucks. Anything like that going on now?

    Sane – if you’re out there, this is my monthly question re trucking. Is it time yet?

  42. 42
    cadillac Says:

    Z,

    With COP down nearly a buck…what’s your thoughts on jumping on some more Nov’s before their earnings announcement? Do you know what time they typically announce A.M, P.M?

  43. 43
    zman Says:

    C – they announce am, CC is at 11 est. I’m waiting until later in the day to decide …if oil and gas don’t fall off a cliff I’ll be adding.

  44. 44
    rammastr Says:

    OEM’s of Aerial work platforms are going to be hurting for the next 12 to 18 months. Alot of inventory and sales are dropping. Europe use to be the savior, but those sales are also slowing. Asia is the wilcard, but they are either doing without or copying others. CAT just disappointed, TEX might do the same this week. DE, which I own, has the right mix of Ag and Construction. Also, raw materials are moving up again, so margins will suffer. IMHO.

  45. 45
    zman Says:

    Thanks Ram – what about int’l construction? Denise just sent me an article on the unbelievable amount of construction going on in the emirates. The reporter said some blocks had as many as 20 of those sky cranes in them. I don’t know if KBR is getting that action or mcdermott but man, somebody is making a mint.

  46. 46
    zman Says:

    CNBC doing a solar spot right now.

  47. 47
    scoop006 Says:

    Re #45 I think JEC is well represented in Dubai.

  48. 48
    zman Says:

    sorry, make that fox news

  49. 49
    rammastr Says:

    KBR, FWLT, FLR, JEC. PKX, which I own, recently got knocked down, but they can not keep up with demand in Asia. CX must also have a hand in all that cement that is being poured.

  50. 50
    zman Says:

    fox did a puff piece on solar-thermal vs solar-photo-volt. ehhh

    Thanks scoop / ram…will have a look.

    RIG trying to recover some earlier gains. I’d play the 110s for a trade but I’m a little busy and would feel the need to watch it too closely right now.

  51. 51
    rammastr Says:

    Why did JPM downgrade COP to sell/underweight?

  52. 52
    Sambone Says:

    12:13 pm EST

    Nymex Crude Down On Economy Woes, Before EIA Data

    By Elizabeth Landau
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures dipped below $85 a barrel Tuesday, hitting an intraday low of $84.95, on concerns about a slowdown in the U.S. economy.

    Trading was light ahead of the U.S. Department of Energy’s weekly petroleum inventory report, slated for Wednesday release.

    Light, sweet crude for December delivery recently was trading 69 cents, or 0.8%, lower at $85.33 a barrel on the New York Mercantile Exchange. December Brent crude on the ICE futures exchange was down 53 cents at $82.74 a barrel.

    Futures fell partly on concerns over the U.S. economy and how a possible slowdown could affect petroleum demand, said Andy Lebow, senior vice president of energy futures in MF Global in New York.

    “People are just trying to figure out where the next big flow of money is going,” he said.

    The Dow Jones Industrial Average fell 2.6% on Friday, making traders anxious about the fate of the economy and contributing to a downward swing in crude prices. On Monday, the DJIA rebounded slightly from these losses and was slightly higher Tuesday morning.

    In Wednesday’s U.S. petroleum inventory report, U.S. crude stockpiles are expected to rise by 300,000 barrels, gasoline inventories are seen building by 1.1 million barrels, and distillates are seen up by 200,000 barrels, according to a Dow Jones Newswires survey of analysts.

    The supply-and-demand situation warrants $65 to $70 a barrel for oil, but it is unclear whether the oil bubble is bursting, said Tim Evans, an analyst at Citigroup.

    Crude prices hit a series of record highs last week, peaking at a new all-time intraday high of $90.07 on Friday. At that peak, prices had risen almost 15% within a month.

    Investors may “come to their senses and realize there’s no serious tightness in this market, or ignore that and hyperventilate over geopolitical issues or isolated tight spots in the market,” Evans said.

    Other analysts firmly don’t view Tuesday’s downswing as a reversal. Prices are still moving in an upward trend that began in January, said Mike Fitzpatrick, vice president for energy risk management at MF Global in New York.

    “We’re selling back down into the trend channel (of)consistently rising prices from Jan “07 that will continue into “08,” Fitzpatrick said.

    Front-month November reformulated gasoline blendstock, or RBOB, was 2.35 cents lower at $2.1100 a gallon. November heating oil was 1.06 cents, or 0.5%, lower at $2.3003 a gallon.

    —By Elizabeth Landau, Dow Jones Newswires

  53. 53
    rseidman Says:

    Z:

    Does CCJ interest you?
    I know this isn’t Oil or Gas,
    but it is energy.

  54. 54
    scoop006 Says:

    ram re # 51 yesterday

  55. 55
    zman Says:

    Ram – I ddin’t see a reason on COP, just the downgrade.

    R – CCJ – is used to watch them but they were such a momentum stock I stopped. Anything new going on. Still not exactly cheap but it is growing rapidly.

  56. 56
    zman Says:

    I promise not to roundtrip BTU again…
    I promise not to roundtrip BTU again…
    I promise not to roundtrip BTU again…
    I promise not to roundtrip BTU again…
    I promise not to roundtrip BTU again…

    DO = dooohhhh! Someone asked me about buying it yesterday, probably about $9 below here and I said I like RIG better. Still do but with if you had told me they’d be offering up a special dividend today I might have said otherwise, lol.

    COP already warned so it probably related to a slow start for refining margins on the west coast relative to year ago levels (which I don’t think will last) AND/OR a belief that their production targets will slip.

  57. 57
    rseidman Says:

    Z:
    Regarding CCJ, it’s a great energy alternative, it’s in a good space,
    and probably has a lot of upside.
    Just an amateur view.

    Bob

  58. 58
    scoop006 Says:

    Z re #56 please explain roundtrip BTU

  59. 59
    zman Says:

    Roundtrip. Had a double, watched it go all the way back to even w/o taking a penny of profit off the table. Same with COP except BTU is back to a nice gain while COP is a big loser now. Still like that name but need to not be greedy…and need to not go to any more weddings.

  60. 60
    Nicky Says:

    They are really defending yesterdays lows.

  61. 61
    aitrader Says:

    DRYS hitting a triple top (15th, 18th, today). Puts have a large premium though.

    Thoughts Z?

  62. 62
    TTupp Says:

    any one know what the pop in RIMM is al about?

  63. 63
    TTupp Says:

    drys is not triple topping,

  64. 64
    rammastr Says:

    It’s one of the FOUR HORSEMAN! Must be a Cramer pump.

  65. 65
    jiveyjr Says:

    alcatel, lucent rimm for chinese partnership hit the wires about half hour ago on RIMM

  66. 66
    j Says:

    RIMM announces a partnership with ALU to sell blackberries in China

  67. 67
    Nicky Says:

    WTI has 10 dma at 85.07 – we didnt’ quite get to close below it.

    Distillates has 10 dma at 22986 – we were pips away from that too.

  68. 68
    rammastr Says:

    It’s all about China. It seems either you ride the wave or get out of the way – for now.

  69. 69
    Stephen Says:

    Hi Z,

    On the SLB Conference Call they kept mentioning a lack of offshore rigs, also that new rigs with new crews are up to 50% less productive. Also saw that it will be 2011 before CEO (i.e. China) will get their first semi-sub, all pretty bullish for RIG. Will try to get in on the pullback.

    Also, HK, PQ, CRK and other gas names pulled back this morning, time to get in?

  70. 70
    Stephen Says:

    Also MTW build cranes almost exclusively.

  71. 71
    zman Says:

    Hey Stephen – I know, a shortage of deepwater capable rigs and yet RIG sold off, along with the other deep capables with SLB’s slide.

    I’m in HK now and considering a double. Plan to be in PQ just before earnings and am waiting on a pullback in CRK which may never come.

    Did you see CEO is spinning out a division via an IPO in 2008? Everybody’s doin it.

    Ram – ture China and add the Emirates as well.

    MTW – nice…thanks. active options guy too.

  72. 72
    TTupp Says:

    Z- think the strip and or front month is headed back into the mid $70’s? oii and slb are starting to look interesting here too! thoughts?

    i feel like a huge douche bag. i had planned to buy rimm calls today in the am , had no idea about the alu thing but the chart had a nice coil pattern, and thought it would leverage aapl’s blow out….. gurrr, and when i think of what i was doing instead it makes me madder…

  73. 73
    zman Says:

    T – I thought they looked interesting yesterday but only played the OII when it was down $5…closed down $6 and I was a little concerned from a technical standpoint (fall knife slices off zman’s hand) but I got lucky there. Might look at FTI too and HAL almost has to go up given what they said vs SLB said…if SLB keeps going up.

  74. 74
    Nicky Says:

    broader market looks like it may need to test the 1498 area before another push higher.

  75. 75
    irished Says:

    BP just agreed to 300 million dollar fine for doing like an oil company(propane actually), fix prices. Seems to be heading lower. Bought some puts but my percentages on puts are pretty low.
    Thus might be time for some calls!!

  76. 76
    zman Says:

    cadillac – thanks for the reminder on COP…should have followed my own advice as it was down $1 at the time and is off only a dime now.

    OII going to close near HOD
    same RIG and TSO

  77. 77
    zman Says:

    should have said advice from the post, not from comments where I held off.

  78. 78
    cadillac Says:

    Z –

    I shouldn’t have panicked this morning and sold off early (RIG, VLO, and other non-energy holdings). Funny thing was by the time I sold all of it off I looked at all the cash I had to spend and bought some COP early this afternoon. So I’m still up but would have been better off just relaxing and letting the market come to me.

  79. 79
    zman Says:

    RIG could use a close above yesterday’s high.

    OII closed that gap

    Cadillac – been done that. At least it’s not all bad from a gains perspective.

    all in all not a bad day

  80. 80
    cadillac Says:

    Amen Brother,

    First Green Day in a bit

  81. 81
    TTupp Says:

    Z- i did close that gap, but all that means is that it will continue its apparent down trend if the rebound doesn’t continue tomorrow– the opposite of an upward gap.

  82. 82
    zman Says:

    T – well, hope it continues the up trend. That’ll depend on the market more than anything.

  83. 83
    benbobby Says:

    zman:I realize that you double down,but do you sell calls or roll against your positions? tks

  84. 84
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