25
Oct

Thursday – Oil Report Review + Earnings Season Rolling + More Rebels Than You Can Wave A Fist At

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Oil is rallying strongly today and the stocks are set to open higher. I'll probably start booking some profits here on recent positions that have jumped. No reason to be greedy. 

Site Access Trouble Watch: The internet is a strange place. One minute you take it for granted, like breathing or hearing, things you do automatically, and the next it behaves like the Iraqi power grid, winking in and out and for folks outside the green zone, (like Nicky in Florida) it collapses all together. Yesterday my host had some problems connecting to certain parts of the internet and I apologize for any frustration this may have caused. They finally told me it was out of their hands and in the hands of their "provider" which sounds very much like passing the buck, but I'm an oil guy, not a tech guy, so what do I know? Rest assured, try as I did, I could not "wish it" into working. Again, my apologies for any frustration this issue caused. Hopefully, this issue will not be a problem today but I have not been given the green light nor do I expect it before the open since apparently tech guys are prone to sleeping in.

Commodity Watch

  • Crude Oil had a big day yesterday gaining $1.83 to $87.10 on the back of what appeared to be an across the board bullish EIA and API inventory reports. See details below. Crude rallied strongly after the close of NYMEX yesterday and is trading up another $1.36 to $88.45 at post time this morning.
    • Rebel Yell Watch. Everybody wants to be a rebel. Now rebels in Sudan have vowed attacks on oil facilities.  This group, calling itself the Justice and Equality Movement (JEM) said they have a long list of demands, chief among which is getting the Chinese to leave the country, but which are unlikely to be met.  JEM claims to have attacked one oil field, killing 20 soldiers and taking two foreign oil workers in the last 24 hours. Sudan says no such attack took place. Sudan is no small fry producer with oil production of between 400,000 and 500,000 bopd depending on the month but has been on the rise in recent years as China and other non US based oil companies have invested heavily in the war torn country.
    • Fundamental Watch: TSO commented on oil prices this morning saying the fundamentals don't support anything more than  oil in the $60s and that the premium is driven by speculators and is out of whack with the supply / demand picture. "Tesoro buys crude every day and we have no problem buying crude...There's a lot of crude."
  • Natural Gas: after trading down to support on Tuesday, gas rebounded back to $7.00 yesterday, again, in sympathy with oil. This morning gas is $0.13 to $7.10.
    • Tropics Watch: It's not dead yet and there may be one last tropical depression left in the season in the Caribbean.

Alberta Royalty Watch: Today is rumored to be the day Alberta decides to follow in the footsteps of such oil production masterminds as Chavez and Chavez wannabes. (NXY) joined a growing list of producers yesterday saying they will move the dollars elsewhere if Alberta gets greedy.  

 

Room To Fall Further Watch: From the NBR conference call from their CEO: "Our margins are expected to decline further...we're not above to forecast when the drilling market in Canada would turn around." Once again, I say, cheap for a reason. 

Oil Inventory Report Review. In A Word: Bullish. Ok here's the caveat. Imports fell off a cliff. If they had been the same week to week we would have been looking at a 3.8 million barrel build.

exp-vs-act-102407.jpg

Refiner Watch: These numbers were fairly bullish for the refiners and not just for crude. I was asked in comments about the ability of refiners to follow through on the positive momentum from yesterday and I have to say that they will likely rally through at least Tuesday but that the broad market could easily mess that up as it tried to around lunch time yesterday. 

API Numbers Confirm Bullishly Big Draws. Those EIA numbers are overwhelmingly bullish relative to estimates and raise suspicions but the American Petroleum Institute, whose numbers are generally thought to be more credible (at least by my new father-in-law who works there and by myself) confirmed the direction and magnitude of the draw downs.  

api-table-102407.jpg

Crude Stocks Saw BIG Draw: I titled recent charts of crude inventories over the past few weeks, "just a bump in the decline?" as inventories gained a little ground. Well, there's your answer. Again, this was a function of imports, not increased demand. However, the expected tightness should be just around the corner as refiners begin ramping back up in earnest.

crude-stocks-102407.jpg

 

Gasoline: Inventories fell despite higher production has imports slumped and demand surged.

  • Production: Increased by 130 bpd and is running high to year ago levels.
  • Imports: imports fell another 255,000 bpd this past week, on top of the 230,000 they fell in the prior week. Hmmm, falling crude imports, falling gasoline imports...sounds like a port problem. Also, with Venezuela importing gas / halting some exports of late there could be less supply coming to the Western Hemisphere at present. 
  • Demand continues to pick up. Ok, this one is worth a chart. American's just don't care what price they pay for gasoline. Ok, they care a little because demand is down 1.5% from last year when gas was cheaper but come on, look at 2005, look at the five year average. The slope of the demand line from the end of summer demand lull to this October desire to motor about and burn gas is much steeper than it should be.  

gasoline-demand-102407.jpg

And Look At The Prices You're Paying! Just imagine the demand if prices weren't up 28% versus the year ago week. Also note that we apparently show more sense and less cents as consumers in 2005. Prices were almost as high at that time but if you compare the chart below with the chart above you can see we were much less enthusiastic about driving.

 gasoline-retail-cost-102407.jpg

  • Inventories continue to ride the bottom of the curve for this time of year.  While overall inventories remain down almost 7% relative to year ago levels the East Coast and midwest remain particularly under-stored (off 10% and 8% respectively to year ago levels). (SUN) starting to look a little more attractive for a quickie.

gasoline-stocks-102407.jpg

  • Days Supply: melted back down to 21 days which is near the historic low.

Distillates

distillate-stocks-and-ho-102407.jpg

Natural Gas Inventory Preview:

  • Street Consensus: 54 Bcf.
  • My Number: 45 Bcf
  • 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.

The injection season is somewhere between one and three weeks from being over unless we get a last bought of unseasonably warm weather. I continue to think we are likely to peak at or just below the 3.5 Tcf mark and that prices are more likely to hinge off weather, CapEx plans, and LNG expectations more than they do the high storage "news".  

 

Holdings Watch: Up to date holdings can be seen here.

CALLS:

  • (COP) Added the Nov $80s for $3.45. Last bid $3.20.
  • (NFX) Jan $55s added for $2.25. Last bid $2.35. Added these for earnings as I've been meaning too but negligent in acting for some time now. I finally just punched in taking the offer with my fingers crossed that they would do as well as I'm thinking and that the broad market will cooperate. I bought a little extra time here just in case. 

Earnings Watch:

  • APA: Reported EPS of $2.17 vs expectations of $1.97. Conference call at 2 EST and I'll have more details then. 

 

Odds & Ends

Analyst Watch: nada.

 

 

 

82 Responses to “Thursday – Oil Report Review + Earnings Season Rolling + More Rebels Than You Can Wave A Fist At”

  1. 1
    zman Says:

    Someone asked about PDS the other day. As ugly as their 3Q looked they actually beat drastically reduced numbers.

    As I said at the opening of today’s post, I plan on booking some recent, “too far, too fast” gains in a few names that were added as trades but have moved up, in some cases, much faster than I expected.

  2. 2
    scoop006 Says:

    No problem logging on today

  3. 3
    Sambone Says:

    8:35 am EST

    Nymex Crude Up $1 As DOE Data Spurs Buying

    By Nick Heath
    Of DOW JONES NEWSWIRES

    LONDON — Crude oil futures climbed sharply higher in early trade in London Thursday, with both the New York light, sweet and ICE Brent crude contracts climbing more than a dollar as prices continued to take strength from Wednesday’s U.S. Department of Energy oil inventory data.

    The surprise draw in crude and products inventories helped push ICE December Brent to a record high Wednesday, and support remained robust Thursday, lifting the contract to a new peak of $86.28 a barrel.

    Materialising after three days of successive lower closes, the turnaround has lured buyers back into crude futures and their return is expected to push prices higher still.

    “The numbers we had out yesterday were barnstormingly bullish,” said Kevin Blemkin of MF Global.

    “People will walk in this morning and see the spreads tighter. And we know about the fund activity in this market — they’ll see this and it will trigger buy signals.”

    At 1114 GMT, the front-month December Brent contract on London’s ICE futures exchange was up $0.99 at $85.36 a barrel.

    The front-month December light, sweet contract on the New York Mercantile Exchange was trading $1.19 higher at $88.29 a barrel.

    The ICE’s gasoil contract for November delivery was up $5.25 at $738 a metric ton, while Nymex gasoline for November delivery was up 285 points at 217.60 cents a gallon.

    Analysts and traders continued to pore over the inventory numbers Thursday, but few argued that the data set was anything other than supportive for crude prices, with crude, gasoline and distillate inventories all falling despite expectations to the contrary.

    “This week’s DOE report was really bullish in a market that just needs a mild push to move higher,” said Peter Beutel of Cameron Hanover.

    And the news was likely to be seized upon by those looking to mount a fresh assault on historical highs, some said.

    “The funds are back and they’ve got their targets set at $95 and $100 a barrel,” a London-based broker said.

    Additional stimulus for crude futures came from OPEC Thursday.

    Despite recent speculation that some OPEC members will push for a 500,000 barrel-a-day output increase when leaders of its member countries next meet, the organization’s secretary general said Thursday that no such increase was under consideration.

    “I have not heard about another 500,000-barrel increase,” Abdalla el-Badri said.

    He added that if oil was to hover near $90 a barrel for prolonged periods, “then we will start worrying about it. So far, we are not concerned.”

    Reaction to the comments was mixed.

    “It’s very interesting because they made a similar comment after the last meeting that they needed to see a few weeks at $80 a barrel — which clearly shows some caution,” said SocGen analyst Mike Wittner.

    “There seems to have been some conflicting signals coming from delegates. I would seize on the comments a couple of days ago from the Saudis. They were very careful to say in actual fact, we will provide more oil if the market needs it. When you read that statement, it’s saying that the market is balanced, it doesn’t need crude oil, but we will provide it when it needs it.”

    But others were sceptical.

    “I suppose he’s always going to say that,” a trader said. “But from what we were hearing yesterday there’s some in OPEC that will be pushing for an output increase at the meeting in November.” Nonetheless, the comments could serve to limit crude’s upside to $90 a barrel, he said.

    Tensions between Turkey and Kurdish militants continued to heighten Thursday, with Turkish President Abdullah Gul quoted as saying that Ankara was “running out of patience” over the situation.

    Turkey has threatened to wage a military campaign against the militant Kurdistan Workers’ Party, or PKK, in northern Iraq if Iraqi and U.S-led coalition forces fail to curtail the militants’ activity.

    And while the markets were largely captivated by inventory data, the standoff continued to provide a bullish backdrop to the current crude environment.

    Analysts were monitoring the influence of December call option open interest on futures prices Thursday as the New York December light, sweet crude future moved closer towards the $90 a barrel mark.

    “(It) is back to being within one day’s volatility of $90 a barrel and we remain with the view that the large open interest on $90 a barrel December call options represent the next real upside potential,” said Olivier Jakob of Petromatrix.

    Sellers of the calls — granting buyers the option to purchase December crude at $90 a barrel — would be increasingly compelled to buy futures as a hedge against their position, he said, boosting futures prices in the process.

    —By Nick Heath, Dow Jones Newswires

  4. 4
    aitrader Says:

    Briefing.com – October 25, 2007 6:30 AM ET

    Suncor (SU) Reports Q3 (Sep) earnings of $1.27 per share, in-line with the Reuters Estimates consensus of $1.27

  5. 5
    zman Says:

    Scoop – thanks. I finally had to use duct tape.

    Thanks AI…just saw it. Results look in line…think stock price action will dominated by whatever Alberta decides. Look at the impact on cash flow from slightly lower production (caused by both planned and unplanned outages) and increased taxes.. CF down $3.8B to $2.7B. Looks like it’ll open down $2 to $4.

  6. 6
    Nicky Says:

    Morning all. I see US have just announced further sanctions against Iran.

    All looks bullish right now…

  7. 7
    zman Says:

    Morning Nicky – glad you could join us today. We’ve also got another rebel group, this one in Sudan vowing oilfield attacks.

  8. 8
    zman Says:

    wow SU bid just jumped … that looks kind of forced.

    SLB – justice dept probe.

  9. 9
    zman Says:

    RIG rally continues.

    COP recovery

    BTU looks like its breaking out

    NFX up tentatively – conf call on now.

  10. 10
    zman Says:

    Notes fro the NFX CC

    Expect 2.5+ Tcfe at ye07. Reserve life will increase to 13 years. That’s up from 9.3 years as of year end 2006. See chart in last nights post.

    4Q hedge 80% of gas 8.90/mcf 1/3
    2/3 at over $7.70

    big hedges in 1Q and 2Q08 over $8/Mcf

  11. 11
    zman Says:

    more NFX

    Monument Butte – doing great as per my post last night. They say it gets little attention from analysts. As they said, the increase in 20 acre wells that will work here (see note last night) means its like they just made a 70 million barrel discovery. $12 F&D costs. Very cheap to drill.

  12. 12
    zman Says:

    NFX conf call going very well in presentation…better stuff than what was in the PR.

    Woodford Shale: cutting well costs, boosting production…much more in 2008

    No deterioration in production after 70 days from Cattle pilot of 40 acre wells ($5.5 to 5.7mm / well)

    2nd pilot: 4 wells from 2 pads
    3rd pilot: 3 wells from 1 pad

    this is going to cut costs by $500K.

  13. 13
    zman Says:

    Just got word the site is partly down again. If anyone can see this please respond.

  14. 14
    rseidman Says:

    Z:
    The site is not reliable yet

  15. 15
    O.W. Says:

    Hey Z, site works ok right now.. yesterday was mostly down for me

  16. 16
    Popeye Says:

    I see your post but it took me three tries to get to the comments Z.

  17. 17
    kiaora Says:

    Works good for me

  18. 18
    Nicky Says:

    Still working for me!

  19. 19
    kyleandy Says:

    cud u comment on esv’s earnings?

  20. 20
    Sambone Says:

    Today it is still slow at times.

  21. 21
    Nicky Says:

    Z – seeing expectations for nat gas for a build of between 50 and 60bcf. Last year was 24bcf and the five year average is 50bcf.

  22. 22
    zman Says:

    You have my sincere apologies on the site access issues. I do not know when it will be fixed as its not only out of my hands but apparently out of my hosts hands. Screaming at them as yielded little so far this morning.

    ESV: have not reviewed yet but they look surprisingly postive, beat Street handily, still on NFX cc.

  23. 23
    O.W. Says:

    up 108% on my OII.. very tempting here..

  24. 24
    zman Says:

    OII – I am very close to punting

    NFX – I’d be adding to position here based on the ongoing call…going to run. Probably hold my longer position and pick up some near calls.

  25. 25
    zman Says:

    mulling the NFX November and December $55s calls. think it runs, CC just ended. very positive….stock still flat.

    gas numbers weighing on my mind a bit, consensus I saw last night was 54

  26. 26
    zman Says:

    analysts should be getting on the squawk boxes and saying another very positive, solid quarter for NFX. Think the lack of real reaction in the stock is the lack of reiteration of a growth target for 2008. Analysts love to be spoon fed. It was a great quarter and they are set up to beat the last mentioned 10% target for 2008 but investors wanted to see that number, or a bigger one in print again. I think they get it when the results from current pilots in the woodford are made known in 3 or 4 weeks.

  27. 27
    zman Says:

    SU flat on results with oil at $88+…hmmm

    Gas injection: 68 Bcf…that’s big.

  28. 28
    TTupp Says:

    z what name do you think will rally the most if they announce no new tax in ALTA?

  29. 29
    scoop006 Says:

    Z- Re #5 CF up $1.50 any idea why

  30. 30
    texana Says:

    z any thoughts on clr reports on 11-6 mostly oil. hk i think reports same day & may show strong gas growth. do u know report date for dnr? thx tex

  31. 31
    Sambone Says:

    10:35 am EST

    Nymex Crude Still Rising, Near $89, On US Data

    By ELIZABETH LANDAU
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude-oil futures neared $89 a barrel Thursday, with fresh buying encouraged by U.S. data showing a surprise drop in crude inventories and continued tensions between Turkey and Kurdish rebels in Iraq.

    Light, sweet crude for December delivery recently was up $1.35, or 1.6%, at $88.45 a barrel after hitting a high of $88.99 on the New York Mercantile Exchange. December Brent crude on the ICE futures exchange hit an all-time intraday high of $86.28, and was recently trading up $1.26 at $85.63 a barrel.

    Crude futures had been slumping from last week’s record highs in recent sessions, but finished higher Wednesday after the report from the U.S. Department of Energy showed a surprise decline of 5.3 million barrels in crude stockpiles for the week ended Oct. 19, as well as unexpected draws in gasoline and distillates. Crude prices are now less than $2 away from the record intraday high of $90.07, hit Oct. 19.

    Heating oil hit an all-time intraday record high of $2.374 a gallon Thursday morning. The November contract recently was trading 2.17 cents, or 0.9%, higher at $2.3637 a gallon. November reformulated-gasoline blendstock, the benchmark Nymex gasoline contract, rose 2.88 cents, or 1.3%, to $2.1763 a gallon.

    Forecasts for a large deficit between global oil supply and demand have been driving crude’s surge in prices over the past two months. Given that situation, any disruption of Iraqi supplies would be significant, even though flows through the major pipeline between northern Iraq and Turkey are limited, said Tom Bentz, director and senior analyst at BNP Paribas Commodity Futures.

    “With inventories being low and projected to get lower as we go forward as demand picks up, we can’t afford to have even the 400,000 barrels off the market,” Bentz said.

    The Kurdistan Workers’ Party, or PKK, has been fighting the Turkish government since 1984, and last week Turkey’s parliament authorized a military strike against the group’s bases in northern Iraq. Crude oil futures hit $90 two sessions later.

    Oil continues to flow from northern Iraq through that pipeline to Ceyhan, Turkey, at a rate of around 472,500 barrels a day, a shipping agent said Wednesday.

    Turkish troops have killed more than 30 Kurdish rebels who were preparing to attack a military unit near the border with Iraq, the military said in a statement on Thursday. The PKK has killed dozens of Turkish soldiers in recent weeks.

    Matthew Bryza, deputy U.S. assistant secretary of state for European and Eurasian affairs, said the PKK is “a problem for all the Black Sea community” and said the U.S. was working to deliver on its promises of helping Ankara.

    While Turkey is grabbing the headlines, Wednesday’s U.S. data showing the sharp decline in crude stockpiles is the bigger driver behind prices, said

    Some analysts said the crude stock decline was more important in driving up prices, Jim Ritterbusch of Ritterbusch & Associates said in a note.

    “Yesterday’s bullish stats have sensitized the crude market to fresh geopolitical developments that would have otherwise had limited impact,” Ritterbusch said.

    The weak dollar, another factor that had been supporting record-breaking rallies, slipped against the euro on Thursday. A weak dollar makes oil cheaper for traders abroad using other currencies.

    With the upward momentum in crude prices so strong, no one wants to stand in the way of higher prices, said Phil Flynn, senior market analyst for Alaron Trading Corp. in Chicago.

    He expects a slight downward correction before prices make a run at $90 again.

    “Ultimately, the concern is that worldwide supplies are falling when we normally want them to rise,” Flynn said. “There’s no doubt that the fundamentals behind the market are still solid.”

    —By Elizabeth Landau, Dow Jones Newswires

  32. 32
    zman Says:

    Hey T – saw that ? last night and have been thinking about it. I’d say SU, ECA, NXY but those are the easy ones. There’s probably a small pure oil sand that will jump if they say no tax. My guess is they do something in the middle.

    Scoop – sorry CF stood for SU’s cash flow.

    Texana – CLR is like the energized bunny…man I wish they would get options on the board although it would have been better to get them months ago, lol. No specific thoughts other than they’re a great operator and they’re probably adding more hedges up here.

    HK I own/ like a lot. No change since my last report…see report page.

    DNR: 11/1 – I don’t follow them anymore but probably should.

  33. 33
    TTupp Says:

    CALGARY — — Alberta Premier Ed Stelmach is bowing to intense oil industry pressure on the controversial issue of higher energy royalties, telling Albertans last night that some increases are likely so citizens get their “fair share,” but promising companies “time to adjust to the changes.”

    -Report on business, globe and malil-

  34. 34
    TTupp Says:

    ^^^^
    ||||

    their fair share! these commies are gona mess up a good thing. people are paid so well out there its rediculous! my cousin moved there with no experience or education and now makes $20k/ month washing trcuks for an oil sands mine– and thats not it– mcdonalds workers out ther e make $15/hr! not only have most of my 20-something bretheren moved to albert for the money they get an annual “winfall cheque” for like $2,000 every year for nothing, plu i think there is no provincial income tax

  35. 35
    Sambone Says:

    T – We’ll see what the numbers will be at 3 pm Mountain time, when Ed has his news conference.

  36. 36
    TTupp Says:

    Z- what you think about apa’s earnings?

  37. 37
    Popeye Says:

    Z, I did a tcpdump while trying to reload the page and it looks like it may be hanging on doubleclick.net. This is probably wrong but if you have a link in there to them you might disable that as a test.

  38. 38
    zman Says:

    ZTRADE: Out half VLO Nov 67.50 calls for $5.50. Up 108% in 2 days. Group probably continues to rally. Still hold the 2 tranches of TSO calls.

  39. 39
    zman Says:

    Thanks P – I tried that yesterday by removing all external links to no avail. My host is having serious connect issues with their provider. They say they will switch over, I ask when??? they say the don’t know.

    T – re APA …I thought they looked pretty good, conf call isn’t for a couple more hours. I’m not playing it today…

    NFX … down a buck. very odd. thinking of adding more.

    Sam – is Alberta doing it at 3 est for sure?

  40. 40
    zman Says:

    NFX: everything on the call went well…think people wanted another guidance boost. waiting and watching for a turn. right now it is trading technically so that a red number on the day means it will get redder…fundamentals don’t come into play. The fact that no company on the chart from last night (aside from much smaller HK) has a 13 year reserve life and trades at 6x cash flow seems to be lost on the investors for the moment.

  41. 41
    Sambone Says:

    Z – 3 pm Mountain
    http://www.bloomberg.com/apps/news?pid=20601082&sid=aepsYZ5kA1xA&refer=canada

  42. 42
    zman Says:

    RIG – another nice move, not getting excited until it breaks 118 though. The options are much less underwater than they were two days ago….who was it that was saying we wouldn’t be getting back up here? come on, fess up, lol

  43. 43
    zman Says:

    BTU: nice breakout

    Sambone: thanks. Sounds like what I thought, something in between the panels recommendations and nothing. A phase in will still mean estimates are coming down which given the meteoric rise of SU can’t be a good thing. Also, those costs T mentioned about just getting people to work there …those aren’t going to do anything but go up. Oil field labor is tight everywhere. Staying in my SU puts.

  44. 44
    zman Says:

    COP getting a nice bounce today…move down was overdone/unwarranted. Very glad it had held this level so far.

    HAL finally going green as it shrugs off the SLB effect. IT was not the subject of a new justice dept investigation unlike the SLBs.

    TSO rocking!

    OII is going to make me punch out soon.

  45. 45
    zman Says:

    Back up site running. I have added a very rudimentary backup site in case troubles persist here. Please use it only as a measure of last resort:

    http://zmanbackup.wordpress.com/

    you can always reach me at zmanalpha@gmail.com

  46. 46
    jazzkool Says:

    z, sold 5 of my 1.95 BTU calls you blasted on 9/28 for 5.20. Thank you very much. It’ll probably keep going up but I could not pass up almost a triple.

    Jazzkool

  47. 47
    TTupp Says:

    whats this about slb an the justice dept?

  48. 48
    zman Says:

    ZTRADE:

    Sold TSO Nov $50 Calls for $7.80; up 333% since entry on Oct 3. Still hold the $47.50 Nov Calls.

  49. 49
    zman Says:

    T: SLB: it’s actually not them, but someone who provides services to them in Nigeria. Should be a non event. Still stock is off a bit…could be unrelated profit taking.

  50. 50
    texana Says:

    dnr- tech breakout on p&f dbl top brkout with vol . mostly co2 oil but also barnett shale gas. nfx making a come back

  51. 51
    Sambone Says:

    11:46 am EST

    New US Sanctions Vs Iran Keep Nymex Crude Perky

    DOW JONES NEWSWIRES
    From Market Talk:
    [Dow Jones] Nymex crude’s advances are supported by new sanctions against Iran, says Tim Evans, analyst at Citigroup. The Bush administration has imposed new sanctions against banks, companies, officials and agencies affiliated with the country’s weapons programs and support for foreign armed forces, but it is unclear whether they will actually lead to a change Iranian policy, Evans says. Mounting tensions between Turkey and Kurdish rebels also support prices, but Evans said a “sell-the-news” reaction in the event of an actual attack by Turkey is possible as long as the oil keeps flowing. Nymex Dec crude +$1.40 at $88.50 a barrel. (elizabeth.landau@dowjones.com)

  52. 52
    Popeye Says:

    SII is down more than SLB but CHK is looking much better.

  53. 53
    drdavis124 Says:

    Just logged on. Sold the last of my XTO th my Xto bought in 1999.

    Request fresh Ideas.

    I mentioned BTJ yesterday.Up today. Looks like a take-out
    Phil

  54. 54
    O.W. Says:

    great trading as always, Z.. even my RIG is back in the black.. you were right all along!

  55. 55
    zman Says:

    Dr D – fresh ideas served up daily, I actually like XTO long as posted two days ago, think it has much further to run.

    BTJ too illiquid for me and I’ve never been able to get seismic right. good luck to you on it though.

    Thinking about taking on more NFX, just have yesterday’s last minute buy plus my stock … this move today is unfounded.

  56. 56
    irished Says:

    confused which site are we using. other one does seem to update.

  57. 57
    zman Says:

    this one unless you can’t get in. right now, depending on where you live, this site either works or it doesn’t. they can’t tell me when it will function properly so if you need me and can’t get in here, try comment over on the backup site and I’ll get back to you promptly.

  58. 58
    ram Says:

    What months for NFX?

  59. 59
    zman Says:

    oil at non-inflation adjusted record level of $89.50…what, it acts like the Iranians are going to shut the Strait of Hormuz!

    Ram : re NFX potentials: look at the $50 strikes in the December and January contracts but I’m waiting for it to stop dropping.

  60. 60
    ram Says:

    NFX trying to come back

  61. 61
    zman Says:

    DR D – how about NFX…the results this morning were misinterpreted, in my opinion, early and the moves in this market seem to build over the course of the day, much like COP yesterday (which is nicely profitable today I might add).

    Anyway, check out the post from last night on NFX. Then, if you have time, and I know you do, listen to the replay of the conference call. They said a lot of good things but since they did not raise guidance, the street has temporarily lost interest. And the move down builds on itself as holders who know nothing more than the tickers, that its an oil company, and the color of the tick (red or green) are choosing to sell because other people are selling.

    One of the most important things they said on the call was something I’ve been saying is that reserve life is going to jump from the low 9 year level to the 13 level. This is fundamentally a different company. Look at the scattergram from my poss and you’ll see that almost no one trades at that high reserve life multiple with that low of a cash flow multiple. It should be at least a point higher. Given that the current CFPS is $8.60 a 1x move in the CF multiple gets you an almost 20% move in the stock.

  62. 62
    Sambone Says:

    Back on, but not sure how long.

    12:16 pm EST

    Crude Hits $89 After OPEC Shipments Report-Analyst

    DOW JONES NEWSWIRES
    From Market Talk:
    [Dow Jones] Nymex crude hit an intraday high of $89 after U.K. tanker tracker Oil Movements said that oil shipments from the Organization of Petroleum exporting Countries will only increase 20,000 barrels a day during the four weeks ending Nov. 10, a smaller-than-expected increase from the previous four-week period, says Gene McGillian, analyst at TFS Energy Futures. “People were expecting to see oil shipments jumping up,” McGillian says, especially because OPEC had decided to increase production starting Nov. 1. There is a good possibility that futures will hit $90 in the next week of sessions, he says. “The market shows it wants to get back into the upward trend,” he says. Nymex Dec crude +$1.66 at $88.76. (elizabeth.landau@dowjones.com)

  63. 63
    zman Says:

    Sam: Nicky is posting on the other site now…probably best to switch to that, I’ll monitor both.

  64. 64
    zman Says:

    ZTRADE:

    Half out Nov $50 BTU CALLS for average $5.35; up 138% since entry on 9/28. Current bid $5.50 as oil is approaching $90.

  65. 65
    zman Says:

    Oil approaching 90 rapidly now with 30 minutes to go in trading.

    Nicki says a spike over 90.07 would do the trick for a breakout.

  66. 66
    zman Says:

    test test test

  67. 67
    zman Says:

    Can someone tell me if they got the last blast for the BTU sale?

  68. 68
    ram Says:

    I did. Thanks.

  69. 69
    zman Says:

    thanks ram – if you have trouble accessing the site today you can comment over on the backup site.

    http://zmanbackup.wordpress.com

  70. 70
    ram Says:

    I am tempted to dump the rest because of some of the premium it still has.

  71. 71
    zman Says:

    understand and I’ll tell you a couple of reasons why I did not. 1) first, now playing with only house money which is always good when you’re in a casino so must be good in the wild world of options 2) I like their business and the improved the get to talk about on the conf call on 11/6 but honestly I’ll probably roll out and up before then, especially if this gains another point or two, 3) nice chart, 4) oil may jump on the open tomorrow and give me one of those point then …

  72. 72
    zman Says:

    wow $90.40

  73. 73
    Sambone Says:

    2:32 pm EST

    Nymex Crude Hits $90 On Supply Concern

    By Elizabeth Landau
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures hit $90 a barrel Thursday, gaining nearly $3 after a forecast for lower-than-expected oil shipments from the Organization of Petroleum Exporting Countries. New sanctions on Iran, coupled with persistent tensions between Turkey and Kurdish rebels, also fueled new buying.

    Light, sweet crude for December delivery recently was up $2.72, or 3.12%, at $89.82 a barrel after hitting a high of $90.00 on the New York Mercantile Exchange. December Brent crude on the ICE futures exchange hit an all-time intraday high of $87.05, and was recently trading up $2.63 at $87.00 a barrel.

    A surprise draw of crude oil stockpiles in a U.S. inventories report from the Department of Energy on Wednesday reinforced concerns over market tightness that had been fueling rallies over the last two months. The report made market participants “take a different view of the marketplace, rather than saying it’s overbought and needs to come off,” said Tony Rosado of IAG Energy Brokers in Ft. Lauderdale, Fla.

    OPEC shipments for the four weeks ended Nov. 10 will only increase 20,000 barrels a day from the previous four weeks, U.K. tanker tracker Oil Movements reported. Given that OPEC had agreed to increase production by 500,000 barrels a day starting Nov. 1, the tracker report concerned traders, said Gene McGillian, an analyst at TFS Energy Futures.

    “People were expecting to see oil shipments jumping up,” Stamford, Conn.-based McGillian said.

    Prices were also supported by new sanctions against Iran. The Bush administration has imposed new sanctions against banks, companies, officials and agencies affiliated with the country’s weapons programs and support for foreign armed forces.

    While the sanctions boosted prices, some analysts doubted whether it should be providing support.

    “Although the daily drumbeat from the U.S. government regarding Iran is serious, sanctions on Iran date from the 1979 Iranian Revolution and we’re not sure how much impact the measures announced today are likely to have in changing Iranian policy,” said Tim Evans, an analyst at Citigroup in New York.

    Turkish troops killed more than 30 members of the Kurdistan Workers’ Party, or PKK, who were preparing to attack a military unit near the border with Iraq, the military said in a statement Thursday. The PKK has killed dozens of Turkish soldiers in recent weeks.

    “When there’s fighting in the region, there’s concerns of things escalating further, so that’s always going to raise tensions in the area and add to the price of crude oil,” said Tom Bentz, senior analyst at BNP Paribas Commodity Futures in New York.

    Heating oil hit an intraday record high of $2.3955 a gallon Thursday. The November contract recently was trading 5.02 cents, or 2.1%, higher at $2.3922 a gallon. November reformulated-gasoline blendstock, the benchmark Nymex gasoline contract, rose 6.92 cents, or 3.2%, to $2.2167 a gallon.

    Now that crude has hit $90, even higher prices such as $100 a barrel are no longer unreasonable to some analysts. “Once we start settling over $90, then we make cases for higher objectives of $95 and then $100,” Rosado said.

    —By Elizabeth Landau, Dow Jones Newswires

  74. 74
    apbd Says:

    Hi All:
    Back on the regular site. Received three blasts.
    apbd.

  75. 75
    zman Says:

    Site update: Level3 in Dallas is having intermittent router issues. No timeline on getting it fixed but it should not take long. Less than 24 hours in the past…which we are well over now. Anyway, just keeping you posted.

  76. 76
    benbobby Says:

    Zman:I know you don’t want to hear this,but still cannot refresh your site ..gained access by clicking on a link from your BTU trade

  77. 77
    zman Says:

    Thanks Ben…yeah, see #75. Come see the active crew over on the backup site at
    http://zmanbackup.wordpress.com

  78. 78
    zman Says:

    RIG position back to green. Somebody said this could not happen just two days ago. Ahhh, options.

    Hey AP – thanks.

  79. 79
    zman Says:

    AI – NBR 30 puts…that’s not a bad bet. I had the right idea there but the wrong expiration. I’ll wait to see if it gets any bounce but that chart is ugly now.

    COP in the recovery ward now, healing most of the damage from yesterday’s mugging. May dump the 80s (now up 30% since yesterday’s purchase) and hold on to the 85s for awhile. If I do it’ll be tomorrow.

    OII up another $1.40. wooo-hoooo!

  80. 80
    TTupp Says:

    i bought COP calls in mid-afternoon on the back of them being so cheap! 25% IV! this is how you make money in options, a 10% move will be a 5 bagger, good call on the add yourself yesterday Z.

    was mulling the APA’zzzzzzzzzzzz

  81. 81
    zman Says:

    T – Nice T! Most of the gang can’t get into this site so we’re talking over on the new backup site as well.

    http://zmanbackup.wordpress.com

  82. 82
    zman Says:

    Gotta run, be back in a couple of hours…have a great night, don’t know if we will be on the backup or regular site tomorrow.

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