31
Oct

Wicked Wednesday – Will The Fed Trick or Treat? + A Word On RIG and The Dry Bulk Hubub

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That's got to be my least original post title ever. (EOG) was the one bright spot (up 4% on the common) in an otherwise blood red day yesterday. Oil and the energy sectors came crashing down on a Goldman slam job and the drybulks got crushed by the "Crowd".

Commodity Watch:

  • Crude: Oil fell $3.45 to $90.08 yesterday. Did world peace breakout? Certainly not. Did Saudi Arabia find a new oil field? Not to my knowledge. No, the bloodletting began when Goldman Sachs advocated "taking profits" and alluded to "already" weakening fundamentals in the 1Q08 supply / demand picture. I doubt there has been time, since their last reiteration that oil was going to $95 just a few weeks ago, for them to gather evidence that 1Q08 is going to be looser than they thought. But by saying as much, they were able to exacerbate the move causing oil to tumble. Can you say pump and dump? Fear that the Fed might not make the much desired quarter point rate cut took a back seat to the Goldman "news".
  • Early Morning Recovery. After trading as low as $88.92 late last night, oil has staged a strong recovery this morning and is presently up $0.75 on high volume at $91.10
  • Graph of $/ Euro vs Oil. This excuse was getting a little flimsy as you can see that oil 's run was a bit excessive to the Euro's climb (thouse are percents on the right hand scale).

oil-vs-dollar-103007.jpg

  • OPEC Watch: Saudi Arabia weighs in on the production hike question. In a nutshell: it won't help. "I don't think additional oil will help," Alireza told reporters when asked if Saudi Arabia should agree to pump more oil to lower crude prices when Opec meets in early December. "It's not a supply problem. I think most of us (Opec members) have really gone up to the (output) level that we can"~ Reuters.
  • EIA Inventory Expectations (from the Bloomberg Survey)

exp-103007.jpg

Comment: Very Split Decision This Week. Numbers are all over the map this time around. Different surveys like Platt's sees a million barrel build in crude as well as builds in both products. This time of year products generally see declining stocks; gasoline due to lower production and imports and distillate due to higher demand. I'm betting both products see declines this week as well. As far as crude goes, I'd say it's a coin toss as to whether you get a bigger build given the sizable, import driven draw on stocks last week, this week could be a "make-up" with imports and stocks ramping.

  • Natural Gas - closed up a nickel to $8.02 on those weak import numbers I mentioned in yesterday's post and also the possibility that Tropical Storm Noel near Cuba could drift into the GOMex (which appears pretty unlikely). Combined gross imports are now at their second lowest level of 2007 which in the case of Canada speaks to the glut of gas in the U.S. The LNG numbers continue to dwindle due to increased competition from abroad.

ng-imports-103007.jpg

 

Earnings Watch: 

(RIG) Reports Solid Top and Bottom Line Beats. Not a lot of meat in the release (a little less than usual aside from the financials). Big day rate increase but also slightly off on utilization. 

  • Reported EPS of $2.12 (after backing out some one time items) vs $2.06 expected.

  • Sales were $1.538 B vs $1.511 B expected. That's a 7% increase over the prior quarter and a 50% increase from 3Q06.

  • CFPS from operations was $2.99 vs expectations of $2.53. This was a very strong cash flow quarter but the spread on estimates here was very wide (different analysts will use different definitions of CFPS most likely the problem) so I'm not sure this info will get much credence. Still $900 million in cash flow generation during the quarter is up a whopping ~ 50% sequentially!

  • Net operating margins advanced again. They reached 48%, up a percent from the prior quarter and up strongly from the 33% margins seen in 3Q06.

  • Avg fleet day rate: $219.7 Kpd (000 per day) vs $202 Kpd in 2Q07 and $147 in 3Q06. This is a record and driven by increases across all rig categories. While deepwater capable rigs led the way here it should be noted that the company's jack-ups also saw a slight bump.

  • Utilization: 89% vs 91% 2Q07 and 87% in 3Q06. This dip is probably what's holding the stock back from a bigger run in the pre-market. How they handle it on the conference call will be key. If it's just planned shipyard or mobilization time then it'll be no big deal. 
  • Yesterday's Rig Status showed one of the new drillships, the Deepwater Expedition, with a 2009 starting rate of $600kpd. Everyone was very pleased last month when the newbuild rates were seen garnering a little north of $500kpd. $600 is the holy grail.  

  • Conference call at 10 EST.

 

 

Stocks We Care About Today Watch:

Dry Bulk Sector Got Slammed Yesterday. Why? A) the first pull back in day rates in a few months, B) a well timed but absurd and sour grapes article from the Motley Fool which proved once again that it's name is apt. 

A) Bulk Shipping Sector Day Rates: The blue line below is the Cape Index. These are the really big ships that chiefly transport grain, iron ore, and coal. It has been on a roll but fell 6% yesterday. The orange line shows Panamax and the yellow line is Handymax.

bulk-rates-103007.jpg

This modest pullback in rates sent many of the drybulk stocks down double digit percents yesterday and left industry leader (DRYS) and up and comer (EXM) down 18 and 20% respectively at the close. True, these are the most leveraged of the group to day rates and they are up quite a bit this year but the rate of earnings growth has outpaced these gain and the rates by which they make a living have paced these gains (the BCI is up ~ 40% since the beginning of September and over 150% since the beginning of this year while the BPI has advance smartly as well. Also, EXM's treatment was particularly unfair as it's fleet is comprised of Panamax and Handymax vessels which did not see the same small dip in rates. 

B) Motley Foolishness. Here's the full article which I have retitled Spotlight on Idiocy. I'll break this absurd article down in pieces. Motley's comments are in italics:

In what sane universe do capital-intensive companies like these deserve multiples to book value approaching those of asset-lite profit leaders like Google and Microsoft?

Answer: This One. Why go after price to book and why compare these guys to software giants? It's like comparing apples to zebras. And lets see, how do you grow book value, oh yes via earnings and just using DRYS as an example, their earnings are set to go from $2.38 in 2006 to over $15 in 2008....that might shrink that multiple a bit. Jefferies, one of the best in the commodities and shipping businesses has a $160 target here ....gee, I wonder if they looked at book value, ooh, ooh better get them on the phone. Try earnings or cash flow multiples pal which are much more appropriate when you are trying to size up an earnings growth story. On that basis the stocks remain exceedingly cheap

I fail to see why a single player within this industry -- DryShips -- should enjoy a valuation more than 50% higher than its nearest rival, and more than twice that of some of the ships giving more distant chase.

First off you are using book value again. Taken on a forward PE basis, DRYS is cheaper than all of its peers on an 08 multiple as you can see from the following table.

dry-bulk-103007.jpg

Sure, it gets the best margins of the bunch, but that just raises more flags. Reviewing DryShips' results, we see that much of its profit over the past year was derived from gains on the sale of assets.Meanwhile, the firm's cash flow statements don't show this supposedly wildly profitable firm generating any cash profits since its IPO. On the contrary, over the last year, the firm has burned through nearly $500 million in free cash flow, as its long-term debt ballooned from $418 million to $728 million. Somewhere, this corporate ship has sprung a leak.

Best margins raise flags???!!!  I see $117 million cash flow from ops in the second quarter when rates were far lower. I'd also note that costs are not rising as fast as revenues so the 36% margins Fool is complaining will I guess be raising even more of their flags.

Anyway, when I see a guy who obviously doesn't get it I like to point it out. We've added a revised valuation table for the dry bulks on the drybulk tab as well as some of Bill's very useful links. Thanks Bill for all your hard work. 

 

Holdings Watch:

CALLS:

  • (RIG) - bought a second batch of the November $120s ahead of earnings for $2.55. This brings my average cost in the $120s to $3.03; last bid $1.90. The released an 8K mid day that rescued the stock from its lows with multiple new high dayrate contracts including one drillship starting in mid 2009 at $600,000 a day which to my knowledge is an industry record and again, speaks volumes to demand for their ultra deepwater capable fleet.

Odds & Ends

Analyst Watch: (LNG) started at outperform at RBC with a $50 pt, FBR raises target on (FTI) slightly to $80 and maintains outperform, 

(CHK)'s DFW Airport Wells Doing Well. They've drilled 33 shale wells on the grounds of the Dallas airport since May and so far the 11 hooked up are producing an average of 2.7 Mmcfgpd, besting the average Tarrant County well which average 2.0.  They plan to drill 300 to 325 wells here by 2011 with a five rig program.

 

 

 

 

251 Responses to “Wicked Wednesday – Will The Fed Trick or Treat? + A Word On RIG and The Dry Bulk Hubub”

  1. 1
    zman Says:

    nice moves up in products today, both gasoline and heating oil nearly doubling the move seen in crude. once again good for cracks. hopefully we are starting to see some convergence here as low inventoried products on the way up in price meet high inventoried oil (on the way sideways)

  2. 2
    freeflow Says:

    DD on EXM today?

  3. 3
    zman Says:

    just tell what the fed is going to do. Maybe those (which are pretty far out of the money at this point )and maybe it will likely be a little close to the money.

    I’d like to see them open for awhile.

  4. 4
    Sambone Says:

    8:31 am EST

    Crude Futures Higher Ahead Of Stock, Rate Data

    By Nick Heath
    Of DOW JONES NEWSWIRES

    LONDON — Crude oil futures recovered some of Tuesday’s losses in London trade Wednesday as profit taking gave way to dip buying; but markets were relatively quiet as traders awaited U.S. Department of Energy inventory data and an announcement on U.S. interest rates.

    Front month Nymex light, sweet crude fell to $88.92 a barrel in overnight trade to extend the steep sell off that preceded the New York close Tuesday.

    But skepticism that the move represented the end to the current episode of high prices tempted some buyers Wednesday, pushing crude back above the previous day’s settlement prices.

    “The trends are all still higher in this complex, and it is not going to require very much to bring buying back into this market,” said Peter Beutel of trading advisory firm Cameron Hanover.

    “That is especially true on any further dips we may see.”

    At 1211 GMT, the front-month December Brent contract on London’s ICE futures exchange was up $0.69 at $88.13 a barrel.

    The front-month December crude contract on the New York Mercantile Exchange was trading $0.58 higher at $90.96 a barrel.

    The ICE’s gasoil contract for November delivery was up $1 at $770.25 a metric ton, while the Nymex gasoline contract for November delivery was up 229 points at 228 cents a gallon ahead of its expiry Wednesday.

    “It’s been a bit of a wait-and-see market this morning, everyone is just holding station,” a trader said.

    “Not only are there the DOE stats, we’ve got this Fed(eral Reserve) rate cut — or not — which everybody seems to be waiting for to see whether it has a significant influence on the dollar and therefore how funds view commodity markets.”

    Crude markets are expecting a build in inventories after last week’s data revealed a surprise counter-seasonal drop in U.S. oil stock levels. The announcement ignited the recent rally in crude that added more than $8 to Nymex light, sweet crude futures before Tuesday’s sell off brought the run to a halt.

    With the market already riven by concerns of fourth quarter demand-supply imbalances, any data hinting that crude and product stocks are looking vulnerable ahead of the northern hemisphere winter would likely add fresh upwards impetus to crude prices.

    A reminder of the current U.S. stock situation came from the U.S. Department of Energy Wednesday.

    “As we go into winter, we’re faced with a very tight market,” Guy Caruso, administrator of the DOE’s Energy Information Administration, told an energy conference in London Tuesday.

    “We think we’re in a very tight situation,” he added.

    Caruso said that crude and products stocks were “average to low” for the fourth quarter of this year and that there wasn’t enough spare oil production capacity.

    “There’s no cushion to deal with either real or perceived” supply disruptions, he said.

    A reaction to Wednesday’s DOE data could be delayed by the scheduled 1815 GMT interest rate announcement from the U.S. Federal Open Markets Comittee.

    The crude and other financial markets are widely expecting a quarter of a percentage point cut in the Fed funds rate Wednesday, confirmation of which would help consolidate weakness in the U.S. dollar, a significant driver of recent crude price rises.

    But a surprise decision by the Fed could have alternative implications for commodity prices in general.

    “The question is will it be 25 basis points, 50 basis points or nothing,” said Eugen Weinberg at Commerzbank.

    He added “25 basis points is priced in already, and if we get it we’ll see a positive reaction for crude and commodities. If nothing happens, it will probably be negative for commodities and if we see 50 basis points cut it will push prices higher.”

    The dollar traded at fresh record lows against the euro Wednesday after U.S. consumer confidence figures out Tuesday shored up expectations of a Fed cut.

    Traders suggested that Tuesday’s retreat was overdue given the pace and extent of recent price gains, but few were prepared to predict that the current bull trend has run its course.

    The publication of a Goldman Sachs report suggesting investors should take profits fuelled Tuesday’s descent, while the steep decline towards the end of the day triggered a wave of technical selling.

    “Before bears start to celebrate, a few things could make their job going forward somewhat difficult,” said Ed Meir of MF Global, with technical indicators suggesting the uptrend is still intact and a shortage of bearish fundamental news to argue against it.

    “Pure technicians would argue that the bull market is still alive and well and only experiencing a modest, but much-needed correction. We have to side with the technicians on this one,” he said.

    While continuing to provide support for crude prices, Middle East geopolitical developments had retreated briefly to the background Wednesday after a recent period of increased rhetoric, with data releases firmly occupying market attention.

    Meanwhile, Petroleos Mexicanos, or Pemex, said it has resumed oil exports at one loading port on Tuesday, and planned to begin shipping from another terminal early Wednesday.

    In a statement, Pemex said it will be able to resume oil production in Campeche Sound after exports are restarted. Earlier Tuesday, a Pemex spokesman said it would take around 24 hours to fully resume production after the ports open.

    Crude oil prices rallied at the start of the week after Pemex announced it had shut-in 600,000 barrels a day of oil production as a result of bad weather.

    The company must now ship oil out of the terminals to free up inventory space to begin restarting production.

    —By Nick Heath; Dow Jones Newswires

  5. 5
    zman Says:

    Wow EOG – holding.

    RIG positive- see post above but probably stuck in a holding pattern of up $2 to $4 until the call in 30 minutes.

    TSO – big up early …hmmm. holding

    Dry bulks running…I’m holding off for a bit on adding. NM had great earnings yesterday and got pounded…probably a good add here. And EXM as per post…wish is were not fed day.

  6. 6
    dooch Says:

    do you see CHK breaking out with gas firm and winter coming?

  7. 7
    zman Says:

    dooch: yes.

  8. 8
    Brian08 Says:

    I’m impressed with CHK making this nice base in the $38s…Good call on the LEAPS awhile back Z…

  9. 9
    zman Says:

    Thanks B. Hope the interviews are going well. Can you put skull & bones on your resume or do you just use the handshake.

  10. 10
    Brian08 Says:

    Just the handshake, don’t want to make it too obvious… 🙂
    The interview went really well, I was able to regale them with my pitch of CHK, so they were pretty shocked that a non-energy guy could talk about energy like that…Hoping to get final rounded…
    Now if Uncle Ben can gimmie 50 today and help me instead of screw me, I’d be FANTASTIC!!!

  11. 11
    cattleman Says:

    Z How do you feel about Nov NFX 55 calls?

  12. 12
    zman Says:

    Hear ya re Uncle Ben. Never can tell with him

    HAL and SLB biding time flat to down a dime.

    EXM up $2.30 vs $4.50

    NFX Nov $55. Pretty gutsy with 12.5 days left. If fed is kind it’s worth a trade but I’m happier with Dec or the Jan’s I’m in. Those gas imports should help this and CHK. In NFX’s case, the stuff I’ve read from Simmons and others post call reflects a sort of “hey, look over here, this is new” kind of mentality regarding the shift in the company’s focus and assets. I’ve been saying it since Spring but whatever. Short answer is, I’d be more comfortable with a longer date there.

  13. 13
    zman Says:

    that should have said EXM up 2.5 vs $4.50 just minutes ago. These are all over the place and will likely be that way until fed time.

    RIG call in 7 minutes.

    Hey cattle, maybe the NFX Nov $50s for a move back near the recent high.

  14. 14
    zman Says:

    May add a little more CHK novemeber call exposure after the Fed or Th or Fri. Earnings Nov 6.

  15. 15
    TTupp Says:

    morning ya’ll. Z i see the new vacuum tubes on the commodore 64 are holding up…

  16. 16
    zman Says:

    RIG dropped a buck and they have not said anything besides the legal boiler plate on the call so far

  17. 17
    TTupp Says:

    btu may complete the pull-back letting us in once agin , what do you think Z?

  18. 18
    zman Says:

    RIG

    floater market demand continues to surprise, lots of demand out through 2010.

    Jack Ups – pleasantly surprised by strength here (added $400 million to backlog on JUs during the quarter)

  19. 19
    zman Says:

    BTU – I’m pretty cautious pre fed.

  20. 20
    TTupp Says:

    i know. im not touching anything

  21. 21
    aitrader Says:

    Cramer Says Buy Dry Bulk Shippers On Weakness (DRYS, DSX, QMAR, TOPT)

    http://www.streetinsider.com/Analyst+Comments/Cramer+Says+Buy+Dry+Bulk+Shippers+On+Weakness+(DRYS,+DSX,+QMAR,+TOPT)/3072384.html

    —————-

    Yeah baby! Grabbed the DSX Nov 40 calls yesterday at the bottom. They don’t report until Nov 14 so I guess I’ll sell today or tomorrow unless Z thinks that is unwise. Z?

  22. 22
    zman Says:

    more rig CC:

    marketing outlook:

    contract backlog at $22.9B, up 1.4 since last quarter.

    high specification unit demand seen still rising.

    stock waiting on Q&A

  23. 23
    TTupp Says:

    you bought $40 calls?

  24. 24
    TTupp Says:

    40 strike i mea aitrader?

  25. 25
    aitrader Says:

    Yes – Nov 40’s that expire on the 17th.

  26. 26
    Sambone Says:

    The all knowing Phil.

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

  27. 27
    TTupp Says:

    is in 40’s 30$ in the money? lol

  28. 28
    zman Says:

    RIG Q&A

    recurring them…third party performance is constrained in the shipyards as far as both new build and mob work/maintenance.

    $600K – is it the new day rate? would not extend to the whole high spec fleet. may see some others this high later but would be cautious extrapolating this as the new rate threshhold.

    how many rigs in fleet have the high spec rate: very limited now, 5 or 6 under construction now and expect that to be absorbed by demand.

  29. 29
    aitrader Says:

    No, DSX is at 42.50 or so. Got the 40 calls when it was 39 someting.

    Oil going ballistic.

  30. 30
    Popeye Says:

    Another big build.

  31. 31
    zman Says:

    inventories:

    crude off another 3.9 mm bls
    big down on refinery util

    gaso up by 1.3
    dist up by 0.8

    odd numbers

  32. 32
    Sambone Says:

    Off to the races

  33. 33
    TTupp Says:

    h sorry br. i get dsx and exm mixed up im not to sharp…. i was gona say thats a bonehead move… jk

  34. 34
    Popeye Says:

    Make that draw LOL, sorry.

  35. 35
    zman Says:

    ZTRADE: HAL 40 November CALLs for $1.00

  36. 36
    TTupp Says:

    ive come to the conclusion that refiners dont trade with cracks, but instead with crack

  37. 37
    zman Says:

    T – tis true short term , they trade with oil and not product…right now cracks are about even on the day as gasoline and ho are running up on these numbers, following oil higher and not the numbers. This is one week and they (products) are still low relative to last year.

    EOG and COP shot out of a catapult. Come on Fed…

  38. 38
    O.W. Says:

    No need to visit Six Flags ever again, just sit in the comfort of your office and trade the energy markets!

  39. 39
    zman Says:

    Gasoline build is pretty strange since production fell and demand rose…imports saw a big resurgence which may or may not be sustainable.

    The drop in refinery utilization to 86.2% is the low for this season.

    OW – LOL. That’s why days like yesterday don’t get me down, haha!

  40. 40
    zman Says:

    Still on RIG call….they’re just outlining good global long term demand growth.

    Analysts seem pretty happy but not completely wowed.

  41. 41
    Sambone Says:

    10:35 am EST

    Crude Rises On Strong US GDP, UK Refinery Fire

    By GREGORY MEYER
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures rose early Wednesday after the U.S. reported surprisingly strong U.S. economic growth for the third quarter and a major blaze at a refinery east of London.

    Ahead of U.S. weekly inventory data from the Department of Energy, prices were also lifted by an attack on a vessel protecting a Nigerian oilfield.

    Light, sweet crude for December delivery on the New York Mercantile Exchange was recently up 69 cents at $91.07 barrel after rising as high as $91.62. December Brent crude on the ICE futures exchange rose 81 cents at $88.25 a barrel.

    Analysts surveyed by Dow Jones Newswires expect a 100,000-barrel increase in crude-oil inventories, a 400,000-barrel drop in gasoline stocks and a 1 million-barrel drop in distillates, including heating oil and diesel. Expectations also point to a 0.5 percentage-point rise in refinery use, to 87.6% of capacity. The U.S. Energy Information Administration releases inventory data for the week ended Oct. 26 at 10:30 EDT.

    Peter Beutel, president of energy risk management firm Cameron Hanover, noted that the inventory report for this week has historically revealed increased supply.

    “If we see the opposite of the five-year tendency, if crude stocks and (refinery) utilization were both to decline today, that could have a very bullish effect on prices,” he wrote in a note to clients.

    Details of the fire at the Coryton refinery owned by Petroplus Refining and Marketing Ltd. were scarce but market participants said it is thought that the isomerization unit, which makes a major component for gasoline blending, has been damaged during an explosion. The refinery has the capacity to process 172,000 barrels a day.

    The oil market is set to focus its attention later in the day on an interest rate decision from the Federal Reserve’s Open Market Committee, at which the central bank is generally expected to cut its key overnight federal funds rate by 25 basis points to 4.50%. Oil prices soared in September after the Fed delivered a half percentage point cut in interest rates in a bid to stop a crunch in the credit markets from spilling over into the rest of the economy.

    “The real story today is the inventory report and the FOMC decision,” said Addison Armstrong, an analyst at TFS Energy Futures, in Stamford, Conn.

    Oil prices have been on a rampage since September, rising as high as $93.80 on Monday on continued expectations of strong demand and tight global supply. The rally has revived expectations of prices climbing as high as $100 a barrel.

    The strong GDP data has further reinforced the notion of strong demand. Gross domestic product rose at a seasonally adjusted 3.9% annual rate July through September, the Commerce Department said in the first estimate of third-quarter GDP.

    “Clearly the strong performance this morning has been the result of the surprising GDP (data),” said Mike Fitzpatrick, vice president of energy risk management at MF Global, in New York.

    Meanwhile, a naval officer was killed and four other naval personnel were injured in an overnight attack on a vessel protecting a Royal Dutch Shell PLC (RDSB) oilfield off southern Nigeria. The attack highlights the precarious nature of the Nigerian oil supply, Armstrong said.

    Front-month reformulated gasoline blendstock, or RBOB, rose 3.94 cents, or 1.75%, to $2.22965 a gallon. Heating oil rose 4.91 cents, or 2.03%, to $2.4737 a gallon. Contracts for both expire at the end of trading Wednesday.

    —By Gregory Meyer, Dow Jones Newswires

  42. 42
    TTupp Says:

    took the HAL’s Z. think vlo’s new floor is a nice round 70$?

  43. 43
    TTupp Says:

    go EXM! well at least my investors are going to get back a few cents on the dollar 😉

  44. 44
    irished Says:

    What a difference a day makes!!

  45. 45
    zman Says:

    Watch GS reiterated their “take profitss” stance since this is messing over their short on day 2, lol

    T – yes I do. I think GC and Mid Cont cracks are about as low as they are going to get. Plus the Tricenda valuation for TSO is going to highlight VLO’s low multiple.

    go CHK, OII, EOG yada yada

    RIG comment on Q&A: subsea tree demand is beyond cap to deliver through 2010 from what they can tell. More affirmation for OII, FTI, CAM

  46. 46
    zman Says:

    Sane : have you seen API?

  47. 47
    sane Says:

    Not yet

  48. 48
    TTupp Says:

    is fed at 230 as usual?

  49. 49
    sane Says:

    API

    Crude DRAW 3.3M
    Distillate BUILD 3.1M
    Gasoline DRAW 800K

    Z, Notice the big Cushing draw.

  50. 50
    TTupp Says:

    HAL DDT?

  51. 51
    O.W. Says:

    Ttup: 2:15

  52. 52
    Brian08 Says:

    Somethin’ kicked RIG in the butt…Must be gettin’ good!!

  53. 53
    zman Says:

    Sane: mostly just wanted to see if you were paying attention, lol. Thanks for the data. I did not see Cushing, thanks, that’ll be the headline within an hour.

    missed my NFX $50 trade.

    T – yup, people don’t go there first but it was hit hard yesterday and is cheap, cheap, cheap.

    Brian: RIG call still gooooooinnnnnggggg onnnn. people seem happy, can’t poke any holes.

  54. 54
    O.W. Says:

    Z, are you lightening up on anything pre-fed? this could be a huge bearish move on crude if he leaves rates put…

  55. 55
    TTupp Says:

    uuber cheap. $100 to control $4000

  56. 56
    TTupp Says:

    the 42 1/2’s are going bonkers

  57. 57
    zman Says:

    OW – Here’s a little conspiracy theory for you. Does Ben have a quote screen up right now. If he see’s crude today, after GS tried to sabotage oil yesterday (treasury secretary Paulson’s old firm) so that he could be more comfortable cutting rates, does it enter into his thinking today know ing that they failed and that he will be responsible for sending oil to $100 if he cuts. hmmmm…

    Am I lightening up….always thinking about it on days like today. I’m sure you’ll get the blast.

  58. 58
    O.W. Says:

    Well, that theory does sound a little far-fetched.. ‘proly means it’s true .. haha.. I get your drift, Z ! 😉

  59. 59
    zman Says:

    No add to SPR, Cushing fell off a cliff from 18.2 mm bls to 15.1 mm bls. That’s an all time low and I have not seen it yet in a story. That could be “reason” for a push to $95 muey pronto when it is widely disseminated.

  60. 60
    zman Says:

    TLM looks like a nice cup and handle, an uber cheap, higher performance Can E&P

  61. 61
    TTupp Says:

    ooops i forgot to short USO Karen Finnerman

  62. 62
    TTupp Says:

    Z you have the ability to trade canadian options? they trade in that back portion of the beer store in Montreal..

    no but for serious, some of these Canadian companies trade better over there

  63. 63
    Sambone Says:

    Z – Helicopter Ben doesn’t know how to use a quote screen, let alone how to look at the US dollar or oil, IMO.

  64. 64
    zman Says:

    Rig – so far so good, looks like analysts are squaking nice things.

    Dry bulks look to me like they will explode if Ben cuts at all. They’d rebound a lot more just based on the spiel I put forth in today’s post were it not for Ben’s possible treachery.

    T – I don’t know. For the TLM its an ADS and the option just trades normal for me.

  65. 65
    zman Says:

    Sambone – he cuts 25 bips and oil is $95. 50 bips and oil is 100…and a gallon of milk will average $6 by Christmas. But who cares, that’s not part of the core.

  66. 66
    scoop006 Says:

    Z If he doesn’t cut oil is ?

  67. 67
    Brian08 Says:

    50: Oil = $100 or $1,000 possibly, I start to use my George Washington’s as toilet paper, and I get a lot more crap from the Canadians in my class…

  68. 68
    aitrader Says:

    Zman – what’s your feeling about HK these days? Worth adding at this level?

  69. 69
    zman Says:

    Scoop: probably over 90. The chart in today’s post was supposed to convey my thoughts that the relationship has gotten a little stretched…another excuse for high oil to throw in a 1000x revised news story along with the words rebel, explosion, mishap, shut in, storm etc…

    AITrade – very much like, already own, waiting on earnings when I think they should hit 20 if the market is friendly like today.

  70. 70
    aitrader Says:

    Thx Z – doubled up on HK.

  71. 71
    PackMan Says:

    SU upgrade 10 $124 C today… any thoughts?

  72. 72
    zman Says:

    P – yes, I think they are overvalued but will keep going up with oil (which also overvalued). Probably should have bailed on my put position yesterday. Still, it is a Dec and I’m sure I’ll get another chance soon.

  73. 73
    zman Says:

    Go RIG Go…making a run on $120. wooo-hooo.

    If I take profits pre Ben the most likely candidate right now is COP. Despite the fact that I think it is too cheap it is also exceedingly volatile and I have good gains on the 80s, flat on the 85s…mulling.

    Also, EOG may get cut to house money status as I think it goes higher in November.

    Wow just saw nat gas trading up $0.21 to 8.24.

    On a Ben cut things that look interesting and are down now: BTU. Also VLO (not down but definitely cheap)

  74. 74
    zman Says:

    also on a Ben cut, as I mentioned before EXM, DRYS & Co should really pop.

    Bill – are you around. What did you thing of that motley FOOL?

  75. 75
    Brian08 Says:

    Hey Z question for you…
    I bought and sold the RIG $115s and then rebought the $115s yesterday and just sold them…But I also have the RIG $120s as well…Would you have sold the $120s and let the $115s run or would you have done what I did?

    But thanks anyway for the RIG trades!

  76. 76
    zman Says:

    TLM through 21. has the buy me sign hung out with that multiple and these commodity prices. ditto NFX as it gets back above $53 and potentially resumes the breakout.

    CHK just touched an all time high.

    B – no, I get you and I think that’s what I would do, protecting what I assume at $115 is the bigger $ position and letting the spec $120s hang out there.

  77. 77
    Sambone Says:

    11:25 am EST

    Nymex Crude Surges On Surprise US Inventory Draw

    By MATT CHAMBERS
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures rose above $93 a barrel Wednesday after U.S. Department of Energy data showed a surprise fall in crude stockpiles.

    It was the second straight week that the data, put out by the DOE’s Energy Information Administration, showed an unexpected draw, and the second straight week it sent prices rocketing higher. A big draw at the Cushing, Okla., delivery point also pushed prices higher.

    The front-month December light, sweet crude contract on the New York Mercantile Exchange was recently up $2.52, or 2.8%, at $92.90 a barrel after rising as high as $93.67. The contract was trading near $91.40 before the data.

    “You had a substantial draw in Cushing, and combined with the big overall draw, it’s pushing prices higher,” said Anthony Rosado of IAG Energy Brokers in Fort Lauderdale, Fla. “I don’t see why we shouldn’t hit new records; the fundamentals seem to be in the marketplace” for crude to rise past $95.

    The EIA said U.S. commercial crude oil stockpiles fell by 3.9 million barrels last week to 312.7 million barrels, compared with analysts’ expectations of a 100,000-barrel build in an earlier Dow Jones Newswires survey. Cushing stockpiles fell by 3.1 million barrels to 15.1 million barrels.

    Gasoline stockpiles rose 1.3 million barrels to 195.1 million barrels, compared with forecasts for a 400,000-barrel fall, and distillates, which include heating oil and diesel fuel, rose 800,000 barrels to 135.3 million barrels, compared with estimates of a 1 million-barrel draw. Refinery use fell to 0.9 percentage point to 86.2% of capacity.

    Front-month November reformulated gasoline blendstock, or RBOB, rose 5.99 cents, or 2.7%, to $2.317 a gallon. November heating oil rose 5.12 cents, or 2.1%, to $2.4758 a gallon.

    —By Matt Chambers, Dow Jones Newswires

  78. 78
    Brian08 Says:

    Thanks Z, just wanted to get a little less involved pre-Ben…Don’t want to give the gains up…And yeah the $115s were a little bit bigger position…

    If Uncle Ben effs up my good mood I’m gonna be pissed!!!

  79. 79
    PackMan Says:

    DRYS just issued a PR locking in rates on 4 ships for part of 2008.

    The rates look kinda low.

    70’s & 80’s k / day.

    Like I said yesterday, I don’t know the biz well, but this seems much lower than the $150k rated being bandied about.

  80. 80
    zman Says:

    B – me too, this is one of my favorite days of the year and I’d hat to have Ben pee in my candy bag.

  81. 81
    zman Says:

    P – odd for them to lock anything in at all, market may see that as them signaling a rate top. No doubt they will try to spin that otherwise but the Chinese rumors out there you do have to be concerned. Will look at and get back. Thanks for the headsup

  82. 82
    zman Says:

    P – those are Panamax. See orange line in today’s chart so the rates are pretty good.

  83. 83
    zman Says:

    it’s also only 5% of their Panamax fleet which means its 2-3% of their total fleet, if we see a string of these it might be a reflection of their thought that the Pana rates are up too much but it also may make investors very happy. At the Jefco conference these guys said they would remain committed to the spot market and it literally sucked the air out of the room. This more conservative approach, “wait and then lock in higher than your peers” may pay off in a reduced risk profile that fund managers appreciate.

  84. 84
    zman Says:

    Crude up $3 to $93.40. Products not quite keeping pace which is not surprising and tells you the speculators are thanking GS for the buying opportunity by rushing back into their favorite trading vehicle, the good old barrel of WTI.

  85. 85
    QUARRYMAN Says:

    Hey Z.

    Does a Fed cut mean a drop in dollar value mean oil must rise in price to maintain the same relative world value?

    aka Fed Fund Rate Cut = Higher Oil Price?

  86. 86
    zman Says:

    T – Si senor. Brushing up on languages with low value currency.

  87. 87
    zman Says:

    Sambone – I see the Cushing draw hit the news stories and is now pushing oil higher.

    That guy in the story above is a PF wannabe

    “fundamentals in place”…ha.

  88. 88
    scoop006 Says:

    Z= RIG CC FINISHED? IF SO YOUR THOUGHTS

  89. 89
    Sambone Says:

    PF = All talking heads, don’t ya know!

  90. 90
    zman Says:

    Scoop – yes finished. Generally positive, analysts were happy but not ecstatic, they couldn’t poke any holes in the go forward demand thoughts on both the high specification/ultra deepwater and on the mid water depth rig demand which remains strong. JU did well and look to be on track to continue to do well so the one point of weakness you expect (the shallow water GOMex) did not hurt them and they are pretty happy with demand there. Soooo, it was pretty positive. It was pretty touch and go during the call if this would stay positive on the day but they handled themselves well and of course oil rocking didn’t hurt. Still, there have been a couple of waves of buying that were obviously analyst induced so I’d expect to see some nice things said tomorrow.

  91. 91
    zman Says:

    ok, who’s nibbling at the Jan 55 NFX’s

    Sambone = truth

    Option Monster: does anyone use that system? Their “heat seeker” was targeting DRYS long yesterday. Just want to know if all it is is a put/call ratio screening program or if there is something more to it.

  92. 92
    Brian08 Says:

    No kidding on the NFXs…No volume until now and BAM 200 contracts…

  93. 93
    zman Says:

    It’s probably Tupp

  94. 94
    TTupp Says:

    thats narjarians thing.. does he own it?

  95. 95
    TTupp Says:

    Tupp! ive never owned the stock or the options!

    Brian, where are the Canadians in your class from?

  96. 96
    TTupp Says:

    re: #95, kidding to the first paragraph. i have to site when im using my dry Canadian sarcasm

  97. 97
    TTupp Says:

    the day i follow trades from a dude with a pony tail ill eat a hat too

  98. 98
    TTupp Says:

    *cite

  99. 99
    Brian08 Says:

    Most recently they both lived in the Toronto area…I’ve had to hear about the Canadian dollar every step of the way…The Canadian Club wanted to throw a “Parity Party” when you guys finally pulled even with the USD…A little late for that now!! AND IT KEEPS GETTING WORSE!!!

  100. 100
    zman Says:

    T – you talking about DRYS…saw him tout it on CNBC yesterday morning with the stock at $131. just curious how it works…guess I could always go read about it.

    T – I though you guys were all funny “ha, ha” not funny “ha, huh”.

  101. 101
    zman Says:

    ZTRADE: Out half EOG November $85 Calls for $4. 122% two day gain and will likely hold the rest through Ben.

  102. 102
    Sambone Says:

    “Ha, huh” Funny guy

  103. 103
    TTupp Says:

    B- 105 now lol– I live in Windsor, a border city. my day and weekend trips have become a lot cheaper since it used to cost me $1.55 to by a yankee buck in like 2002. i wonder what the change in the peso cross rate is now? that could be nice too!

    it will be at 110 by year end if you guys keep cutting and we don’t… Yale right? are you doing a concentration on Finance? tell your Torontonian classmates they should have went to Schulich.. kidding– ivy league will always dominate– although we did beat you in a number of business contests on the Economist television show 😉

    Z- you read? unheard of. HAL, the calm before the storm.. any trades in the cache for after the announcement?

  104. 104
    zman Says:

    T see 73 & 74

  105. 105
    zman Says:

    Sambone – do I make you laugh, do I amuse you? funny how?!

  106. 106
    TTupp Says:

    http://www.fool.com/investing/value/2007/10/30/worlds-scariest-stock-research-in-motion.aspx is this the same douche-bag who wrote the drys article!!??

  107. 107
    TTupp Says:

    sam you a canuck?

  108. 108
    Sambone Says:

    Uh, Uh ……… Get outta here

  109. 109
    Brian08 Says:

    T yeah Yale…Been a good time so far…$1.10, if we in the US are lucky…Those trips to Montreal are becomin’ HELLA expensive for us Americans!!!

  110. 110
    Sambone Says:

    T – Southern baby! Tha south’s gonna do it again!

  111. 111
    TTupp Says:

    re: 73, you know VLO is a darling of mine…..

  112. 112
    Sambone Says:

    Canuck’s like cold, I don’t

  113. 113
    TTupp Says:

    do you guys have a commerce society? montereal– beautiful city, visit the option exchange- it is ran from the vacant portion of a dual-use beer store…

  114. 114
    Sambone Says:

    12:37 pm EST

    Nymex Crude Touches $94 After US Inventories Fall

    By MATT CHAMBERS
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures touched a record $94 a barrel Wednesday after U.S. Department of Energy data showed a surprise fall in crude stockpiles.

    It was the second straight week that the data, put out by the DOE’s Energy Information Administration, showed an unexpected draw, and the second straight week it sent prices rocketing higher. A big draw in stockpiles at the Cushing, Okla., delivery point for New York Mercantile Exchange crude futures, which fell to a two-year low, also pushed prices higher.

    The front-month December light, sweet crude contract on the New York Mercantile Exchange was recently up $2.77, or 3.1%, at $93.15 a barrel after rising as high as $94.00, the highest price for a front-month contract. The contract was trading near $91.40 before the data. Brent crude on the ICE Futures Exchange rose to a new intraday record $90.74 a barrel and was recently trading at $89.84, up $2.40.

    “You had a substantial draw in Cushing, and combined with the big overall draw, it’s pushing prices higher,” said Anthony Rosado of IAG Energy Brokers in Fort Lauderdale, Fla. The tightening U.S. inventories, in addition to speculation and supply risk factors already priced in, could be a catalyst for crude to rise past $95, he said.

    The EIA said U.S. commercial crude oil stockpiles fell by 3.9 million barrels last week to 312.7 million barrels, compared with analysts’ expectations of a 100,000-barrel build in an earlier Dow Jones Newswires survey. Cushing stockpiles fell by 3.1 million barrels to 15.1 million barrels. Both total U.S. stocks and those at Cushing are at their lowest since October 2005.

    Gasoline stockpiles rose 1.3 million barrels to 195.1 million barrels, compared with forecasts for a 400,000-barrel fall, and distillates, which include heating oil and diesel fuel, rose 800,000 barrels to 135.3 million barrels, compared with estimates of a 1 million-barrel draw. Refinery use fell to 0.9 percentage point to 86.2% of capacity.

    Nymex crude prices have surged 14% in the past month on a confluence of factors, including sliding U.S. stocks, a weaker dollar and concerns tensions between Turkey and Kurdish militants could spill over into northern Iraq and effect crude oil pipelines.

    As well as digesting the EIA’s weekly report, traders are now waiting for the Federal Reserve’s decision on U.S. interest rates, due at 2:15 p.m. EDT. Most traders are expecting the Fed to cut rates by a quarter percentage point. A bigger-than-expected cut is likely to boost prices because it will be seen as positive for crude demand.

    Before the DOE data, prices were buoyed by stronger-than-expected third quarter U.S. economic growth.

    Front-month November reformulated gasoline blendstock, or RBOB, rose 6.46 cents, or 2.9%, to $2.322 a gallon. November heating oil rose 6.95 cents, or 2.9%, to $2.4941 a gallon after earlier hitting a new intraday record $2.4973.

    —By Matt Chambers, Dow Jones Newswires

  115. 115
    TTupp Says:

    i live half my life n Vancouver- they have palm trees and no snow… you can be on the beach 80 Fahrenheit, and go snowboarding an hour away to Whistler, the best ski hill in the world! a Utopian city!

    the south is much warmer i bet tho 😉 , when i get chilly i go to Vegas.

  116. 116
    zman Says:

    Seeing a bit of a pullback in the sector despite still lofty commodities. Expected equity dip into the Fed release. 25 bips seems to be consensus, correct?

  117. 117
    aitrader Says:

    Bond markets indiciate 92% prob of 25 bp and 8% of no cut. Markets not betting at all on 50 bp.

  118. 118
    Brian08 Says:

    That’s what I’m reading…

  119. 119
    Sambone Says:

    Wallstreet is 100% on 25

  120. 120
    zman Says:

    Thanks fellas. Sambone, think they sell the news?

  121. 121
    Sambone Says:

    Z – Not this market. These lemmings, grrrr, don’t get me started.

  122. 122
    zman Says:

    my thought too. good, I’m 95% long.

  123. 123
    Sambone Says:

    You know everything is Goldilocks when WMT starts it’s Black Friday sales on this coming Friday. I wonder why?

  124. 124
    zman Says:

    DRYS at HOD

  125. 125
    zman Says:

    momentum seems to be shifting to the dry bulks now.

  126. 126
    bill Says:

    Re drys

    http://money.cnn.com/news/newsfeeds/articles/marketwire/0322401.htm

    This is exactly what I have been saying

    old rate 30 k new rate 81 k
    old rate 51 new rate 81.8
    old rate 49.5 new rate 78.6
    old rate 28 new rate 77

    Thats another 58 m of pure profit to the bottom line. And that for just 4 ships.

    they still have more that will reset.

    This deal, will show up in q 1 pl

    And even though drys and other in the sector recovered, drys is trading with the rest of the pack and no premium for this great newsas i write this drys is up the same as the other dry shippers

  127. 127
    zman Says:

    Thanks Bill. Can’t believe how bad of a slasher piece that Motley Fool article was. Guy is truly a moron.

  128. 128
    TTupp Says:

    you know your tempted to write an editorial Z. ps does oii repot b4 or after the bell demain

  129. 129
    zman Says:

    OII after the bell Thursday

  130. 130
    zman Says:

    XOM reports before the open tomorrow.

  131. 131
    zman Says:

    Crude up $4 to $94.35: CUSHING. Goldman Who?

  132. 132
    TTupp Says:

    i have a feeling XOM will disapoint

  133. 133
    TTupp Says:

    so does Narjarian. buy sum DUG!!!!!!!

  134. 134
    zman Says:

    T – I was just about to buy some calls, lol. Why do you think so? They did not warn like their peers. Also, they disappointed last quarter…two in a row. I think $94+ my override a small miss anyway. Not saying you are wrong, just curious why you think they miss.

  135. 135
    Sambone Says:

    Z – Don’t count GS out yet. Those pikeys know how to work this market.

  136. 136
    zman Says:

    yeah, they’re the smartest guys in the room.

  137. 137
    sane Says:

    I don’t trust pikeys, especially when it comes to caravans.

  138. 138
    TTupp Says:

    because they didnt warn… and they refine quite a bit, second in throughput to cop right?

  139. 139
    TTupp Says:

    i have my tinger on the trigger for rimm and BTU

  140. 140
    ram Says:

    ZMAN – Should OII run into earnings?

  141. 141
    O.W. Says:

    a last minute move on COP?

  142. 142
    Sambone Says:

    13 minutes

  143. 143
    zman Says:

    COP set a stop at $5 on the COP 80s (now $5.45)

    setting at 1.80 on the $85s

    OII – I’d guess it moves with energy, they need a beat and good news to maintain this level. A meet will not do. Still holding.

  144. 144
    Sambone Says:

    Turkish “For ever action, there is a reaction. And a Pikey reaction… is quite a fucking thing”.

  145. 145
    freeflow Says:

    That has got to be my favorite movie of all time.

  146. 146
    zman Says:

    oil going for $95 today.

  147. 147
    Sambone Says:

    Wow, up $4.25 now to 94.63

  148. 148
    drdavis124 Says:

    bought more CHK calls I’M addicted.

    Bought Put XOM ODUMJ Jan 09 @$50 75cents

    XOM is dead long term. The above is a long term trade. Researves in hostle counties are worthless but are on the books as full value. Don Coxe Rule the “value goes down by the square of the price increase” in those contries.

    Phil

  149. 149
    drdavis124 Says:

    XOM Does anyone know the percentage of oil res. XOM have in Chavez type countries??????

  150. 150
    Sambone Says:

    .25

  151. 151
    aitrader Says:

    25 bp FF cut, 25 bp for discount rate.

  152. 152
    zman Says:

    COP went right through my stop limits, pulling them off.

  153. 153
    O.W. Says:

    my COPKQ were sold

  154. 154
    Sambone Says:

    Fed comments dragging down the market

  155. 155
    zman Says:

    what did they say? how bad economy talk? even oil is selling off.

  156. 156
    Brian08 Says:

    Dow seemed to firm before going red…Enjoy the roller coaster ride…

  157. 157
    aitrader Says:

    Wasn’t a unanimous vote – one dissenter. Fed left the door open for a further adjustment depending on the market outlook. Sounded a bit “doom and gloom” rather than upbeat.

  158. 158
    sane Says:

    They are now saying the housing market is going to be a significant drag on the economy in coming months

  159. 159
    sane Says:

    They are saying housing is going to get worse.

  160. 160
    Sambone Says:

    Futures now have 52% odds of rate cut in December, which is down from where it was.

  161. 161
    zman Says:

    jeez, they couldn’t see that before but they can now?! somebody needs to kick some peep holes in the ivory tower. Market should not panic over that kind of talk as it means more rate cuts are more likely than not going to occur.

  162. 162
    aitrader Says:

    Oil breaking above 94.

  163. 163
    Sambone Says:

    US$ falling against the euro

  164. 164
    zman Says:

    They can start calling him $100 Ben

  165. 165
    Sambone Says:

    Z – See “Goldilocks”, “What, me worry”, etc. on this market.

  166. 166
    ram Says:

    COP?

  167. 167
    aitrader Says:

    BB reporting 2 year low in stocks at Cushing. I can’t see oil avoiding the $100 mark in the next week.

  168. 168
    zman Says:

    COP: I’m going to hold, not seeing a big panic in the energy sector although some hurt worse than others.

  169. 169
    sane Says:

    They are not going to avoid a recession, so they need to take their pick: A credit market recession, or an inflationary recession. Guess they chose the latter…

  170. 170
    TTupp Says:

    nxy, pcz, and su uppped at FBR. they a good research house Z?

  171. 171
    zman Says:

    FBR – yes

  172. 172
    TTupp Says:

    xom b4 or after bell tomorrow?

  173. 173
    zman Says:

    was a little early on my first half sale of EOG it seems. oh well, its a problem to have.

  174. 174
    zman Says:

    xom before

  175. 175
    zman Says:

    RIG can feel free to make a move on $120 now.

    BTU down is odd here.

    wow TLM

  176. 176
    Sambone Says:

    Sane – See #65, “$6.00 gallon of milk”. What, me worry? It’s not part of the CPI, ya know!

  177. 177
    O.W. Says:

    you always use limit stops, Z ?

  178. 178
    ram Says:

    Would you think of adding to COP prior to XOM and with the prospects of higher oil?

  179. 179
    zman Says:

    mostly, otherwise they have a license to steal.

  180. 180
    zman Says:

    Ram – no I would not but I might after I see the numbers.

    What happened to oil up = mkt down and vice-versa?

    Drybulks look likely to run again.

  181. 181
    O.W. Says:

    I used a market stop.. took me out 5 cents below market.. ha.. managed to get a 1/3 back at a price even lower than that, at least… now it rrrruns away! go markets

  182. 182
    zman Says:

    OW – way to go! I’m not that nimble and I am a poor day trader anyway.

  183. 183
    Brian08 Says:

    CHK HOD…GOOOOOOOO AUBREY!!

  184. 184
    zman Says:

    EOG = wow up another $3

  185. 185
    ram Says:

    That’s what I was getting to ZMAN. I got exec on COP – took a loss – and was trying to get back in. It seems to run now.

  186. 186
    O.W. Says:

    the face that the fed is going inflation neutral is sure good to energy bulls.. not so sure about the general economy, though

  187. 187
    O.W. Says:

    face=fact

  188. 188
    O.W. Says:

    a $100 oil looks even more in the cards now due to the wording..

  189. 189
    zman Says:

    RAM – I was saying I would not add before XOM’s numbers tomorrow.

  190. 190
    ram Says:

    ZMAN – Thanks.

  191. 191
    O.W. Says:

    focusing on DSX a la Cramer style on CNBC right now

  192. 192
    zman Says:

    guess BTU down was odd…

    but I still may sell the COP $80s prior to the close.

    ya know a quick guy like OW could have been in and out of RIG at least 5 times today with big profits.

    CHK soaring

  193. 193
    aitrader Says:

    DSX – let’s see if it breaks its 45.15 52 wk high. Certainly seems to be enough momentum here to do so.

  194. 194
    O.W. Says:

    wow..making 50% on my newly bought COP calls in 20 minutes is not too shabby

  195. 195
    O.W. Says:

    Z – You’re right, but I’ve found out that long term.. the more you try to guess to near term tops and bottoms , in the end you just mess it up , churn through commissions and , and forget about the initial big move you were after from the start.. so I like your style a lot better, thanks, though 🙂

  196. 196
    ram Says:

    Nice O.W.

  197. 197
    zman Says:

    XOM up $0.85

  198. 198
    TTupp Says:

    i think we’re getting some sun whisper numbers

  199. 199
    zman Says:

    ZTRADE: out CHK Nov $37.50s for average $2.40, up 60%. Still hold the longer dated calls.

  200. 200
    zman Says:

    Thanks for the headsup on RIG scoop. Cramer likey conference call.

    back in 30

  201. 201
    dooch Says:

    what is up with HAL? no move with crude or fed

  202. 202
    drdavis124 Says:

    CHK will be over $40 11/16

    Phil

  203. 203
    TTupp Says:

    what was the date of the last fed cut?

  204. 204
    Brian08 Says:

    T I believe it was the 18th of September…

  205. 205
    jiveyjr Says:

    9/18 50 bp cut

  206. 206
    TTupp Says:

    i mean whisper numbers on SUN

  207. 207
    Brian08 Says:

    Yeah it definitely a Tuesday which was the 18th, because I was sitting in the hall watching CNBC and almost yelled a string of explitives because I was short the Dow through PUTS and that 50 bps cut totally screwed me…

  208. 208
    TTupp Says:

    we saw a bigger than normal draw in crude last week to right guys?

  209. 209
    Brian08 Says:

    Hell yeah!

    I think there was an expected build and we got a 5.3MM DRAW!!!

  210. 210
    zman Says:

    Dr D. – I agree and that’s why I have longer dated calls but the I’m tired of round tripping profits in my near month ones on CHK….I’ll probably buy them back next big red day.

    SUN – should be able to say their east coast cracks are materially improved on the call.

    HAL – I have patience with them always

    T – a lot bigger, 5.8

    OII chargingm

    never got my PQ dammit

    SWN post close should be good #s but I’m not chasing and they need a beat.

  211. 211
    Brian08 Says:

    Sorry about that T…I knew it was either 5.3 or 5.8MM build…

  212. 212
    TTupp Says:

    nevertheless same deal, i say we rall the rest of the week like last week. picked up some NXY calls mid-day

  213. 213
    irished Says:

    Zman
    All is really good except for WNR. Any thoughts?
    Thanks.

  214. 214
    ram Says:

    ZMAN – Any other trade thoughts before earnings tom?

  215. 215
    zman Says:

    oh it might be 5.3, I was going on memory

  216. 216
    zman Says:

    Irish: I’m holding WNR into earnings. Cracks are improving and if TSO approves the Tricenda, which I think they will, then you will get a better spot to duck out than here.

  217. 217
    Brian08 Says:

    T, I’m wondering if we just head straight to $100 and don’t bounce off of $95 first…These inventory numbers have been hugely bullish (at least to my noobish eyes) and with Uncle Ben’s fight to make the USD like toilet paper, I can’t see where the bears can have their case for cheaper oil…

  218. 218
    irished Says:

    Gracias. Excellent day!!

  219. 219
    zman Says:

    Ram – Nahhh. Things are pretty green and pretty reluctant to chase or think at this late hour.

  220. 220
    ram Says:

    Unfortunately I am not as green as you, so I was looking for other opp’s. Hopefully tomorrow is better.

  221. 221
    zman Says:

    Green has nothing to do with what you or I are in …I’m talking about how much the stocks are up now.

  222. 222
    TTupp Says:

    another slip in all three sized drybulk day-rates

  223. 223
    zman Says:

    EXM and NM up 10% today

  224. 224
    ram Says:

    O.K. I get what you mean now.

  225. 225
    TTupp Says:

    z what happens t tso’s price is they announce the board accepts kirkorian’s bid? straight back to 65$?

  226. 226
    scoop006 Says:

    Z What stock price would surprise you re RIG

  227. 227
    aitrader Says:

    Seems like VLO is lagging the refiners group. Time to double up on a down day perhaps..

    What’s your “best guess” on their earnings Z – meet, miss, or beat?

  228. 228
    zman Says:

    T: $65 +/- a buck

    Scoop: depends on how far out you’re talking: this year ($105 and $135)
    12 months out anything short of $140.

    VLO: I don’t make guess on earnings but since they’ve already warned I’d say its a meet to a near miss and that the go forward talk regarding uptime will be more important that this quarter’s numbers. The near term outlook is known to be weak so that should surprise either. I think their talk about ongoing capital improvements combined with the good old capacity tightness st0or will sell pretty well investors this go around.

  229. 229
    aitrader Says:

    T – fwiw I’m straddled on TSO with Nov 60 puts and Nov 62.50 calls. It’s a bit risky, but the idea is the market punished them on earnings tomorrow and Friday and then they take Mr. K’s offer and move to $65.

    The break-even was $4 for both when I jumped in a couple of days ago.

    Thx again Zman!

  230. 230
    scoop006 Says:

    Z I was thinking short term ;like 3 weeks

  231. 231
    zman Says:

    Scoop: < $110 and > $135 would surprise me

  232. 232
    scoop006 Says:

    I expect to see $126 by 11-17.

  233. 233
    TTupp Says:

    ai, re #229, thats a strangle

  234. 234
    scoop006 Says:

    Check out call volume for RIG January 08
    $120 $130 $140.

  235. 235
    zman Says:

    Crude trading 95.15 in the after market

  236. 236
    TTupp Says:

    re: 234, thats some serious conviction!

    scoop, ive never really understood this, but since there is 20,000 contracts of volume, wouldn’t the open interest have to be at least equal to this? or will this show up tomorrow?

  237. 237
    zman Says:

    On my two quote systems it shows up tomorrow…don’t know if that way everywhere.

  238. 238
    aitrader Says:

    T- thx for the definition. I knew it was one of those “fancy option terms” 🙂

  239. 239
    TTupp Says:

    re: 234, that could be a iron butterfly spread….. right? 3 legs, equidistant, all calls or puts, middle leg twice the size of outers….

  240. 240
    Nicky Says:

    Evening all. Huge move since the close – is this dollar related. I hear they can’t buy December $105 options fast enough!

  241. 241
    zman Says:

    SHE LIVES!

  242. 242
    TTupp Says:

    SUN missed Q3

  243. 243
    zman Says:

    T – yep, nice brick on the bottom line there.

  244. 244
    Nicky Says:

    how much higher then Z?

  245. 245
    Nicky Says:

    I am still finding the fundamentals for $95 oil hard to swallow let alone $105!

  246. 246
    zman Says:

    Ya know I’ve been saying a pull back to 90 and then a run. Goldman gave us the pullback. At 95 you know they go 100 and the we see a bigger pullback, probably starts out testing back to the current level fails, then drops hard to 90, fails again and lows at 85. Fundamentals? Who said anything about fundamentals, 😉

  247. 247
    TTupp Says:

    z out of curiosity, how many members are you at?

  248. 248
    ram Says:

    ZMAN – Were there thoughts of going into DEC or JAN on RIG?

  249. 249
    ram Says:

    Actually, is DEC and JAN seasonallity (?) good for energy stocks?

  250. 250
    ram Says:

    ZMAN – Not naming names – but I subscribe to a newsletter with a person that influences stock prices. He has blessed a particular Dry Bulk stock with lofty projections. Hopefully this will add another boost to the sector.

  251. 251
    aitrader Says:

    Z – looks like Tesoro missed by a mile. Reported .34 EPS compared to .85 EPS forecast.

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