02
Nov

T.G.I.F.

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Commodity Watch

  • Crude Oil Withered. The contract had a wild ride yesterday, topping $96, then falling as low as $92.06 in the early mornings only to fall back to $93.49, down $1.04 on the day amid profit taking and a slight (and I do mean slight) increase in the value of the dollar. This morning oil is yo-yo-ing back over $94.25.
  • EU calls on OPEC to boost output
  • Venezuela echos every other Opec member this week and last in blaming speculators for high oil prices.
  • Mexico Watch: The port of Coatzacoales remained shut as of yesterday. The other two export points for Pemex oil production were reopened Tuesday/Wednesday. Last Sunday all three were shut due to high seas and this last port remaining closed should seal the deal on another crude withdrawal in next week's EIA report.
  • Natural Gas Rallied. The EIA reported an injection of 66 Bcf, the Street was looking for a number in the mid 50s ... and no one cared. All eyes were focused on the expected deep trough of cold air expected to reach the southern tier of the U.S early to mid next week. Gas shot up $0.31 to close at $8.64 despite storage reaching an all time record and oil suffering the slight profit taking pullback described above. This morning gas is trading off nearly a dime.

gas-table-110107.jpg

gas-graphs-110107.jpg

I'll have more on the relative size of this surplus to winter demand variance over the weekend. 

 

Holdings Watch: No action yesterday

open-options-110107.jpgclick to expand.

Note on BTU: With the spinout of Patriot Coal symbol changes on the option to from BTU KJ for our Nov $50 calls to PWU KJ. Pricing now is geared for the existing option to 1 share of (BTU) and 0.1 (PCX) share. (yesterday's close would value the combined at $49.47+0.1*35 = $52.97).

Earnings Watch / Stocks We Care About Today 

 

  • OII Reports A Beat: Guides up.
  • Reported EPS of $0.96 vs $0.85 expected (guidance was $0.80 to $0.88)
  • and Revenues of $485 vs $435 mm expected
  • 2007 Guidance Revised Up to $3.15 to $3.25 (4Q of $0.73 to $0.83) which is higher than previous full year guidance of $2.95 to $3.10. Current consensus for the 4Q is $0.81. and $3.07 for 2007. Since they just handily beat their own 3Q guidance I wouldn't worry about the fourth quarter range vs current estimates.
  • Established 2008 guidance range of $3.50 to $3.80 vs current consensus of $3.68. Can you say under-promise and over-deliver.
  • The three largest of the companies six segments (ROV, subsea products, and subsea projects) outperformed expectations.
  • ROV - tied their previous record for fleet utilization at 88% (up 1% sequentially), rates topped $8,600 (up from $8,300 in 2Q07)
  • Subsea products operating income grew 93% YoY on strong umbilical and specialty products demand but backlog backed off from $378 mm last quarter to $344 mm this quarter. Still well above year ago levels but might be seen as a very modest negative.
  • Subsea projects op inc nearly doubled YoY. Much of this work is hurricane repair from 2005 and the company commented that it sees that demand falling off slightly next year. Subsea projects account for 35% of op inc during the quarter and this slowdown is incorporated into 2008 guidance.
  • The 2008 forecast includes a higher degree of downtime than this year as several vehicles will be in drydock for part of the year for required
  • Conference Call at 11 EST 
  • Good Week For Lawyers Watch:
    • (XOM) - Had a $3.5 billion 2003 royalty lawsuit overturned in the Alabama Supreme Court. XOM argued that the punitive damages of $3.5B were improperly levied against it since there was no fraud involved and won. That's not peanuts even to Exxon. 
    • Federal court in W. Louisiana rules in favor of Anadarko in its bid to forestall the feds from increasing the royalties on GOMex leases in which the government did not proof read leases which were sold as is at the time. A very good day for offshore producers.
  • TSO 3Q CC comments - they will likely have a 4Q much like their 3Q (in terms of bottom line) unless crude falls or products rise muey pronto. This means 4Q numbers are going to be cut in half soon. Before you say, then why be in it I will answer with this was pretty obvious to anyone on the call this morning...they actually said it and the stock did not die straight away. The fact of the matter is analysts did a poor job of modeling the companies performance this quarter and next but the Tricenda valuation still puts a floor under prices. To TSO's knowledge the offer has not been finalized. Once it is finalized TSO has 10 days to respond and they were tight lipped about what the board's recommendation to shareholders will be.  I will only remain long here so long as cracks continue to show evidence of bottoming. If crude takes another wild flight of fancy higher leaving products with only half moves as it did in the four weeks prior to this one I'll look for an exit provided by a rally with crude (as illogical as it sounds, the refiners move with crude at first and cracks when things settle down) and will likely wait out the result and then move into cheaper VLO, again, crack spread recovery willing.
  • TLM reported 3Q results and says that the quarter's production represents a near term inflection point with rising production expected for the next several quarters as international development projects come online.

Odds & Ends

Analyst Watch: (MRO) raised to buy at Credit Suisse, Tesoro lowered to above average by Carris

DNR for Texana ... will be part of the weekend post.

(CHK) - I mentioned the other day they were producing from 30 wells on the DFW airport campus and have designs on drilling another 300 or so. Intelligence press sites a source saying (CHK) sees up to 1 Tcf (3+ EURs/well) from this property alone which would yield a net add of just under 10% to their proved reserves although I'm not sure what they booked here last quarter.   

Questions from the late night crowd watch:

ZMAN, My understanding is when the RIG/GSF merger is completed RIG stockholders receive $33 cash dividend and shares in the new entity.How does this affect the value of RIG calls. ~ Scoop

Great Question: 

Here’s the latest memo I have on that. http://www.optionsclearing.com/market/infomemos/2007/oct/23704.pdf

Shareholders meet on 11/9 plus they need a Caymen court’s approval. They still expect to close before year end but it may not happen in November.

According to the deal, if approved RIG holders will get .6996 X RIG + $33. The parity on that trade is about $109. At the current price of $121.47, you would get $118 the next day. I personally plan on taking a vacation from the stock from the day before the shareholders meeting to just after it closes as it can get a bit messy and there are often delays in your ability to sell an option that is having it’s symbol changed.

 

 

Housekeeping Item: From time to time servers go down and internet connections are lost or intermittent. There is no easy solution and although we think everything is fixed regarding the Level 3 problem from last you never know. Please bookmark the backup site and if you ever log in here and either can't get in or experience an unreasonable refresh time pop in over there and shoot me a note. Sometimes an internet site can work fine from one place and not at all from another depending on the routing of the information from host to client. The sooner I hear about a problem, the sooner I can get my host on top of it. Here's the backup link: http://zmanbackup.wordpress.com.

Have a great day and if I don't talk to you in comments or emails have a great weekend,

127 Responses to “T.G.I.F.”

  1. 1
    Sambone Says:

    7:34 am EST

    Nymex Crude Up $1.05 At $94.54/Bbl

    By Angela Henshall
    Of DOW JONES NEWSWIRES

    LONDON — Crude oil futures are higher in London amid another volatile trading session, supported by a weakening dollar and ongoing concern over tightening supply ahead of winter.

    Market participants said a number of factors are moving crude futures higher including technical trading, keeping the target of $100 a barrel for Nymex light sweet crude within range.

    “It looks like a bit of a technical breakout here — looking at charts, strong possibility of this going up quite a way longer,” a London-based broker said. “Looking at trying to test the highs.”

    “I’m expecting whipsaw action day — not for the faint-hearted,” said Kevin Blemkin a broker at MF Global. “Trading has been so volatile (in recent days)that it’s scared a lot of people away from the market,” he said. “But we could see some profit-taking ahead of the weekend.”

    At 1119 GMT, the front-month December Brent contract on London’s ICE futures exchange was up $1.32 at $91.05 a barrel.

    The front-month December crude contract on the New York Mercantile Exchange was trading $1.09 higher at $94.63 a barrel.

    The ICE’s gasoil contract for November delivery was up $11.00 at $799 a metric ton, a record seen lending support to crude futures, while Nymex gasoline for December delivery was up 284 points at 237.16 cents a gallon.

    Market participants look ahead to U.S. non-farm payrolls data due out at 1230 GMT, market consensus points to an unremarkable set of data but any surprises could cause dollar movements. Crude oil futures has fluctuated relative to dollar weakening in recent days.

    —By Angela Henshall, Dow Jones Newswires

  2. 2
    freeflow Says:

    morning – HAL looking good this morning so far

  3. 3
    TTupp Says:

    looks like the payroll may be a nice perch to stand on

  4. 4
    Sambone Says:

    US$ getting spanked again.

  5. 5
    O.W. Says:

    APA rocking..

  6. 6
    TTupp Says:

    Z- if we have a strong day im punting the nov exm’s to reposition to the decembers, or bac in the nov’s closer to the money…. what are you thoughts? not much of a chance they end up n the money wth more value than when they were purchased with such a hgh vega

  7. 7
    zman Says:

    Was posting on wrong post like a dolt:

    Aitrader- HLX that’s run by Robert Murphy, the ex head of exploration from Remington Oil and Gas. Very smart, very good gas finding guy on the GOMex Shelf. Delays are a fact of life anywhere and especially offshore and Street is often unreasonable.

    Thanks for the headsup will have a look.

    Good to see Bloomie has a BDI feed, I wonder if their website will have delayed access to it?

    should have said that Robert runs the oil and gas side of the business, not the servicee (ex Caldive part)

    Scoop – did you see my thoughts re RIG and the deal?

    Also, BTU pricing got interesting yesterday with their spin out.

    reading the HLX transcript now.

    stocks looking for pretty good open;

    HLX – Ok, good on the service side, as you said a bit softer than expected on the E&P side. Will look at more over the weekend but the responses of management were spot on with accepting responsibility for setting the bar a bit too high for the division which goess a long way in my book, will look at more over weekend as have not run valuations here in awhile but they are solid guys and it looks to have been an overreaction.,

  8. 8
    TTupp Says:

    OW- apa might be a good dt, but they say there will bee alot of whipsaws in the crude contract today. also, cramer was pumping it last night

  9. 9
    TTupp Says:

    wholly crap the cad is at 107 usd! this is a record level, yesterday say 50year highs– it was n all over the news

  10. 10
    zman Says:

    T – agreed but they do have earnings in front of them …at some point…I may take the Decembers first and then punt the Novs as you say.

  11. 11
    TTupp Says:

    or we could be balzy and take the 60’s like wild men…

  12. 12
    TTupp Says:

    did you say you have bloomberg?

  13. 13
    zman Says:

    true that and no, I don’t have BB

  14. 14
    zman Says:

    COP putting on a run again,

  15. 15
    zman Says:

    ZTRADE: APC DEC $60 Calls at $2.35.

  16. 16
    zman Says:

    Ram – did you get that blast?

  17. 17
    TTupp Says:

    XOM head and shoulders pattern broker necline

  18. 18
    TTupp Says:

    Zi didn’t get the APC blst

  19. 19
    zman Says:

    well the broad market just made that trade cheaper.

  20. 20
    aitrader Says:

    TSO clinging to the 57 level. Doesn’t seem like it can claw its way back.

  21. 21
    TTupp Says:

    yea are your puts up on your strangle ai:

  22. 22
    zman Says:

    not with this market..

    checking T

  23. 23
    TTupp Says:

    well there goes the market

  24. 24
    aitrader Says:

    T- doubled up on them yesterday 🙂

  25. 25
    zman Says:

    check your email T, anything from me in there now?

  26. 26
    TTupp Says:

    so now its a concoction? i was gona wait to see a floor and sell em, but this looks like its gona get ugly
    `

  27. 27
    ram Says:

    I got it – thanks. APA?

  28. 28
    Sambone Says:

    Just a feeling, but I think the overall market will be nasty today.

  29. 29
    zman Says:

    TSO move is market, much like rig being down now. Direction from the call is probably sideways at best with a little drift off possible until Tricenda makes another move.

    OII numbers were very good and ahead of guidance and consensus. Street did not like guidance for 2008 as it straddled their numbers…also drydock down time seems to be holding the stock to flat today. Conf call in an hour and I’m going to continue to hold into that on this now very long day trade.

  30. 30
    TTupp Says:

    PTR’s daily chart looks like a train about to derail

  31. 31
    Popeye Says:

    Nicky – Alonso quits/fired.

  32. 32
    TTupp Says:

    yea their was some serious tension on that team

  33. 33
    Sambone Says:

    Wow, Financials in freefall.

  34. 34
    zman Says:

    Love how my stocks take a drubbing b/c some worthless pos wanted to sell some other worthless pos and oversized pos that he could not afford. Interest only…I thought it would last foreever but then they wanted me to pay interest…schmucks.

  35. 35
    aitrader Says:

    OII getting pummeled. They beat earnings, guidance was neutral to positive, and the market doesn’t like. Who da thunk it?

  36. 36
    Brian08 Says:

    Good enough for me Z…Gives me a chance to get the stocks of those schmucks because you know they’re like cockroaches, they’ll never die…Even if Darwinism would suggest they shoulda perished long, long ago…

  37. 37
    Sambone Says:

    Z – Tell us how you really feel! LOL

  38. 38
    zman Says:

    S – you’re a funny guy

    OII – they completely missed the boat and ran it down…headlines I saw last night were your typical report cluster f. “guides in line”. The hell they did. They guided up and strongly for 2008 initial while beating the pants of 3Q. That should have been the headline. Just because guided to where the Street already was does not mean in line if the numbers are well up from previous guidance range. And who cares what the Street thinks after they clearly demonstrate that they either thing management is constantly sandbagging them on numbers or don’t understand seasonality of business in the GOMex. Fourth quarter = things slow down and yet their EPS estimates were a close match 3Q to 4Q. Double schmucks.

  39. 39
    Sambone Says:

    10:22 am EST

    Crude Futures Up On Employment Data

    By GREGORY MEYER
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures rose in early trading Friday, emboldened by a sanguine U.S. employment report.

    Light, sweet crude for December delivery on the New York Mercantile Exchange was recently up 87 cents, or 0.9%, at $94.36 a barrel. Brent crude on the ICE futures exchange rose 98 cents to $90.70 a barrel.

    The front-month futures contract remains beneath Wednesday’s record settlement price of $94.53 and Thursday’s record intraday high of $96.24 in a volatile trading environment and concerns about the strength of the U.S. economy.

    Analysts said Friday’s data from the Labor Department, which indicated non-farm payrolls rose by a larger-than-expected 166,000 in October, eased those concerns somewhat and point to sustained U.S. oil demand.

    “The contention, obviously, is if it’s good for the U.S. economy it implies the demand is also going to be strong for the energy complex,” said Nauman Barakat, senior vice president at Macquarie Futures USA.

    The stock market was slightly lower, adding to its plunge Thursday, with the Dow Jones Industrial Average recently down 43 points at 13,527.

    If the stock market falls further later in the day, “the oil market will be under a little pressure,” said Phil Flynn, senior analyst at Alaron Trading in Chicago.

    On Thursday crude futures finished 1.1% from their highs as traders took profits in a day of wild price swings. With prices chopping around above $90, analysts continue to see more volatility in the days ahead.

    “This week has brought up further evidence that the oil market is running a hefty deficit and with the global balances pointing to continued tightening, we see upside price risk through the remainder of Q4,” Barclays Capital analysts said in a note Friday.

    U.S. crude inventories posted their second straight draw last week, according Department of Energy weekly inventory data released Wednesday. The fall surprised analysts and sent prices soaring to a record settlement.

    Front-month December reformulated gasoline blendstock, or RBOB, rose 3.42 cents, or 1.8%, to $2.3774 a gallon. December heating oil rose 3 cents, or 1.2%, to $2.5423 a gallon.

    —By Gregory Meyer, Dow Jones Newswires

  40. 40
    zman Says:

    See key reversal OII. Schmucko reporters.

  41. 41
    TTupp Says:

    ai its this crummy market

  42. 42
    TTupp Says:

    Z- i was on Rig’s wesite for a while last night. top notch! did you see the education and experience of the management!? talk about a strong team of ringers

  43. 43
    zman Says:

    T – I’ve never really spent much time with the service guys but their resumes are impressive at the bigger firms.

    speaking of good managements: APC and CHK reporting next week. APC Monday amc, CHK Tuesday amc

  44. 44
    TTupp Says:

    yea i might have to fluch something out first i dont like to less than 75% cash through oct and nov

  45. 45
    TTupp Says:

    oii looks super promising… have you done a write up comparing them to their key competitors?

  46. 46
    TTupp Says:

    thats: flush*

  47. 47
    zman Says:

    T – no I haven’t b/c they are only loosely, comparable to others in that they have the world’s largest fleet of ROVs which are in extremely high demand and will likely be for the next 5 years at minimum if not forever, ROVs are the only way to make the ultra-deepwater connections and these guys have I think three training schools for operators. As Cramer would say “best in breed”. CC in 10 minutes

  48. 48
    zman Says:

    On the subsea products side (umbilicals / subsea trees etc) their components are seen as some of the best, highest spec in the world but their are many players here. RIG commented on their call that deepwater subsea tree capacity is easily outstripped by demand for the next 2 to 3 years from what reports they have read.

  49. 49
    zman Says:

    I’d also note that CAM (one of the better comps) beat by a similar dollar amount but lower percentage yesterday and now is running hard.

  50. 50
    TTupp Says:

    z- all this integrated o&G action is taking the conviction out of the 85 cops////

  51. 51
    zman Says:

    OII – Conf Call Notes

    ROV fleet size increased 10% YoY, added a net 2 systems (4 new, 2 retired) which is inline.

    Subsea products: record qtr, big demand

    Umbilical forecast: reduced projections Due to project delays. but sees 2008 up 40% due to:

    1) pent up demand overhang from 2007

    2) distance increasing between subsea trees and platforms (bigger umbilicals)

    3)orders – placed later than before,
    did lose one umbilical contract for $65 mm to a competitor. still think backlog could be up 10% by year end with current contracts being pursued

    T – I’m thinking about doubling there.

  52. 52
    TTupp Says:

    oii might catapult in the afternoon if uso and spy comply

  53. 53
    zman Says:

    COP I mean. XOM trading with the DJIA. These gas prices are excellent for COP and not as good for XOM who saw N. American gas volumes decline again.

    The COP 85s are still quite response to price but I will likely go Dec on next batch.

  54. 54
    zman Says:

    So far from the OII call I would not expect them to jump this afternoon…maybe the Q&A sheds some impetus but the tone of the call I would characterize as cautiously optimistic.

  55. 55
    TTupp Says:

    z re 50?

  56. 56
    TTupp Says:

    nm

  57. 57
    Popeye Says:

    Z, any comment on OII P/E?

  58. 58
    zman Says:

    T – yes…think COP 85 Decembers, now rush with the Dow/XOM action.

    nm?

    still see big tree and umbilical demand

    they’ve received good forward orders for ROVs

    Popeye – given their growth its on the high end of the scale on ’08 but pretty inexpensive on 09 which should not be hurt by news today.

    People are piling on selling now. Still not to the Q&A yet but it could stay down all day.

  59. 59
    zman Says:

    Popeye – that should have said given their slower expected growth in 2008 relative to 2007 their 1 yr fwd PE is a bit high but I think they are bagging the Street to over deliver later, as usual.

    Q&A starting now.

  60. 60
    Popeye Says:

    Wow just lost a buck, what did they say?

  61. 61
    zman Says:

    More OII

    ROV Orders from new floating rigs ordered:

    69 rigs ordered

    46% of these have drilling contracts order…of those 14 have ordered new ROVs and OII won all of them and will outfit the 14 contracts with a total of 19 ROVs.

    $65mm lost umbilical order. Could see backlog up back up by end of 4Q. They think they will recoup $40 million by year end in new contracts.

    People are piling on to the selling

  62. 62
    aitrader Says:

    OII – what did the market expect, “we just found several metric tons of gold under one of our rigs along with Ghawar II” ??!

  63. 63
    zman Says:

    OII

    Its going to sell off with the market also sliding fast too. Stock really needs to hold current levels, mid $71’s.

    Analysts unhappy with the backlog being flat with June quarter at year end.

    ROV’s keeping the market just barely supplied (high demand)

    Considering a December add…but must hold this level or I jump and come back later.

  64. 64
    zman Says:

    OII

    Long term business just looks great, stock looks hung up on the backlog.

    Analysts seem to be looking through it to the long term and are very complimentary of the quarter and seem optimistic but the stock is legging down again with the market.

  65. 65
    zman Says:

    OII

    Analyst very flattering, they’re getting more flattering as the stock falls.

    subsea products are done on % completion accounting so you wouldn’t have project timing issues to explain the big jump. They are kicking butt in products. Good margins, see slight improvement in margins next year.

    I think this is bottoming now.

  66. 66
    jazzkool Says:

    z, may have already answered this in other posts, but are you saying you are exiting RIG calls on 11/8/07, the day before the shareholders meeting. Will you give us a blast if you do, please. I know you will blast us if you get out before that.

    jazz

  67. 67
    zman Says:

    Sounds like favorable comments coming from analysts, I’m going to wait for Monday to make sure I’m reading this right. OII is being deliberately conservative….which is not helping the stock.

    On target to hire 400 ROV pilots.

    Other stuff:”

    TLM liking its quarter

    Jazz: That’s my plan…just don’t need to be in it for the transition.

    OII Q&A over. Stock down $3.16

  68. 68
    TTupp Says:

    anyone: whats front month cl at?

  69. 69
    zman Says:

    up $1.27 to 94.75

  70. 70
    zman Says:

    OII will rally from here if the market can a little. Analysts were very positive on the call and I think they like getting on the squawk box and touting a good stock while it is down.

  71. 71
    TTupp Says:

    spx really holding at support ~1500

  72. 72
    TTupp Says:

    they’ll really it into close, the select few who dont want to be short over the weekend since it didnt sell off enough for them today

  73. 73
    zman Says:

    T – I tend to agree with you.

  74. 74
    zman Says:

    Here’s more about why I want to be out of RIG options or the options of any issue in which the underlying is to undergo radical restructuring (at the time said restructuring occurs):

    BTU: spins out coal company, option renamed from BTU kj to PWU kj, the make has a huge spread on it now as opposed to before and in this case BTU is starting to move higher but the underlying also tracks the new stock PCX which is down today as BTU holders who just had the PCX shares hit their accounts dump it. I would say great, buy the option and once the dumping is over the stocks can move higher with lofty coal and gas prices. And that’s why the spread is so high. To prevent me from doing just that. Schmucks.

  75. 75
    TTupp Says:

    lol tend as in usually or in this circumstance?

  76. 76
    zman Says:

    T – need you ask?

  77. 77
    TTupp Says:

    Z- re 74, the same thing happened to me with burlington / cop last winter

  78. 78
    Sambone Says:

    Hmmmm, with the credit markets under the gun again, I wonder when Cramer will have another meltdown? Interesting that GS has set aside 16.9 B for the first 9 months for bonus’s. They deserve every penny, don’t they Z.

  79. 79
    zman Says:

    nice call on the APA this am

  80. 80
    zman Says:

    T – yeah , I’ve done it before and I know better…not going to let it happen with RIG as that one will be messy plus the ARB is against RIG holders at these prices.

    Sambone – your still a funny guy. GS = pikey

  81. 81
    jazzkool Says:

    Thanks, z. RIG is doing so well right now, I am afraid to dump the calls. Definitely will get out before 11/9 unless you blast us with your sell of RIG.

    Jazz

  82. 82
    Sambone Says:

    12:12 pm EST

    LATEST ON OIL Format For Printing

    Nymex Crude Touches $95, Supported By Jobs Data

    By GREGORY MEYER and MATT CHAMBERS
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures touched $95 a barrel Friday, boosted by strong U.S. jobs numbers.

    Light, sweet crude for December delivery on the New York Mercantile Exchange was recently up $1.19, or 1.3%, at $94.68 a barrel. Brent crude on the ICE futures exchange rose $1.28 to $91 a barrel.

    Analysts said Friday’s data from the Labor Department, which indicated non-farm payrolls rose by a larger-than-expected 166,000 in October, eased those concerns somewhat and point to sustained U.S. oil demand.

    “The contention, obviously, is if it’s good for the U.S. economy it implies the demand is also going to be strong for the energy complex,” said Nauman Barakat, senior vice president at Macquarie Futures USA.

    On Thursday crude futures finished 1.1% from their highs as traders took profits in a day of wild price swings. With prices chopping around above $90, analysts continue to see more volatility in the days ahead.

    “Guys down here are looking at things like the Dow Jones Industrial Average, moves in the dollar, economic reports for direction” in the absence of changes to supply and demand factors, said Peter Donovan, vice president at Vantage Trading on the Nymex floor.

    The rapid build up in prices, which are up more than 50% so far this year, has been in large part due to forecasts of a big fourth-quarter supply deficit going into the winter.

    Adding to the ammunition of those forecasting this, U.S. crude inventories posted their second straight draw last week, according Department of Energy weekly inventory data released Wednesday. The fall surprised analysts and sent prices soaring to a record settlement.

    “This week has brought up further evidence that the oil market is running a hefty deficit and with the global balances pointing to continued tightening, we see upside price risk through the remainder of Q4,” Barclays Capital analysts said in a note Friday.

    Front-month December reformulated gasoline blendstock, or RBOB, rose 5.88 cents, or 2.5%, to $2.402 a gallon. December heating oil rose 3.65 cents, or 1.5%, to $2.5488 a gallon.

    Gasoline futures were supported by ratings service Standard & Poor’s boosting the percentage weightings of RBOB to 4.55% in 2008, from 1.37% in 2007. The increase means the $65 billion to $70 billion of funds that track the index will have to boost their holding in gasoline next year.

    —By Gregory Meyer and Matt Chambers, Dow Jones Newswires

  83. 83
    TTupp Says:

    we should take wagers when we see $100 oil, my bets are on wed or thursday, 60% of my money on thursday

  84. 84
    TTupp Says:

    re 82, wait till they get next weeks draw…

  85. 85
    zman Says:

    Nice call on the broader rally T…see COP

    OII getting that boost as well.

    HAL following SLB up

    BTU up nice, Calls grudgingly higher

    drybulks happier now as well.

    Oil, yep draw again next week may do it, or the one after that

  86. 86
    gaamblor Says:

    RIG options won’t change before Nov exp will they?

  87. 87
    zman Says:

    Hey gaamblor,

    I doubt it but you never know… Votes are on the 11/9 and then you’ve got the Cayman courts approval needed…they sounded hopeful for year end but I just don’t want to take the chance. The deal would shave $3+ off the shares if it were consummated right now.

  88. 88
    TTupp Says:

    i might initiate vlo’s, looks like a floor firmly in place, easing in as per not my usual style.

    z whats dec cl at , im taking off

  89. 89
    zman Says:

    up $1.68 or 1.7% at 9515

    mogas up 7.7 cents or 3.3%
    ho up 5 cents or 2%

    good week for cracks theory still working

  90. 90
    zman Says:

    ZTRADE: Out 2x RIG position for $9.60 average; up 78%. Still hold the $120 calls.

  91. 91
    zman Says:

    Housekeeping Items

    If you are a new member and did not receive the email blast (and want to) that just went out regarding the sale of the RIG $115s please contact us at zmanalpha@gmail.com

    Also, make sure that you add that address to your email’s address book.

    Finally, make sure you add the backup site listed in today’s post to your bookmarks.

    That is all. Feels like an early beer thirty today.

  92. 92
    Sambone Says:

    Todays movie quote – Guess the movie
    “Whether or not what we experienced was an According to Hoyle miracle is insignificant. What is significant is that I felt the touch of God. God got involved”

  93. 93
    zman Says:

    I got no idea on that one…need hint

  94. 94
    Sambone Says:

    The path of the righteous man is beset on all sides by the iniquities of the selfish and the tyranny of evil men. Blessed is he, who in the name of charity and good will, shepherds the weak through the valley of darkness, for he is truly his brother’s keeper and the finder of lost children. And I will strike down upon thee with great vengeance and furious anger those who would attempt to poison and destroy my brothers. And you will know my name is the Lord when I lay my vengeance upon thee.

  95. 95
    zman Says:

    I love the Pulp

  96. 96
    Sambone Says:

    Yep, you got it.

    Love this line:
    Whose motorcycle is this?
    It’s a chopper, baby.
    Whose chopper is this?
    It’s Zed’s.
    Zed’s dead, baby. Zed’s dead.

  97. 97
    zman Says:

    …except for the pawnshop seen which makes me pucker. Zed was a jerk.

    RIG continues to fly

    OII down a whopping 48 cents now. Thought the analysts sounded happy.

  98. 98
    ram Says:

    ZMAN – ZMAN – Are you thinking about rolling any trades to DEC?

  99. 99
    zman Says:

    I’m going to let the TMV of the weekend burn those contracts down a bit so it will be Monday.

  100. 100
    Sambone Says:

    Zed

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

  101. 101
    ram Says:

    SAMB – CAn you interpret #99 for me please?

  102. 102
    ram Says:

    ZMAN – Is it a paradox though on #99? The contracts that are current will also lose unless they are deep in the money.

  103. 103
    ram Says:

    HELLO….Did I accidently pull the plug?

  104. 104
    zman Says:

    Ram – was on a call. If I’m going to add and don’t really expect a pop on Monday then why pay for 2 days over the weekend in something brand new? The stuff I hold I’ve already sunk transaction costs into. I don’t pull everything on Friday’s ever so it’s not a paradox…just don’t think I need to let Saturday and Sunday tick buy on a new purchase when, cerebus paribus, the contract will be cheaper on the open.

  105. 105
    Sambone Says:

    I’m also just back. Ram 104 true.

    2:35 pm EST

    Brent Rises To New Intraday Record $91.87/Bbl

    By GREGORY MEYER and MATT CHAMBERS
    Of DOW JONES NEWSWIRES

    NEW YORK — Brent crude futures touched a new record Friday, boosted by output cuts due to a fire at a major U.K. refinery and strong U.S. jobs numbers.

    New York gasoline and heating oil futures also rose on the refinery outages, with gasoline aided by an increase in weightings attributed to it by the S&P GSCI commodities index, the biggest benchmark for commodities index funds.

    Brent crude for December delivery hit a record high $91.87 a barrel and was recently trading at $91.47, up $1.75. Light, sweet crude for December delivery on the New York Mercantile Exchange was recently up $1.64 or 1.8%, at $95.13 a barrel.

    Swiss-based Petroplus Holdings AG (PPHN.VX) said Friday that its Coryton refinery in the U.K. is producing about half normal output after a fire this week and that repairs will take up to one month.

    “The big news here has been outages at Petroplus refineries in the U.K.,” said Rick Mueller, a Netherlands-based senior analyst at Energy Security Analysis Inc., an energy consulting firm. “That’s certainly going to support prices as we start heading into colder weather.”

    Front-month December reformulated gasoline blendstock, or RBOB, rose 7.79 cents, or 3.3%, to $2.4211 a gallon.

    December heating oil rose 4.85 cents, or 1.9%, to a record $2.5746 a gallon, after hitting a new intraday record earlier of $2.5123.

    Gasoline futures were supported by ratings service Standard & Poor’s boosting the percentage weightings of RBOB in its GSCI commodities index to 4.55% in 2008, from 1.37% in 2007. The increase means that the $65 billion to $70 billion of funds that track the index will have to boost their holding in gasoline next year. Former index owner Goldman Sachs reduced the weighting of gasoline futures for this year after the benchmark Nymex futures switched from unleaded gasoline to RBOB, causing a slide in prices at the time.

    Analysts said Friday’s data from the Labor Department, which indicated non-farm payrolls rose by a larger-than-expected 166,000 in October, eased those concerns somewhat and point to sustained U.S. oil demand.

    “The contention, obviously, is if it’s good for the U.S. economy it implies the demand is also going to be strong for the energy complex,” said Nauman Barakat, senior vice president at Macquarie Futures USA.

    On Thursday crude futures finished 1.1% down from their settlement record as traders took profits in a day of wild price swings. With prices chopping around above $90, analysts continue to see more volatility in the days ahead.

    “Guys down here are looking at things like the Dow Jones Industrial Average, moves in the dollar, economic reports for direction” in the absence of changes to supply and demand factors, said Peter Donovan, vice president at Vantage Trading on the Nymex floor.

    The rapid build up in prices, which are up more than 50% so far this year, has been in a large part due to forecasts of a big fourth-quarter supply deficit going into the winter.

    Adding to the ammunition of those forecasting this, U.S. crude inventories posted their second straight draw last week, according Department of Energy weekly inventory data released Wednesday. The fall surprised analysts and sent prices soaring to a record settlement.

    “This week has brought up further evidence that the oil market is running a hefty deficit and with the global balances pointing to continued tightening, we see upside price risk through the remainder of Q4,” Barclays Capital analysts said in a note Friday.

    —By Matt Chambers and Gregory Meyer, Dow Jones Newswires

  106. 106
    Sambone Says:

    Uh oh

    “Arizona Nuclear plant security stops worker with explosive device” Dow Jones

  107. 107
    zman Says:

    Surprised not spiking higher on that in aftermarket. That is very bad …probably good for Hillary as she can stick a cattle prod in the Reps for not having installed better security.

  108. 108
    Sambone Says:

    Never mind, their reporting that the worker had a “Small capped pipe” which contained suspicious residue in the bed of his truck.

  109. 109
    aitrader Says:

    Sounds more like a bong than a bomb 🙂

  110. 110
    Sambone Says:

    Maricopa County Sheriff’s office is on the job!

  111. 111
    zman Says:

    OII big reversal lower with market after it failed to go positive …the strong stay strong and the weak get flushed.

  112. 112
    zman Says:

    XOM alludes to a “material restatement” by altering its bonus plan to OK a recoup in the case of a restatement. Wow…that’s not popular.

  113. 113
    zman Says:

    aitrader = your a funny guy!

  114. 114
    Wyoming Says:

    Z,

    Is HAL following SLB or vice versa? I think that HAL. IMHO I think HAL takes lead. Technical both are swinging up, but SLB will have more resistance. Talked (actually golfed) with one of their sales guys and both of their boats did nothing in Sept. and this is carrying on in October. This is their bad cylinder. Boats generate big revenue and have huge expenses.

  115. 115
    Sambone Says:

    45 minutes to “Tini time”. Looks like market is wanting to go more towards the close.

  116. 116
    Sambone Says:

    I mean down

  117. 117
    zman Says:

    Hey Wyo! I was just looking at the trades yesterday and today, looks like HAL following moves in SLB on a % basis. You know how I feel about the two of them. HAL will partially close the valuation gas over the next year and its a big gap. Thanks for the info on their boats…sehr interresant

  118. 118
    aitrader Says:

    TSO lookin’ to slide to a close under 56. Might be time to sell the puts and load up on calls. Any thoughts Mr. Z – would you hold off or reverse the position if it slides below 56?

  119. 119
    zman Says:

    don’t it goes that low but it’s trading with the market and not fundies right now. look for improved cracks next week.

  120. 120
    zman Says:

    that should have said don’t think it goes that low (sub 56) at least today.

  121. 121
    aitrader Says:

    It’s closed below the LoD the last several days and touched 56.05 today, but it’s fighting hard to stay above 56.50 today.

  122. 122
    zman Says:

    yes I can honestly say that I really don’t think TSO will close below $56 today, LOL

    runaway energy train at the close, oil is at 95.90, gasoline is up a dime, ho is up 6 cents…only NG not joining the party as yesterday’s storage overcomes some of the “winter is coming” euphoria of the last few days.

  123. 123
    aitrader Says:

    lol – full point TSO rally at the close.

  124. 124
    Sambone Says:

    Crazy market, 4 minutes to “Tini time”. Everybody have a good weekend. Go BQI!

  125. 125
    Wyoming Says:

    Z,
    After the Q3 results, SLB has egg on their face crying about NAM troubles while HAL says no problem.

    BTW, ESV is still on our location @ full rates. Weather keeps picking up and one of their legs is stuck in the mud. About $1mm so far. Don’t know if I would go short them anytime soon. Both wells we aorked on should come in close to 2000 bopd.

  126. 126
    zman Says:

    Have a great one S!

    CHK back over $40

    BTU acting like it spun nothing out now, surging hard despite NG,

    RIG on fire

    TLM running…see more of same from APC, NFX, CHK next week.

    Agreed re HAL ..no longer short ESV, still thing NBR could fall more though

    APC moving, should have bought APA as mused yesterday and more COP as thought as well but not a bad week on the whole.

    Beer Thirty!!! Have a great one folks!!!

  127. 127
    TTupp Says:

    Z- what do you think of CAM? im gona read up on the weekend looks cool

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