15
Nov

Thursday – Dualing Inventory Reports

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Did a little profit taking yesterday; expect to do some profit and loss taking in the November strikes as we close at the month Friday.  

Commodity Watch

  • Crude Oil: Big rebound yesterday after the pressure from futures options expiration passed on Tuesday. December crude ended up $2.92 at $94.09. This morning crude is trading pretty flat with yesterday's close. 

Inventory Expectations (from the Platt's Survey)  

exp-111407.jpg

Z Comments: Think there is a better than even chance of a good report for refiners and energy stocks. Of course, it is 1) weekly data so you never know and 2) government data, so you really never know.

  • Street Expects Small Crude Draw: Should have seen a slight incremental increase in imports from Mexico last week versus prior week although things down there were still not back to normal. The expected draw of 700,000 barrels would increase the YoY deficit by 0.6% from last week's levels (to the 92.6% listed above). 

crude-stocks-111407.jpg

  • Why It Could Be Bigger. The crude number today really hinges on those import levels and the refinery utilization which, running in the mid 80%s, is well off where it should be following the second seasonal maintenance period of the year. If utilization remains mired at 86% we are likely to see a small build but I don't think that happens. I think refineries are getting it together and that utilization will rise above 87% this week.

utilization-111407.jpg

Finally, prices are likely to be very "influenced" by the stock levels at Cushing, Oklahoma. Currently at 2+ year lows, inventories at Cushing, the delivery point for NYMEX crude have fallen at a time when oil imports from Canada are surging so what gives? After having conversations with a couple of knowledgeable types on the subject plus having listened to numerous refiner calls the conclusion is that all of the oil pipelines coming across the border are full. So much so that TransCanada is converting part of it's main line gas delivery system to oil (the Keystone Project) and building a line down to Cushing and to the Midwest (see thumbnail). In the meantime, there is known to be quite a bit of heavy, sour Canadian crude at Cushing and en route and given the wide differentials between light sweet and heavy sour crudes at this time it is no wonder the refiners who can process it are taking all the cheap stuff (heavy sour) they can get their hands on. And so inventories have fallen and until they start rising again at Cushing (and I mean not just one week but a new trend), oil will remain high priced. That's just my opinion and I could be wrong. 

keystone-project.jpgclick to expand

  • Gasoline ...Its about all about demand: More important right now than the production volumes, which should not deviate much from the 8.9 mm bpd of make over the last few weeks, is the demand figure.  Driving season, shmiving season. At nearly 9.4 mm bpd Fall demand is off only slightly from the summer peak and is running 0.8% ahead of last year's levels. 
  • Distillate (this could also be bigger than expected): While overall inventories remain high, heating oil inventories remain below average and continued colder than normal weather in the northeast through the end of November should begin leading to larger draws on inventories soon. Last week saw the coldest weather of the season for those areas that use heating oil to heat their homes, colder than normal and much colder than last year. 

hdd-heat-oil-weighted-111407.jpg

  • Natural Gas: started to back off a bit after recent surprising strength.  This morning gas is trading up $0.04 to $7.88.

Inventory Expectations

  • My Number: 15 to 20 Bcf Withdrawal. I continue to believe this will be a rounded top and not a "peak and plunge" style shift which may lend itself to further gas price weakness in the next couple of weeks.

    • Imports: at a combined 9.3 Bcfgpd, gross imports were down 0.4 Bcfgpd from the prior week, essentially in line with year ago levels. Weak imports are pulling our bacon out of the fire (supporting gas prices). At some point Canada will start sending lower volumes to the U.S. but so far that case has not materialized although many, including myself, expected a more rapid decline in Canadian volumes a year ago.
    • Heating Degree Days. 123 for the reporting week vs 93 in the prior week (when we saw an injection of 36). 
  • Last Year: The comparable week one year ago saw an injection of 3 Bcf with heating degree days of 91.

  • Street Consensus: Unknown at time of posting.

Flip Flop Watch: Talking Head Get's An Oily Black Star:

  • Yesterday's sound bite: "In real terms, demand has not declined sufficiently to allow the market to feel flush with supply," said John Kilduff, an analyst at futures brokerage MF Global, in a research note. "As for yesterday, it represents a temporary, albeit large, correction."
  • On Tuesday he was on CNBC agreeing with the IEA that we are seeing demand destruction at which point in the day oil was off $3. 

Stocks We Care About Today Watch

  • (XTO) Announces 5 for 4 stock split (kind of goofy but OK), raised dividend 25%, announced a heavily development weighted capital budget of $2.6B (which is flat with the 2007 budget and demonstrates the nice free cash flow generation machine this company has become) and reiterated 2008 unit volume growth guidance of 17%. See my quarterly comments on them here
  • (DRQ). Specialized drilling equipment for deepwater and harsh environment applications (subsea and surface wellheads and production trees being my primary focus but they also provide the other connectors, tools etc for hooking up deep water wells).
    • (OII) and (RIG) both commented the other day that the subsea tree and wellhead industries are running full tilt to keep up and neither firm saw a slow down in these business lines for the next 3 years.
    • It's not cheap but it is growing quickly and it has frequently been subject to takeover rumors: EPS estimates: 2006: $2.12; 2007: $2.52; 2008: $3.09; 2009: $3.70.
    • Risk here is an increasing amount of delayed projects of late although this fear has been trumpeted by one analyst in particular (UBS) who has been wrong on the companies ability to work its way out of an earnings plateau.
    • Finally, this one comes from a friend of the blog who spends a good many hours on and around oil rigs each month, he's not a deepwater guy but we do some brainstorming sessions and this came out of one last night.
    • I'd like to see it fall back from current levels of $58 into support at $52 to 54. Just putting you on notice.

(TSO): Speaks at the BofA Energy Conference at 2:05 Est. They probably will remain tight lipped about the Tracinda offer as they have until next week to make their recommendation to shareholders.

 

  • (DNE) - Strong presentation at the Houston Energy Financial Forum. Z Note on the way here, but in a nutshell I love to follow to management teams and this one has some good talent aboard. At $2, it is basically an option on them and their ability to revitalize a strong legacy asset position along the Gulf Coast. 

Holdings Watch

CALLS:

  • (EOG) Out remaining EOG Nov 85 calls for $3.20, for 78% gain. Sold the first half for $4 pre reincarnation of the sub prime mess.
  • (HAL) Out HAL $37.50 November Calls for $0.85. 70% 2 day gain. Said that one would be quick. Still hold the ailing $40 strikes of November.

PUTS: No action. 

Odds & Ends 

Analyst Watch: (HOC) from hold to buy at Soleil, (TNP) price target slashed from $84 to $42.

 

112 Responses to “Thursday – Dualing Inventory Reports”

  1. 1
    Sambone Says:

    7:49 am EST

    ICE Brent Traders Focus On Forcados Attack

    Dow Jones Newswires
    From Market Talk:
    1229 GMT [Dow Jones] Crude oil futures market participants eye developments in Nigeria, amid anxiety over escalating tensions between militant groups in the Niger Delta and the oil majors operating there. ICE front-month Brent spiked higher immediately following news of an attack on a pipeline which feeds Royal Dutch Shell’s Forcados facility earlier Thursday, but then retreated as participants concluded only a small amount of output was likely to be impacted. “There was a knee-jerk upwards but in volume terms it’s insignificant really,” says a trader of West African crude based in Europe. “(The news is) overall bullish though,” says the trader, who adds it implies renewed tension in the region. ICE Brent December -17c at $91.19/bbl.

  2. 2
    Sambone Says:

    8:24 am EST

    Nymex Crude Steady Before Inventory Data

    Dow Jones Newswires
    From Market Talk:
    [Dow Jones] Nymex crude is little changed before weekly inventory data due 10:30 a.m. EST. Dec crude -17c at $93.92/bbl. Analysts expecting a 300,000 bbl draw in both crude and distillate inventories and a 100,000-bbl draw in gasoline. Refinery use is seen growing 0.7 percentage point. Many analysts are tipping a bigger draw in stockpiles because “backwardation,” which is when nearer month futures are at a premium to months further out, removes the incentive to store oil. (matt.chambers@dowjones.com)

    1229 GMT [Dow Jones] Crude oil futures market participants eye developments in Nigeria, amid anxiety over escalating tensions between militant groups in the Niger Delta and the oil majors operating there. ICE front-month Brent spiked higher immediately following news of an attack on a pipeline which feeds Royal Dutch Shell’s Forcados facility earlier Thursday, but then retreated as participants concluded only a small amount of output was likely to be impacted. “There was a knee-jerk upwards but in volume terms it’s insignificant really,” says a trader of West African crude based in Europe. “(The news is) overall bullish though,” says the trader, who adds it implies renewed tension in the region. ICE Brent December -17c at $91.19/bbl.

  3. 3
    zman Says:

    HK announcing a field expansion at Terryville, low cost, low risk production and this area is prospective for the Gray Sand and Bossier targets talked about afte recent 3D. Planning more 3D on the new acreage. they speak at the B of A energy conf at 12:05 est today.

  4. 4
    aitrader Says:

    CNBC reported a rumour that the UAE is dumping the dollar. Not sure what that means – guess it’s either that they want to price oil in other currencies or they are reallocating dollar based investments to other currencies like China threatened to do last week.

  5. 5
    Denise Says:

    Good morning
    T/A notes-she apologies for flip-flopping-thinks late day selloff good for market
    she thinks it is time to buy when were down-will get a Turkey rally
    -Oscillator oversold, 30 day adv/decline will be oversold Monday,hi-low under 20%,
    VIX should jump with decline, ect…
    And my personal best indicator I have been experiencing those gut wrenching
    “maybe I should go to cash feelings and I am wrong”- Especially after reading GE is unwilling to pony up $200mm on a $5b
    enhanced fund (smells bad!)
    I am continuing to put $ to work

  6. 6
    zman Says:

    aitrader – http://www.bloomberg.com/apps/news?pid=20601087&sid=a.HBWyw42tnU&refer=home

    Morning D – looks like another red dawn in the broader markets…guess they didn’t like the Empire #s. like the personal indicator best.

  7. 7
    Sambone Says:

    Looks like the energy names will be down on the open today.

  8. 8
    zman Says:

    BTU has a nice presentation on their website for today’s B of A speech.

    S – doesn’t mean much before inventories. Could be a buying op.

  9. 9
    zman Says:

    ZTRADE: Entering the APA December $110 calls for $1.30. Stock is $98.77 having backed off from $105 in the last few sessions.

  10. 10
    Sambone Says:

    9:43 am EST

    Nymex Crude Slips Before US Inventory Data

    By MATT CHAMBERS
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures were down slightly Thursday as traders positioned themselves before key weekly U.S. government inventory data that is expected to show a drawdowns in crude oil, distillates and gasoline.

    Light, sweet crude oil for December delivery on the New York Mercantile Exchange was recently down 69 cents, or 0.7%, at $93.40 a barrel. Brent crude on the ICE futures exchange fell 6 cents to $91.30 a barrel.

    Prices have swung wildly in both directions this week, losing $3.45 a barrel Tuesday before coming back up $2.92 Wednesday as traders bet inventory drawdowns will come in larger then analysts predicted earlier in the week.

    Analysts were expecting a 300,000-barrel draw in both distillate inventories, which include heating oil and diesel fuel and crude oil. Gasoline stockpiles are expected to draw by 100,000 barrels and refinery use is seen growing by 0.7 percentage point to 86.9%.

    With a larger draw than 300,000 barrels built in to the crude price after Wednesday’s gain, prices could be primed for a sell-off unless there is a big draw.

    “Any increase in supply in any category should resume the sell-off (started Tuesday) unless one of the categories is wildly bullish,” Phil Flynn, an analyst at Alaron Trading Corp., said in a research note.

    The extreme volatility in crude oil seen lately is expected to continue Thursday, with Nymex December crude oil due to expire Friday, and with the latest available data showing 134,956 contracts still open in that contract as of Wednesday, despite a 122,896-contract fall in open interest that session. December Brent expires next Wednesday.

    Front-month December reformulated gasoline blendstock, or RBOB, fell 1.69 cents, or 0.7%, to $2.3535 a gallon. December heating oil fell 1.26 cents, or 0.5%, to $2.5608 a gallon.

    —By Matt Chambers, Dow Jones Newswires

  11. 11
    Sambone Says:

    “Any increase in supply in any category should resume the sell-off (started Tuesday) unless one of the categories is wildly bullish,” Phil Flynn, an analyst at Alaron Trading Corp., said in a research note.

    What did he say?

  12. 12
    zman Says:

    PF went bearish at 97 and he’s sticking to it. Wow. I agree with the logic but think we may just get that bigger withdrawal

  13. 13
    zman Says:

    S – Ya know he runs a trading outfit so once he had everyone long, it was time to shift gears and churn those commissions. I’m sure you are shocked at the possibility that his motivations for oil price comments may be driven by something quite different from fundamentals.

  14. 14
    scoop006 Says:

    Z re # 13 so cynical lol

  15. 15
    zman Says:

    Sorry Scoop, its been a long two weeks, my current scud count going into expiry is too high and I’m a bit crusty from a long night of listening to conference calls. I promise to play nice.

  16. 16
    j Says:

    In case anyone missed it, Icahn bailed on TLM.

  17. 17
    scoop006 Says:

    Z re # 15 If misery loves company you got a friend in me

  18. 18
    zman Says:

    J – I saw that and he added to his APC position.

    Why he bailed on TLM is a bit of a mystery and I don’t know how big a pos it was but people won’t like it at least today. They are in the process of arresting flagging production there and we should see sequential growth for the next several quarters. Dirt cheap and I may add to my position which was doing pretty well before the sub prime crap resurfaced.

  19. 19
    zman Says:

    broader going green, oil waiting on data in 10 minutes. Misery does not love company, misery just likes to not be miserable.

  20. 20
    ram Says:

    Don’t take prisoners in this enviornment!

  21. 21
    Sambone Says:

    Z – Want a little cheese with that “Whine”? LOL

  22. 22
    zman Says:

    yeah, stilton

  23. 23
    aitrader Says:

    re: #15 – hehe, 4 weeks to a 40% drawdown. Whoever said learning energy options would be cheap, eh? Reminds me of futures trading :-0

    We’ll get ’em next month though, right Z!

  24. 24
    zman Says:

    RE 23. You bet. Besides the position closed so far this month have been good.

  25. 25
    aitrader Says:

    re: #23, add a 1977 Vintage Port and a Cohiba and I’m in.

  26. 26
    Popeye Says:

    Ouch.

  27. 27
    zman Says:

    big build in oil, big draw in distillates

  28. 28
    ram Says:

    Re 27: judging by APA reaction this is bad?

  29. 29
    TTupp Says:

    wasent gas due out too?

  30. 30
    zman Says:

    huge build in crude imports

    gasoline demand remained high

    cushing inventories remained flat at 13.4 mm barrles.

    Got the bigger than expected draw in distillates and the big rally in utilization at refiners (jumped to 87.7%)

    Oil down a $1.60 from down a $0.60 pre report. They have to be thinking more demand in the future as the refiners are obviously coming back now.

    Numbers are:
    crude: up 2.8
    gasoline: up 0.7
    distillate: down 2.0

    Nat Gas saw a draw of 9 Bcf

  31. 31
    Sambone Says:

    Uncle Phil – The trader

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

  32. 32
    sane Says:

    Waiting on API

    By the way…. Last week the API reported a build of 2.3M

  33. 33
    Sambone Says:

    10:32 am EST

    Nymex Crude Slips Before US Inventory Data

    By MATT CHAMBERS
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures were down slightly Thursday as traders positioned themselves before key weekly U.S. government inventory data that is expected to show a drawdowns in crude oil, distillates and gasoline.

    Light, sweet crude oil for December delivery on the New York Mercantile Exchange was recently down 69 cents, or 0.7%, at $93.40 a barrel. Brent crude on the ICE futures exchange fell 6 cents to $91.30 a barrel.

    Prices have swung wildly in both directions this week, losing $3.45 a barrel Tuesday before coming back up $2.92 Wednesday as traders bet inventory drawdowns will come in larger then analysts predicted earlier in the week.

    Analysts were expecting a 300,000-barrel draw in both distillate inventories, which include heating oil and diesel fuel and crude oil. Gasoline stockpiles are expected to draw by 100,000 barrels and refinery use is seen growing by 0.7 percentage point to 86.9%.

    With a larger draw than 300,000 barrels built in to the crude price after Wednesday’s gain, prices could be primed for a sell-off unless there is a big draw.

    “Any increase in supply in any category should resume the sell-off (started Tuesday) unless one of the categories is wildly bullish,” Phil Flynn, an analyst at Alaron Trading Corp., said in a research note.

    The extreme volatility in crude oil seen lately is expected to continue Thursday, with Nymex December crude oil due to expire Friday, and with the latest available data showing 134,956 contracts still open in that contract as of Wednesday, despite a 122,896-contract fall in open interest that session. December Brent expires next Wednesday.

    Front-month December reformulated gasoline blendstock, or RBOB, fell 1.69 cents, or 0.7%, to $2.3535 a gallon. December heating oil fell 1.26 cents, or 0.5%, to $2.5608 a gallon.

    —By Matt Chambers, Dow Jones Newswires

  34. 34
    Sambone Says:

    Sorry they said same thing earlier. My bad.

  35. 35
    zman Says:

    Crude Build: this was 100% inspired by a flukishly high import number which no one anticipated would be the case with Mex still down. The delta between weeks added over 5 mm barrels to the number, had it been flat with last week we would have seen a draw of 3.0 mm barrels.

    I think oil traders will wrestle with this for a little while as you had a one time number (imports) offsetting a change in trend (rising consumption by refineries)

    Thanks Sane

  36. 36
    zman Says:

    bye bye chances for another OPEC hike. They can point to this week’s increase and say it’s not needed.

    Oil trying to hold 92 but volumes so far on the mini-recovery rallies are low compared to sell off period volumes.

  37. 37
    QUARRYMAN Says:

    Z.

    Any upward movement possible in VLO b/t now and noon Friday.

    I’m cleaning out all Nov specs at Noon.

    Q.

  38. 38
    zman Says:

    Q: It’s possible, they are trying to find a bottom for oil now. So far this has been a fairly crack spread positive event but the stocks will move with oil it could go either way here. Holding pretty well down $1.60 now (after tumbling more than $2 earlier) and volume is starting to pick up on the mini recovery rallies now.

  39. 39
    zman Says:

    CNBC about to have CEO of APC (Jim Hackett) on in a few minutes…smart guy…worth a listen.

  40. 40
    j Says:

    Z, CLB coming back in for you, don’t miss your window again.

  41. 41
    Sambone Says:

    10:48 am EST

    Nymex Crude Slips On Surprise Inventory Build

    DOW JONES NEWSWIRES
    From Market Talk:
    [Dow Jones] Nymex crude slides below $93/bbl after DOE says crude oil inventories unexpectedly rose last week and refinery use rose more than expected. Dec crude -$1.53 at $92.56 after trading around $93.25 before the release. $100 a barrel is looking less and less likely any time soon. (matt.chambers@dowjones.com)

  42. 42
    zman Says:

    J – ty

    ZTRADE: OUt SU Dec 95 puts for $3.20 (up a whopping 8%).

  43. 43
    aitrader Says:

    Dec CL looks to be heading to 90 with Nov at 92+. Seems to be a somewhat larger disconnect considering the Nov contract expiry tomorrow.

  44. 44
    Wyoming Says:

    8% beats the alternative.

  45. 45
    zman Says:

    S – These oil traders are such fair weather fans. The picture has not changed one iota since they were all hot to pay $100 / barrel and if anything the geopolitical factor has keyed up a bit in an area that actual produces oil (Nigeria) versus an area that drove us here but had little chance of impacting production (Turkey)

    Wyoming: true enough. SU was not an effective way to hedge falling oil, maybe it will be now that I’m out.

  46. 46
    zman Says:

    Despite the blood bad in the shares crude is rallying. People have got to be asking the question, “what happens next week when imports return to normal and we have all this extra demand from refiners?”

  47. 47
    TTupp Says:

    does the street put alot of stock in the Philly fed numbers?

  48. 48
    zman Says:

    T: I table that one to Sambone.

    Sane: any API #s yet.

  49. 49
    Sambone Says:

    Z – That’s why I don’t listen to the “Talking heads”. “Those that can’t, go on TV”! LOL

  50. 50
    TTupp Says:

    re:vlo, looks like the MM’s are keeping th UL below 67.50 since thats where 99% of th OI lies. does anyone xactly they do this? is it by selling the stock they held for hedging against their written positions?

    might make my final approach (X3) here might my VLO, DEC, 72.5, Calls. will bode nicely if we get a TSO induced rally.

  51. 51
    TTupp Says:

    sam can you help me out here? we get hose numbers in like 10m.

  52. 52
    Sambone Says:

    T – The street looks at the numbers and then uses it to make a decision on how manuufacturing is doing (Slowing, etc.) It’s not a big event as let’s say the CPI.

  53. 53
    sane Says:

    API

    Crude 3.2M Build
    Distillates 1.1M Draw
    Gasoline 1.8M Build

  54. 54
    TTupp Says:

    gottcha. it just looks like the market is in waiting

  55. 55
    zman Says:

    Thanks Sane: that lines up pretty well with the EIA for once.

  56. 56
    TTupp Says:

    z is their a way i can buy FBR’s research ect? seems like they are early to the party usually. who is nown as the best research ouse on the street for energy?

  57. 57
    elduque Says:

    It seems to me that the market is ignoring the fact that a recession (which I believe is where we are heading) will have an effect on demand.

  58. 58
    Sambone Says:

    T – Industrial and capacity numbers tommorow at 9:15 am are higher up on info than the Philly.

  59. 59
    Sambone Says:

    El – Market doesn’t believe in the “R” word. Remember, it’s Goldilocks, not to hot, or not to cold. I would recommend you look up Stagflation.

  60. 60
    zman Says:

    56 – FBR – I think you can subscribe as an individual, know you can as a company. Either through Multex or open an account. They are pretty good on the research side but not as influential as say Goldman. Talent is quite spread out across big and small shops…I don’t listen to anything on refiners out of Bear and or on E&P out of JP Morgan.

  61. 61
    Sambone Says:

    Z – Raymond James has a pretty good research shop on energy. I used to be able access, but they shut it off.

  62. 62
    zman Says:

    Sambone – think it was either Wachovia or UBS economist earlier who was talking about coining the term “grocession” a sustained period of very low but positive growth.

    EL – I think they take solace in the fact that growth from India/China will keep mounting despite recent growing pains. Also they don’t believe in the R word like Sam said.

    should have added Jefferies to the energy list too, smart guys.

  63. 63
    TTupp Says:

    ask size is the amount somene is willing to seel to me right?

  64. 64
    zman Says:

    yes

  65. 65
    Sambone Says:

    Grocession – Ya the suits like different names, don’t they. Grocession means to me that I’m having to pay more for my Grocery’s. LOL

  66. 66
    TTupp Says:

    i used to have access to Bear at BMO, research was over scholastic, like they were trying too hard to sound smart while lacking an overall conviction about the issue at hand.

  67. 67
    Sambone Says:

    Tha street don’t likum RIG today.

  68. 68
    zman Says:

    T: do you have live quotes on oil?

  69. 69
    zman Says:

    the CROWD doesn’t like RIG today.

  70. 70
    Sambone Says:

    11:22 am EST

    Nymex Crude Dn On Surprise Crude Inventory Build

    By Matt Chambers
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures fell Thursday after key weekly U.S. government inventory data showed an unexpected build in crude oil stockpiles and that refinery use was greater than expected.

    Light, sweet crude oil for December delivery on the New York Mercantile Exchange was recently down $1.95, or 2.1%, at $92.14 a barrel. It was trading around $93.25 before the data. Brent crude on the ICE futures exchange fell $1.14 to $90.22 a barrel.

    The data came after a big gains in prices Wednesday as traders bet on a fourth straight weekly draw in crude oil stocks. An increase in crude oil imports was the main cause of the actual stock build.

    “Everyone was expecting a draw, but imports shot up,” said Brad Samples, an analyst at Summit Energy in Louisville, Ky. “It could definitely put a damper on (any run to $100). The recent stock draws had been providing strong signals for bulls.”

    Samples said the premium of benchmark U.S. crude, such as West Texas Intermediate, over other international grades is helping draw in more imports.

    Crude oil inventories rose 2.8 million barrels to 314.7 million barrels, the U.S. Energy Department said. That compared with an average forecast of a 300,000-barrel draw in a Dow Jones Newswires survey of analysts. Crude oil imports rose 830,000 barrels a day to 10.487 million barrels a day.

    Gasoline stockpiles rose 700,000 barrels to 195.0 million barrels, compared with an average survey estimate of a 100,000-barrel draw and distillate stockpiles fell 2 million barrels to 133.4 million barrels, compared with analysts’ forecasts of a 300,000-barrel draw.

    Refining capacity rose 1.5 percentage points to 87.7%. Analysts had expected a 0.7 percentage point gain.

    Front-month December reformulated gasoline blendstock, or RBOB, fell 5.59 cents, or 2.4%, to $2.3145 a gallon. December heating oil fell 3.72 cents, or 1.5%, to $2.5362 a gallon.

    Heating oil prices were somewhat supported by the larger-than-expected fall in distillate stocks.

    Crude oil prices have swung wildly in both directions this week, losing $3.45 a barrel Tuesday before coming back up $2.92 Wednesday.

    The high volatility in crude oil is expected to continue this week, with Nymex December crude oil due to expire Friday, and with the latest available data showing 134,956 contracts still open in that contract as of Tuesday, despite a 122,896-contract fall in open interest that session.

    —By Matt Chambers, Dow Jones Newswir

  71. 71
    Sambone Says:

    RIG – I’m gonna “Load tha boats” when it starts trading “When issued”.

  72. 72
    zman Says:

    S – agreed, how do you not? $18 to 20 eps 2009

    Go oil, if Efffferson could ask the right questions (ie, what about Cushing holding flat, what import sustainability at that level, what about increased demand from refiners as they march/claw their way back over 90% utilization), we could have gotten oil back up much more quickly.

  73. 73
    QUARRYMAN Says:

    Z. re: VLO Nov 72.5s

    I’m tempted to let it ride, but my luck VLO closes Friday at 72.51 and I owe for 5000 shares!

  74. 74
    zman Says:

    Q – just don’t exercise, it’s your option.

  75. 75
    freeflow Says:

    im having a lot of trouble loading the site – anyone else having trouble?

  76. 76
    zman Says:

    FF – taking me a few seconds to refresh, your the only problem I’ve heard of today. Have you tried clearing your cache and closing and reopening your browser?

  77. 77
    Sambone Says:

    The “Crowd” is currently exiting energy.

  78. 78
    Sambone Says:

    and Financials

  79. 79
    freeflow Says:

    ill try that – thanks z

  80. 80
    zman Says:

    FF …if it doesn’t help there are some other things we can try.

    not a spot of green on my screen.

  81. 81
    Sambone Says:

    EPL is the only green I see.

  82. 82
    ychong Says:

    VLO: According to the Wallstreet Journal, VLO was cut to outperform by Tristone this morning.

  83. 83
    zman Says:

    ychong – thanks…looks like little impact since it’s trading pretty much in line with the group on a sloppy red day.

  84. 84
    freeflow Says:

    that worked Z – thanks. Phil’s site is down for me too – after 10AM

  85. 85
    Sambone Says:

    Is it “Tini time” yet?

  86. 86
    Sambone Says:

    12:52 pm EST

    Nymex Crude Down On Surprise Crude Inventory Build

    By Matt Chambers
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures fell Thursday after key weekly U.S. government inventory data showed an unexpected build in crude oil stockpiles and that refinery use was greater than expected.

    Light, sweet crude oil for December delivery on the New York Mercantile Exchange was recently down $1.54, or 1.6%, at $92.55 a barrel. It was trading around $93.25 before the data. December Brent crude on the ICE futures exchange, which expires Thursday, fell 69 cents to $90.67 a barrel. January Brent was down $1.41 at $89.35.

    The inventory report erased some big gains in prices that were made Wednesday as traders bet on a fourth straight weekly draw in crude oil stocks. The unexpected stockpile increase came as crude oil imports jumped to a three-month high.

    “Everyone was expecting a draw, but imports shot up,” said Brad Samples, an analyst at Summit Energy in Louisville, Ky. “It could definitely put a damper on (any run to $100). The recent stock draws had been providing strong signals for bulls.”

    Samples said the premium of benchmark U.S. crude, such as West Texas Intermediate, over other international grades was probably helping draw in more imports.

    Mexican Oil Boosts Stores
    Crude oil inventories rose 2.8 million barrels to 314.7 million barrels in the week ended Nov. 9, the U.S. Energy Department said. That compared with an average forecast of a 300,000-barrel draw in a Dow Jones Newswires survey of analysts. Crude oil imports rose 831,000 barrels a day to 10.487 million barrels a day, their highest since Aug. 17.

    The rise in imports was likely because of Mexican production from the Gulf of Mexico coming back on line after being shut in because of rough weather, said Laurie Falter, an economist at the Energy Information Agency, the statistics and analysis arm of the DOE.

    Gasoline stockpiles rose 700,000 barrels to 195 million barrels, compared with an average survey estimate of a 100,000-barrel draw, while distillate stockpiles fell 2 million barrels to 133.4 million barrels. That compared with analysts’ forecasts of a 300,000-barrel draw.

    Refining capacity rose 1.5 percentage points to 87.7%. Analysts had expected a 0.7 percentage point gain.

    Front-month December reformulated gasoline blendstock, or RBOB, fell 5.19 cents, or 2.2%, to $2.3185 a gallon. December heating oil fell 2.88 cents, or 1.1%, to $2.5446 a gallon.

    Heating oil prices fell less than crude and gasoline and were somewhat supported by the larger-than-expected fall in distillate stocks. Heating oil stockpiles will become an important driver of crude oil prices going into the Northern Hemisphere winter, and traders will be closely watching winter weather forecasts for direction.

    Crude oil prices have swung wildly in both directions this week, losing $3.45 a barrel Tuesday before coming back up $2.92 Wednesday.

    The high volatility in crude oil is expected to continue this week, with Nymex December crude oil due to expire Friday, and with the latest available data showing 109,417 contracts still open in that contract as of Wednesday. With very few traders prepared to let Nymex contracts go to physical settlement, the vast majority of those contracts will be closed this trading session and next.

    Nigeria, Iran Keep Crude Supported
    Crude prices were buoyed somewhat by an attack on a Royal Dutch Shell (RDSB) pipeline in Nigeria that feeds the Forcados export terminal. “Some” production was shut in, a Shell spokesman said, but wouldn’t say how much.

    Tensions between the U.S. and Iran remain very much in the forefront of traders minds. The U.N. nuclear watchdog, the International Atomic Energy Agency, said Thursday that Tehran continues to defy the U.N. Security Council by ignoring demand to freeze uranium enrichment.

    Crude traders “wanted a bigger sell-off (on the inventory data) but both the Iran and Nigeria geopolitical problems continue to exist,” said Tony Rosado, of IAG Energy Brokers in Fort Lauderdale, Fla.

    Nigeria’s crude exports have been severely curtailed by militant attacks in the oil-rich Niger Delta region, which has helped crude’s more than 50% rally this year.

    Crude prices have also been supported by concerns that the U.S. could attack Iran over its nuclear program, leading the latter to either cut its own exports or try to block tanker traffic into the Persian Gulf.

    —By Matt Chambers, Dow Jones Newswires

  87. 87
    zman Says:

    Hearing solar and wind tax credits may get ditched from the latest version of the energy bill due to be finished by year end. Nataxi Bleichschroeder analyst out with the call today saying it could be rough on the solar group. No effect so far but lack of credits could stunt growth a bit. Just thinking out loud as these things are not cheap and have had a run like the bulk shippers.

  88. 88
    freeflow Says:

    shorting the DIA now…

  89. 89
    Sambone Says:

    Got the feeling that the overall market will go down close to the close. Just a feeling is all, ya know!

  90. 90
    freeflow Says:

    Agreed – hence the puts

  91. 91
    Sambone Says:

    Hmmm, DIA looks like a Head and shoulders chart, kinda.

  92. 92
    zman Says:

    Energy getting woodshedded despite the strongest crude levels of the day post report.

  93. 93
    zman Says:

    TSO gave the stiff arm to any questions about Tricinda in their preesentation just now.

    Oil off $0.50 now

  94. 94
    Sambone Says:

    Blue Star has gone from 24 to 16 1/2 in a very short time]
    Gordon Gekko: Fox, where the hell are you? I am losing MILLIONS! You got me into this airline and you sure as hell better get me out or the only job you’ll ever have on the Street is SWEEPING IT! You hear me, Fox?
    Bud Fox: You once told me, don’t get emotional about stock. Don’t! The bid is 16 1/2 and going down. As your broker, I advise you to take it.
    Gordon Gekko: Yeah. Well you TAKE IT!
    [shouts]
    Gordon Gekko: *Right in the a*$ you fucking scumbag cocksucker!*
    Bud Fox: It’s two minutes to closing, Gordon. What do you want to do? Decide.
    Gordon Gekko: [calms down] Dump it.

    Kinda reminds me of today, eh?

  95. 95
    zman Says:

    tidbits from the TSO presentation.

    very little railcar capacity for moving ethanol about…sounds like more tanker cars going to be built.

    unless you see job losses from a recession, there is little impact on west coast gasoline demand.

    Thanks S, I needed that. “you’re a funny guy”

    OIL has recovered all its losses from prior to the report…stocks near LOD.

  96. 96
    zman Says:

    more from TSO:

    global growth fuel is now diesel. increasing in the US but at 60% of cars in europe, VLO big beneficiary of this.

  97. 97
    ram Says:

    VLO is the best of taking garbage crude and turning it into #2 diesel? Diesel is also more expensive than gas in CAl by about $.25.

  98. 98
    zman Says:

    Tempted to pick up more DEC VLo but this market lacks any sense of organization at present. Will be able to buy cheaper soon I am afraid.

    Oil closed down less than 1% , XOI down 3% and falling, OIH down 3.5% and falling.

  99. 99
    Sambone Says:

    Z – Your smarter than me, but I’d hold off abit on the VLO trade. Tommorow will be extreme because of the futures expiring. Just my 2 cents. Also I believe the overall market will be down over 200 today.

  100. 100
    Sambone Says:

    I guess the “Dead cat bounce” is over for the Financials.

  101. 101
    aitrader Says:

    SUxs my only green energy options position – definition of irony and all, eh.

  102. 102
    ychong Says:

    This market is quite ugly.

    How you guys see the outlook on oil/gas stocks in general?

  103. 103
    Sambone Says:

    Y – I’m very bullish long term. I believe the “Crowd” is exiting this week. They will be back.
    15 minutes to “Tini time”.

  104. 104
    Popeye Says:

    HK showing signs of life.

  105. 105
    zman Says:

    Re 102: That’s a pretty broad question so I’ll give a pretty broad answer. In general I’m definitely more positive than negative on E&P, refiners, oil service. I think some of the alt energy plays are overheated.

    Once you start breaking it down into the subsectors there are names I like and names I don’t like in service, I much prefer deepwater drillers and makers of parts used to hookup these kinds of wells versus land drillers with Canadian exposure or people whose business is largely commoditized.

    I’m not dissuaded over a few red days although it is painful. Oil demand remains high and the natural gas storage situation while high, is requiring a very rapid pace of drilling. I don’t see a sharp contraction in demand anytime soon and when you look at what analysts are using in their models, these estimates are well below current forward prices.

    or you could have just read 103, lol.

  106. 106
    zman Says:

    TSO gave a nice nod to VLO being a great operator in their speach at B of A, lol.

    This red day brought to you by the broad markets and panic inspired there in , not crude which is now 93.4.

    Favorite quote from TSO speech:

    “China will become the black hole of hydrocarbons, they will suck up oil and and anything that looks like oil” to meet demand as they have said they will not be importers of products to meet demand for any length of time but will instead rapidly scale production (build refiners).

    Popeye: Re HK That increase in the Terryville acreage getting no attention today but that along with the deeper gray sand and bossier targets they are seeing on seismic is big news.

  107. 107
    zman Says:

    lets have a better day tomorrow.

  108. 108
    Sambone Says:

    Z – This one is for you.

    Catwoman: Robin?
    Robin: Yeah?
    Catwoman: Slay the blue dragon.
    Robin: Groovy.
    Batman: Oh, no.
    Robin: Oh, yes.

  109. 109
    cattleman Says:

    y’all find this much easier if you trade in the middle of the chart instead of the right edge.

  110. 110
    zman Says:

    108, 109 lol, lol

  111. 111
    aitrader Says:

    re: #109, I keep fallin’ off the edge while feelin’ my way to the middle!

  112. 112
    aitrader Says:

    Slightly off topic question – are any of you folks systems traders? I’m a software guy with a bit of a quant/systems background and am wondering if any folks have developed or are developing systems based approaches to energy options trading?

    [For those that haven’t used a systems approach it boils down to quantified entry rules, exit rules, defined stops and exits, and money management. It’s esp. popular for futures trend trading for example.]

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