20
Nov

Rebound Tuesday? Oil On The Rise, Natural Gas Retreating

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Commodity Watch:

  • Crude Oil: yesterday the January crude contract closed up $0.80 to $94.64 in what many news stories called quiet trading. That sounds like it was a boring day of nothing but drifting higher trader but volatility once again abounded with day's range covering $2 ($93.16 to $95.15). $2 swings have become the norm, not the exception and my sense is that we are building a base in the low to mid $90s for another run on $100 prior to year end. Crude is trading up another $1.00 in pre market action.
  • Oil Sands Ablaze - Fire last night at the Scotford facility (Shell, MRO, CVX) in NE ALberta. 155,000 bopd capacity site, damage estimate not yet in.
  • Sudan Watch: Rebels free five oil workers.
  • Natural Gas traded off $0.21 to $7.79. With minor exceptions gas has remained mired in a fairly tight range of $7.50 to $8 since mid August. Examining the following chart and the expected round top in storage I expect one more quick dip into the low $7s which should either be seen as a buying opportunity (if winter weather then decides to show up some place other than the northeast) or the beginning of a test of $7 itself if the predicted warmer than normal winter is evidenced in early December temps. I think the move to lower levels, below $7.50 could occur this week as we appear set to essentially tread water storage over the next couple of storage reports. In other words, you won't see me loading up on more of the gassy names just yet but I'll keep the cheap ones, like CHK as their hedges are more than adequate to coast through minor squalls in gas prices. Gas is trading off another $0.21 this morning.
  • NG Imports. LNG inched up 0.1 Bcfgpd to 0.8 from the prior weak but were still off 0.5 bcfgpd versus last year. Meanwhile, imports from Canada fell to 8.1 Bcfgpd (their lowest level since early June and in line with year ago levels) resulting in gross imports to the U.S. falling another half Bcfgpd from the prior week. More on this tomorrow in the NG storage preview.

ng-price-111907.jpg

 

Cracks Spreads and Refineries. Key Takeaways:

  1. Refiners are trending with the market.
  2. Valuations are at or below the mid point of the historic trading range on the forward P/E multiple.
  3. Products had mounted a recovery relative to crude prices in the last three weeks.
  4. 4Q Average Cracks are improved over 3Q and for the most part closing on or ahead of 4Q06 levels.
  5. If asphalt is a big part of your business you are suffering right now.
  6. Favorite names right now FTO, VLO, TSO (which I think recommends the Tracinda offer) and SUN. Note I only own a little Valero right now because we just went through option expiration and I don't trust the subprime slimers (see 1 above) not to drop several more shoes.

 

crack-spreads-111907.jpg


E&P Sensitivity to Oil Price Moves:  The process of marking to market the fourth quarter and rising estimates to 2008 and beyond should hit full stride in the next weeks. As the early changes to estimates come out is appears 2008 price decks are advancing by as much as $10 and $20. As can be seen from the following graphs, APA is most levered to changes in oil prices. And remains near the bottom of the group on its forward multiple of cash flow. What's interesting about that you say? How about that the Street is currently estimating oil will average $70 per barrel next year. Now this is a stale estimate and the more recent numbers have ranged from $80 to $90 per barrel. But say the Street Consensus price for oil rallies another $10 to $80 (sounds plausible and it will happen by January if crude prices remain in the $90 vicinity much longer) that translates into roughly another $2 of 2008 CFPS for APA, which would know half multiple off the stock and bump it one to the left in that second chart below were the stock to remain at $100.  

oil-sensitivity-111907.jpg

 

Holdings Watch:

CALLS

  • APA December $100s added for $4.60. Last bid $4.10.

PUTS: No action 

Odds & Ends

Analyst Watch: (XOM), (HES), and (STO) from Neutral to Buy at UBS, (SNP) from Sell to Neutral, (SU) to Outperform at CIBC, (ESLR) to buy at Janco 

 

155 Responses to “Rebound Tuesday? Oil On The Rise, Natural Gas Retreating”

  1. 1
    Sambone Says:

    8:32 am EST

    Nymex Crude Rises To 1-Week High As Dollar Falls

    DOW JONES NEWSWIRES

    [Dow Jones] Nymex crude rises to a new weekly high after the dollar falls to a record against the euro. Jan crude +$1.06 at $95.70/bbl after going as high as $95.89, the most for a front-month contract since Nov. 12. Prices are now less than $3 from their all time high of $98.62, making Wed’s US inventory data key for crude and its chances of making $100. (matt.chambers@dowjones.com)

    Reported Earlier:
    LONDON (Dow Jones)- Crude oil futures climbed by more than $1 in London trade Tuesday, sparked by falls in the U.S. dollar.

    The greenback fell to record lows against the euro and the Swiss franc, boosting buying interest in crude oil futures from non-dollar denominated investors.

    The US dollar fell on expectations of a further rate cut from the US Federal Reserve, which also offered a direct link to higher crude prices, with a rate cut seen to be supportive of crude oil demand.

    “Negative or low real interest rates are good for commodities — it’s also probably pushing the outlook for consumer inflation as well, which is also driving the price,” said Commerzbank analyst Eugen Weinberg.

    At 1226 GMT, the front-month January Brent contract on London’s ICE futures exchange was up $1.10 at $93.38 a barrel.

    The front-month January crude contract on the New York Mercantile Exchange was trading $1.04 higher at $95.68 a barrel.

    The ICE’s gasoil contract for December delivery was up $16.50 at $837.75 a metric ton, while Nymex gasoline for December delivery was up 254 points at 240.70 cents a gallon.

    Traders are expecting a quiet week with the U.S. Thanksgiving holiday Thursday and an early close at the New York Mercantile Exchange Friday. Thin volumes Tuesday helped propel crude swiftly higher.

    “In the pre-holiday doldrums, we would expect that trading the dollar index and interest rates through oil will dominate the day’s activity,” said Olivier Jakob of Petromatrix.

    The dollar’s weakening came after OPEC member countries Iran and Venezuela called for abandoning pricing crude in dollars, as a result of the greenback’s ongoing slide.

    But while that proposal was rebuffed by OPEC’s most influential member Saudi Arabia, the further erosion of oil producers’ purchasing power may weaken potential OPEC incentive to increase crude production when the organization holds its policy meeting in Abu Dhabi on Dec. 5.

    The fall in the U.S. dollar, left the euro worth as much as $1.4802, its highest level on record.

    While the dollar’s moves occupied center stage Tuesday, expectations of colder weather in the U.S. also offered some support.

    The onset of winter temperatures, notably in the prime heating oil-consuming region of the Northeast U.S., were seen as contributing some strength to crude.

    Significantly colder weather is expected to affect the U.S. East and Gulf coasts in coming days, with winter weather advisories in force in parts of the Northeast, according to weather forecasters AccuWeather.

    “Traders already know that temperatures will be colder than normal for the next two weeks. That knowledge was probably the biggest reason that prices rallied yesterday,” said Peter Beutel of trading advisory firm Cameron Hanover.

    But any substantial weather-related gains would require a new set of forecasts calling for even colder weather or forecasts for seasonably cold weather in December as November nears its end.

    “Any forecasts for December, at this point, are too far away to be reliable,” Beutel said.

    In addition to seasonal temperatures, the fundamentals that have helped push crude prices to record highs remain in place to help support crude and possibly push it higher, some said.

    “The reasons why we took an aim at $100 are still with us today and the first bouts of cold weather are emerging,” said analysts at BNP Paribas.

    The supportive influence of options-related hedging activity could also raise its head, much as it did ahead of the December option expiry last week, they added.

    A large volume of open interest in Nymex December $100 crude call options — which allow holders the option to buy at that price and invariably forces sellers to hedge their position by buying futures as the strike price nears — was cited as a magnet for higher crude prices ahead of expiry on Nov. 13.

    “There’s no particular reason to exclude that a similar dynamic will develop on the new January 2008 front month,” the BNP Paribas analysts said.

    Data from Nymex show sizable open interest on Nymex January $100 and $110 crude call options.

    Ahead of Thursday’s holiday, the crude markets will be closely monitoring Wednesday’s U.S. Department of Energy inventory data, with the market expecting another build in crude oil inventories, while the early effects of seasonal weather could be reflected in distillate stocks.

    U.S. crude oil stocks are expected to climb by 800,000 barrels in the week ended Nov. 16, according to the average of a Dow Jones Newswires survey of 10 analysts.

    Gasoline inventories are seen growing by 700,000 barrels, while stocks of distillate, which include heating oil and diesel fuel, are expected to fall by 400,000 barrels.

    Refinery use is forecast as growing by 0.4 percentage point to 88.1% of capacity.

    “Although last week was warmer on a population-weighted basis for the entire country, weather in [northeast regions of] PADD 1a and 1b, which drives heating oil demand, was cooler,” said analysts at Lehman Brothers in a separate note. That would result in only slightly weaker total distillate demand over the previous week, they said.

    —By Nick Heath; Dow Jones Newswires

  2. 2
    zman Says:

    Thanks Sam,

    Dollar definitely part of it, Euro now 1.4808! Look how everyone in the story is gravitating back to the $100/barrel them. Fair weather fans.

  3. 3
    zman Says:

    HOUSTON, Nov 20 (Reuters) – More than 50 ships were waiting to enter or exit the Houston Ship Channel as a dense sea fog was dissipating Tuesday morning, the U.S. Coast Guard said.

  4. 4
    Sambone Says:

    Wow, glad I don’t own FRE

  5. 5
    zman Says:

    wow, and I thought the dry bulks had it bad. FRE was 65 at 10/1. ooouuucchhh.

    energy at least opening green. UBS upgraded the majors. price decks being revised higher for oil and as such the group is getting even cheaper.

  6. 6
    freeflow Says:

    i just bought some DRYS… against my better judgement.

  7. 7
    zman Says:

    FF – Good luck, lot of market risk.

    Doc – you out there. Today is the kind of day you should be telling me to hedge, when the market is up 100, not when down 200.

    APA and DO putting on nice moves.

    Re DUG: so to go short energy you would buy calls on this bear ETF. This is the most diversified one I have found and looks fairly balanced in terms of weightings.

  8. 8
    Wyoming Says:

    DUG – Ultrashort by 2 times the index. A call would be a move to the upside means that O&G is getting spanked and trending lower.

  9. 9
    zman Says:

    Everyone is on vacation around here so I’ll take the time to address some emails I’ve gotten regarding getting out or going short of energy due to the broad market troubles.

    Where’s the doom and gloom today? If you thought we should be hedging/short yesterday then certainly you would be even more adamant today. For myself I don’t market time; I’m not that smart and looking at how the “best and brightest” in that game have performed over the long I would say…that they aren’t the best and brightest after all.

    I stay on top of my sector. When I get nervous my positions get smaller with fewer names. But shorting energy for any length of time as a hedge is a losing game given valuations, stout short, medium and long term fundamentals, and the potential for oil to rally on this ever weakening dollar. Certain issues may be ahead of themselves and due for profit taking from time to time but betting against the entire group for more than a couple of days at a time (and again I’m not smart enough to pick those days as they are generally broad market driven) is tough.

    WYO – Thanks, I was just making sure people had it right. Nobody in here but you and me anyway today. Check out the DO chart.

    Speaking of spankings, NG down to 7.57 now.

  10. 10
    zman Says:

    Wyoming – Since I have not paid much attention to DUG and its long counterpart DIG I will start a paper trade exercise on them this month. Best way to get to know an option or underlying issue without the risk.

  11. 11
    redjack Says:

    I’m lurking around here…
    here is some interesting reading..
    http://www.businessweek.com/bwdaily/dnflash/content/nov2007/db20071115_045316_page_2.htm
    http://seekingalpha.com/article/54670-sandridge-energy-an-ipo-to-watch

  12. 12
    ram Says:

    Some people are still suffering from the recent shock and awe.

  13. 13
    Sambone Says:

    Z – More and more ETF’s are being used on the street. Before if you wanted to hedge, you had to either short or buy options. Rydex mutual funds started the whole thing in regards to hedging portfolios. Now folks use the ETF shorts as a way to not have the sting in portfolios when the market is going down.

  14. 14
    Sambone Says:

    10:21 am EST

    Nymex Crude Rises Above $96 On Weaker Dollar

    By MATT CHAMBERS
    Of DOW JONES NEWSWIRES

    DOW JONES – Crude oil futures rose to a one-week high Tuesday as the dollar fell, giving more pricing power to traders using other currencies.

    Colder weather in the U.S. Northeast, the world’s biggest heating oil market, and positioning ahead of key weekly U.S. inventory data due Wednesday from the Department of Energy, also boosted prices.

    Light, sweet crude for January delivery on the New York Mercantile Exchange was recently up $1.43, or 1.5%, at $96.07 a barrel after rising as high as $96.16, the most for a front-month contract since Nov. 12. Brent crude on the ICE futures exchange rose $1.56 to $93.84 a barrel.

    “It’s still the dollar” supporting prices, said Michael Cambria of Eagle Futures on the Nymex floor. “The forecasts for colder weather are also giving it a boost, at least until somebody comes out and downgrades the forecast” to warmer weather.

    The dollar fell to a record low against the euro on worries that Persian Gulf countries, many of which peg their local currency to the dollar, may revalue those currencies to offset the dollar’s broad weakness. Also hurting the U.S. dollar was a rise in Asian and European stock markets overnight and the likelihood that U.S. stocks will open higher Tuesday after tumbling Monday. This boosts the risk appetite in currency markets, which tends to favor the euro against the dollar.

    The Northeast, which got early snow in many regions Monday, is forecast to get colder-than-normal weather from Nov. 25 until at least Dec. 3, according to the National Weather Service’s mid-term outlook forecasts. The expectations come as most forecasters are predicting a warmer-than-normal winter.

    Winter heating demand, both through heating oil and electricity in countries that use fuel oil, is expected to make for a big supply gap in the fourth quarter, according to many predictions. How far temperatures deviate from normal, in either direction, will play a big part in price moves in coming months.

    Price direction in the near term will likely be decided by the DOE data, which is expected to show an 800,000 barrel build, according to the mean estimate in a Dow Jones Newswires survey of analysts. Distillate stocks, which include heating oil and diesel fuel, are expected to fall by 400,000 barrels while gasoline stocks rise by 700,000 barrels. Refinery use is seen growing by 0.4 percentage point to 88.1% of capacity.

    Despite the expectations for growing crude stockpiles, some are positioning for a slide, which would be price positive.

    “This morning’s push to above one-week highs amidst new lows in the U.S. dollar and a likely sizable crude stock draw in tomorrow’s data would appear to position January (Nymex crude) futures for a test of record nearby futures highs,” said Jim Ritterbsusch, president of trading advisory firm Ritterbusch and Associates. Front-month futures hit a record $98.62 a barrel on Nov. 7.

    Front-month December reformulated gasoline blendstock, or RBOB, rose 2.38 cents, or 1%, to $2.4054 a gallon. December heating oil rose 3.23 cents, or 1.2%, to $2.6365 a gallon.

    —By Matt Chambers, Dow Jones Newswires

  15. 15
    zman Says:

    RJ – thanks for the PBR piece,
    saw that SD piece last night…no meat…check out the original look at SD way back in July on SeekingAlpha…there’s your meat, lol. Need to do an update there.

  16. 16
    zman Says:

    oil up $2.05 at 96.67. PF and Kilduff probably back banging the $100 gong now.

  17. 17
    redjack Says:

    Z…yesterday you asked W about BTJ..any response?

  18. 18
    Wyoming Says:

    Here is the proshare website
    http://www.proshares.com/
    I like the Ultra’s for the double performance;

    UltraShort Oil & Gas ProShares seeks daily investment results, before fees and expenses, that correspond to twice (200%) the inverse (opposite) of the daily performance of the Dow Jones U.S. Oil & Gas IndexSM.

  19. 19
    kyleandy Says:

    z- have been using DUG as a hedge against my long energy posit for a few weeks. my theory is i shud get the best energy picks on this site, while whoever runs DUG hopefully should find the weakest ones.

  20. 20
    zman Says:

    RJ – not yet, Wyoming, did you see me ask about BTJ in the seismic arena…just wondering if you have come across them and have nay thoughts there?

    Ky – love the way you think. That’s exactly my goal. Is DUG actively managed? I thought it was a 2x short index which would make it perfect for hedging, especially given its breadth, unlike something like the OIH which is heavily weighted towards a few of its issues and only has 15 in it. DUG includes E&P, refiners, majors, service and even some transmission cos…very broad.

    XOM really liking that upgrade, up 4%. Don’t own any COP now but probably should, chart needed to hold a little better but is recovering and cheap to XOM.

    impressed with CHK up here with NG getting hit. like said in post, hedges.

    BTU may be the big buy when NG bottoms.

    Tupp – if you are around re APA, this is why I jumped down to the $100s as they are getting a nice move today on APA/oil rally while my 110s are still flat to where I bought them. It will take a move toward 105 to wake those up at which point I’ll harvest the $100s

  21. 21
    Wyoming Says:

    Z,
    Just noticed the DO part of your response. Looks like DO is ahead of RIG with both on the same tracks of movement. Probably merger overhang?

  22. 22
    zman Says:

    RIG/GSF will have a bigger JU fleet as well as total fleet…also they are building more (I think the last construction count >$3 billion combined)…was weighing on some fund managers mind’s early last month.

  23. 23
    Wyoming Says:

    Any thoughts on the impact of La Nina?
    http://www.cpc.noaa.gov/products/analysis_monitoring/enso_advisory/ensodisc.html
    and
    http://www.kiplinger.com/businessresource/forecast/archive/la_nina_likely_to_linger_071116.html

    Know of a “clear” gold play for a further drought in more populated areas? Thought I read something about a company taking over city water departments.

  24. 24
    zman Says:

    Re 23 – will look at and get back on both. La’s and El’s need to be strong to give you real temperature predicting power…they are next to useless for it in the weak and moderate forms. For precip though it should spell continued drought from the Rockies east into the areas already hardest hit.

    You want national security, we should all be investing in desalinization. GE is big but I have not looked at some of the new names since they came as hot IPOs last couple of years.

  25. 25
    Wyoming Says:

    BTJ – heard of them, like what I read on the quick, nice move today. Looks like a 3-2 split. They would fit in nicely with the deepwater theory.

  26. 26
    j Says:

    Someone bought 5000 of the Jan 42.5p for PBR. Odd.

  27. 27
    mimster90 Says:

    snowing here in Boston.

    Too bad there is no way to play heating oil prices directly.

  28. 28
    TTupp Says:

    while we’re n the topic if the 2x returns etf’s some of you who are nimble and interested in arb. type trading, might find pairs trading with the 1x & 2x etf interesting.

    ie last summer i was making bunches of money on putting the qqqq and the ultra 2x q’s on a daily comparative chart, and when one was out/under performing its counterpart it was lucrative to step in and short the over performer, and long the under performer. this might give some nice returns with say dig/ xle or something more appropriate– do the dig/dug guys have a 1x that is the same as dig/dug?

  29. 29
    TTupp Says:

    z any idea what consensus is discounting into the q4 apa eps for an oil price as is?

  30. 30
    TTupp Says:

    z- like the apa call you made the other day (buy 100’s), but i am strictly a seller of options this month.

  31. 31
    TTupp Says:

    you will probably more more money than me tho.

  32. 32
    TTupp Says:

    mim open a futures account and trade HO futures?

  33. 33
    zman Says:

    J – that is a head scratcher. OI there was already > 15,000 contracts. I dunno.

    Chinese petroleum on the march today.

    SNP, PTR, CEO running 5 to 10%.

    mimster – agreed although SUN is next best thing. The problem is even if you found a truck delivery business that would be the same as owning a filling station meaning they have to buy the product low and sell it higher. Since they have to refill their own stocks as the course of the winter goes on you can see the risk.

    TT 28: sounds interesting but definitely not my game…somebody help him out on the 1x dig and dugs variants.

    TT29: About $74.31. WTI quarter to date average is running $88.77

    TT30: understand and hear you there. I am on the cusp of writing some calls against my CHK position.

    TT31: I doubt that.

    TT32: Not a bad idea but paper trade it first. That is a seriously dangerous game and not for someone who has not done it before. Beautiful leverage can turn you to subprime in a day.

  34. 34
    jiveyjr Says:

    anyone follow EAC…company local here in DFW area…seems biggest problem to me is a lot of oil production is in area where price concessions required much of the time…didn’t listen to last conf. call tho…maybe better now

  35. 35
    TTupp Says:

    we got so used to trading the market long, i think we’ve all been caught a little flat footed.

    how were your july and august returns- i cant remember…..

  36. 36
    zman Says:

    Jivey – I don’t follow them…you want I should look into them?

    T – better than November as I had a considerable short on the refiners.

  37. 37
    jiveyjr Says:

    I wouldn’t propose that you follow EAC if you don’t already..you have plenty to do….only thought if someone followed it they could give their thoughts.

    Jon Brumley founded the Co. after he left XTO…he is the originator of the royalty trust concept insofar as I know…his son is CEO now…stock traded like a dog last year when execution wasn’t so hot….is doing better now with execution oil pricing etc…

  38. 38
    TTupp Says:

    z hats jan cl at?

  39. 39
    Nicky Says:

    Morning all. No sign of Kilduff but surely on a question of time….

  40. 40
    Nicky Says:

    It looks as if wti should take out the continuation high of 98.62 at a minimum.

    Volumes very light, open interest down – easy for this to be winged about.

    Distillates likely to be near record levels tomorrow so this continues to be a BS story.

  41. 41
    Nicky Says:

    Somehow all the arguments have come unhinged. Broader market down hard with signs of the consumer being hit and therefore demand should be slowing and oil in the stratosphere – makes no sense

  42. 42
    zman Says:

    Oil up 2.76 on weak volumes… NG down 0.23 perfect. You should see another pull in distillates due to ongoing high early degree days in the NE. Distillate inventories may be high but HO is not and foreign diesel demand is very strong.

  43. 43
    Nicky Says:

    Aye but are we seriously in danger of running out? Fall was mild, most of the winter is due to be warmer than usual. The fundamentals do not support this – its just a bubble.

  44. 44
    zman Says:

    No danger of running out but they are going to make you pay more for it.

  45. 45
    Nicky Says:

    And was everyone screaming wti is too cheap at 50 in January? No.

  46. 46
    Nicky Says:

    At some stage wti is going to collapse to the tune of 20 dollars and its going to be very ugly.

  47. 47
    zman Says:

    T: crude strip

    jan $97.15
    feb $96.09
    mar $95.18
    apr $94.20
    dec08 $89

  48. 48
    Brian08 Says:

    Nicky Re: #41…I agree, this is so non-sensical to me…I’m lightening up on any calls that I have profits on…

  49. 49
    zman Says:

    I think, numbers will tomorrow we kiss $100 and then either bounce lower or surge towards $105 which would be my signal to lighten up.

    The stocks aren’t discounting anywhere near these oil prices and it’s really ashame that it takes big ups in oil and a positive market to rally them when they are so discounted to the the market.

  50. 50
    Nicky Says:

    Brian from what i can see energy has now de-coupled from everything. Even when the dollar has a bounce oil continues up. Gold has seen a big pullback but still no pullback for energy.

  51. 51
    zman Says:

    I think, numbers willing, tomorrow we kiss $100 and then either bounce lower or surge towards $105 which would be my signal to lighten up.

    The stocks aren’t discounting anywhere near these oil prices and it’s really ashame that it takes big ups in oil and a positive market to rally them when they are so discounted to the the market.

    Regarding it being crazy oil is up here you can fight it or you can make money off it. I think it’s a house of cards but it will take a fundamental catalyst to unravel it … like several storage builds… and I don’t see that right now. Saudi could do it if they wanted but they are all talk of late and no bite. The tightness is real and the chinks in the wall of demand are very small at this point.

  52. 52
    Sambone Says:

    Overall market looks like it wants to go red.

  53. 53
    Nicky Says:

    The only comment I have seen for tomorrow is that we should see a bigger build in wti and rbob than consensus.

  54. 54
    Brian08 Says:

    #49: I agree Z…There is no reason that the stuff that we all own should be gettin’ woodshedded like it is with this broad market…I’m probably making a mistake by lightening up, but rationality has taken a back seat…

    #50: That’s odd…It was totally coupled with the market for the past few sessions…At least its managing to hold up now with the market falling out…I’m hoping that there’s enough time for my DECs – VLO 70s and COP 85s…

  55. 55
    Sambone Says:

    10:49 am EST

    Nymex Crude Rises Above $96 On Weaker Dollar, Cold Weather

    By MATT CHAMBERS
    Of DOW JONES NEWSWIRES

    [Dow Jones] Nymex crude goes on a chart-based, or technical rally, once it gets through resistance at $95.90. Jan crude +$2.04 at $96.68 after rising as high as $96.75, the highest for a front-month contract since Nov. 8. The dollar and colder weather helped prices up initially, and then momentum buying took over. “The latest move is technical and related to the break above resistance at $95.90; however, volume is still light, pre-holiday,” said Addison Armstrong of TFS Energy Futures.

  56. 56
    Nicky Says:

    Well it was either crazy at 50 or its crazy now at 100. But if we are going to 105 tomorrow with everyone on vacation would you trust it?

  57. 57
    Brian08 Says:

    Not a snowballs chance in hell Nicky…Have like 2 contract volume tomorrow…

  58. 58
    Nicky Says:

    #50 Gold has fallen back from 849 to 773. WTI has gone up.
    The dollar index put in a short term bounce too – very small I agree but wti was not following.
    Energy stocks I am sure will just be getting canned along with the broader market.

  59. 59
    Nicky Says:

    It was Z that said 105 not me…

  60. 60
    zman Says:

    Nicky, no its just a lack of volume but I’ll be happy to cash out of some calls if we go over $100 as the equities will pop on the same rational.

    Interesting re oil. They are looking for 800,0000 build, no? Bigger than that with increased refinery util (as most people are expecting) would mean another record size imports load…they rarely come in twos.

  61. 61
    Nicky Says:

    Consensus:

    Crude: +0.8mbbls, Gasoline: +0.7mbbls, Distillate: -0.4mbbls

  62. 62
    Nicky Says:

    Fed Minutes at 2pm. Dow getting very close to giving a major sell signal…..

  63. 63
    zman Says:

    I wasn’t saying $105 tomorrow but that would be in the technical cards in coming weeks and on everyone’s mind if we didn’t bounce off $100.

    Scenario goes something like this…imports drop next week on fog in blocking up the HSC while refiners continue to boost activity and we see a big draw on crude to new lows for the 4Q and wallah, $105. Just thinking out loud but that would do it but we wouldn’t be there for any length of time, just long enough for me to sell out of some oil stuff and rotate to more the more gassy side.

  64. 64
    Nicky Says:

    Perfectly feasible Z – we should see a spike to finish this move…

  65. 65
    Nicky Says:

    Out of interest if distillates is popping on cold weather then why is ng falling again?

  66. 66
    zman Says:

    N – total different regions of the country dominate NG vs HO usage. I said NG would fall last week. Temps in natural gas land were above normal while they were normal in the heating oil consuming regions.

    Gas weighted degree days:
    111 this week versus 123 in the prior week and down from 118 last year when storage change was 0.

    Heating oil weighted degree days:
    152 this week versus 163 in the prior week and up from 92 in the same week last year.

  67. 67
    Sambone Says:

    12:39 pm EST

    Nymex Crude Bursts Through $97/Barrel

    DOW JONES NEWSWIRES
    From Market Talk:
    [Dow Jones] Nymex crude bursts through $97/bbl amid low Thanksgiving week trading. Jan crude +$2.48 at $97.12, eyeing its all-time high of $98.62 hit Nov. 7. Jan Brent, trading as high as $95.09 came within 10c of a record, while heating oil hit a record $2.6786/gal. Prices look set to take a run at $100 and Wed’s DOE data is the next significant price driver. (matt.chambers@dowjones.com)

  68. 68
    zman Says:

    So what wisdom are we looking for in the Fed minutes this time around? They obviously aren’t going to say everything is rosy but do we expect them to give us anything on their next rate decision, inflation etc… What are people looking for that will make the market rally or fold?

  69. 69
    Nicky Says:

    Z – the weather I have been looking at shows an arctic front crossing the whole country later this week.

  70. 70
    Nicky Says:

    Dow absolutely HAS to hold 12845 on a closing basis.

  71. 71
    Nicky Says:

    I think the Fed’s hands are now tied.

  72. 72
    zman Says:

    N – Those numbers I gave are for last week’s weather which will impact this week’s EIA reports.

    The CPC is show gw-hdds going to 127 this week (in line with levels seen two weeks ago when we got the 9 Bcf draw…but it is much warmer than normal) and hence my expectation of a rounded top for nat gas storage

    while oil goes to 157 which is slightly below normal but level with the last two weeks of cool weather.

    I’ll put some graphs in tomorrows post.

  73. 73
    Nicky Says:

    I personally think we have lower lows out there with or without a bounce first. I am looking at 1418 spz then 1405.

  74. 74
    Sambone Says:

    Z – 90% of the street thinks that Ben will lower. The crowd is nervous and looking for anything to put a postive spin on. I’m looking for an ugly 08.

  75. 75
    Sambone Says:

    Hmmm, traders are back from lunch and they are taking it red. Don’t worry, be happy because GOOG and APPL are still up.

  76. 76
    Sambone Says:

    217 point swing so far today.

  77. 77
    Wyoming Says:

    “When you get this kind of problem in this kind of environment, prices will rise,” said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.

    On the VLO refinery shut down and Shell oil sand fire.

  78. 78
    Nicky Says:

    My God and you think PF is paid to make those sort of inane comments!

    Z you are absolutely right – I remember you said ng would fall to the mid 7’s this week. Do we start to rally on the back of the bad weather though?

  79. 79
    zman Says:

    N – tough call…two more pathetic storage numbers, how bad is the weather going to be…maybe they will revise the CPC HDD # higher. Generally cold traders make for rising prices. Was thinking we were going to test 7.20. Stocks sort of care but not too much. on that bounce SWN long maybe not bad play…think it plays out next week. Dec 1 had seen some severe chill in Chicago..,. is that still in the cards…again, cold traders yada yada yada.

    Re PF: you have to admit he has not been wrong.

    BTU note that it tried to rally and failed with gas and then the market falling…people really want to own that one and it will pop but I’m waiting.

    By the way, somebody just sent a note over saying I don’t know how to do puts. Wow, some people have some seriously short time lines and memories. This isn’t a day trading op and two weeks ago these same kinds of guys were telling me they just had their best day ever. jeeze

  80. 80
    zman Says:

    so Fed in 10 minutes?

  81. 81
    Nicky Says:

    Aye Z but he doesn’t appear to have caught the move in the trades he gives.

  82. 82
    zman Says:

    N – hard for me to tell but I remember you have pointed out the discrepancy between his comments and his end of post levels (buy gasoline at $xxx) several times.

    He said he was bearish about two weeks ago at 97 (and one of his traders since confirmed 97 was their level for a top) with PF seeing that as the level that kills the economy…haven’t checked his thoughts of late.

  83. 83
    Nicky Says:

    My best guess for energy tomorrow is that it drops even if we pop first!

  84. 84
    zman Says:

    Energy being oil, NG, the stocks or all 3?

  85. 85
    Sambone Says:

    Matt has a problem repeating himself.

    1:27 pm EST

    Nymex Crude Bursts Through $97/Barrel

    By Matt Chambers
    Of DOW JONES NEWSWIRES

    NEW YORK — Brent crude oil futures touched a new intraday record high Tuesday as the dollar fell, giving more pricing power to traders using other currencies.

    Colder weather in the U.S. Northeast, the world’s biggest heating oil market, and positioning before key weekly U.S. inventory data due Wednesday from the Department of Energy also boosted prices and helped push New York Mercantile Exchange heating oil futures to a record.

    January Brent crude on the ICE futures exchange rose as high as $95.23 a barrel, an intraday record for a front-month contract. The contract was recently up $2.31 at $94.59 a barrel.

    Light, sweet crude for January delivery on the New York Mercantile Exchange was recently up $2.28, or 2.4%, at $96.92 a barrel after rising as high as $97.57, the most for a front-month contract since Nov. 8. Nymex front-month crude hit a record $98.62 on Nov. 7.

    “The rise in crude is relentless, and it’s still going higher for the same reasons: the dollar keeps getting crushed, supplies are tight going forward and there are geopolitical issues’ that could crimp the flow of oil if they worsen, said Tom Bentz, an analyst at brokerage BNP Commodity Futures in New York. “I can see us going well over $100.”

    The dollar fell to a record low as a rebound in U.S. stock markets reduced safe-haven flows to the greenback and returned the focus to lower U.S. interest rates.

    The Northeast, which got early snow in many regions Monday, is forecast to get colder-than-normal weather from Nov. 25 until at least Dec. 3, according to the National Weather Service’s mid-term outlook forecasts. The expectations come as most forecasters are predicting a warmer-than-normal winter.

    Winter heating demand, both through heating oil and electricity in countries that use fuel oil, is expected to make for a big supply gap in the fourth quarter, according to many predictions. How far temperatures deviate from normal, in either direction, will play a big part in price moves in coming months.

    “The forecasts for colder weather are giving it a boost, at least until somebody comes out and downgrades the forecast” to warmer weather, said Michael Cambria of Eagle Futures, on the Nymex floor.

    Front-month December heating oil rose 6.62 cents, or 2.5%, to $2.6704 a gallon after hitting $2.6810, a record for a front-month contract. December reformulated gasoline blendstock, or RBOB, rose 4.64 cents, or 2%, to $2.4280 a gallon.

    Price direction in the near term will likely be decided by the DOE data, which is expected to show a 700,000-barrel build, according to the mean estimate in a Dow Jones Newswires survey of 16 analysts. Distillate stocks, which include heating oil and diesel fuel, are expected to fall by 300,000 barrels while gasoline stocks are seen rising by 700,000 barrels. Refinery use is seen growing by 0.4 percentage point to 88.1% of capacity.

    Despite the expectations for growing crude stockpiles, some are positioning for a slide, which would be price positive.

    “This morning’s push to above one-week highs amidst new lows in the U.S. dollar and a likely sizable crude stock draw in tomorrow’s data would appear to position January (Nymex crude) futures for a test of record nearby futures highs,” said Jim Ritterbusch, president of trading advisory firm Ritterbusch and Associates.

    —By Matt Chambers, Dow Jones Newswires

  86. 86
    Nicky Says:

    Last Fed cut was a ‘close call’.

  87. 87
    Nicky Says:

    oil, distillates and rbob. i am on the fence re ng for now!

  88. 88
    Sambone Says:

    N – No need to be on the fence, GOOG and APPL are up! LOL

  89. 89
    zman Says:

    market tanking: something in the minutes I take it?

    N – I can write some more on NG to get you there but there’s no hat in it for you.

    Looking at oil it’s up to imports again and utilization.

    RBOB could go either way…people seem to be getting sensitive to $3+ at the pump.

    HO: probably a bigger draw than that.

    Thanks for playing today, missed the healthy debate even if you are a perma-bear, lol.

  90. 90
    Sambone Says:

    Thar she goes.

  91. 91
    Sambone Says:

    Wow, Financials getting killed.

  92. 92
    Sambone Says:

    WB has almost a 7% yield now.

  93. 93
    Nicky Says:

    Fed unlikely to cut and oil takes off – again that makes no sense.

  94. 94
    Nicky Says:

    Z – you have to admit the bearish path has been right on with the broader market off late.

    I am anticipating a very good rally soon but from lower levels.

  95. 95
    Nicky Says:

    We need to see a washout and we haven’t yet.

  96. 96
    Wyoming Says:

    WB has some decent insider buying; CEO 100k and a director @ 37k. Hope they hedged.

  97. 97
    zman Says:

    N – 93 …CNBC just said liklihood of a cut according to the bond market 91%. Oil running on technicals now, not dollar, obviously not fundies….they want $100.

    N – 94 & 95 absolutely. bunch of idiots made bad loans, erased a couple of years of earnings. Not my sector and unless we actually see a recession, with global ramifications it won’t impact demand. Even if we do, it won’t unhinged demand growth, just slow it. and on the NG side, no impact. we need a capitulatory down day…money looks like it’s once again flowing away from the financials to what is working …ENERGY

    bet you WY has another leg down…no end in site to housing pain.

  98. 98
    Wyoming Says:

    Z,
    Does China have an SPR similar to us?

  99. 99
    zman Says:

    China has announced the creation of one, size will be, um, large.

    Russia may have a small one and I saw they were going to create one.

    India is rumored to be in consideration stage but I think there is no way for them to get it done.

  100. 100
    zman Says:

    Stocks feeling the weight of down 100 djia now, selling off a bit despite the $3.40 rally in crude.

  101. 101
    Wyoming Says:

    Just thinking about how a “Black hole” can get blacker. Thanks.

  102. 102
    zman Says:

    Wyo – right and one of the plays there will be the met coal for making all that steel for the above ground tank portion. BTU.

  103. 103
    Sambone Says:

    Nicky’s hero

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

  104. 104
    Wyoming Says:

    From my perspective, the JV squad is playing consistently this week.

  105. 105
    redjack Says:

    DRYS in a free fall

  106. 106
    Nicky Says:

    My feeling is the Fed will not cut – inflation under control when oil is at $100???? If they were on the fence last time there is not a hope in hell for a December cut.

  107. 107
    Sambone Says:

    N – Agreed, but Wallstreet doesn’t.

  108. 108
    zman Says:

    RJ – I’ve just been dead wrong there. Unlike energy, these can’t go up without the broad….cheap and getting cheaper never applied so much to a group. There will come a time to buy and hold but damned if I know when that is.

    Fed excludes food and energy…Plus they’d have to support the dollar to slow or ease oil and they aren’t doing that.

  109. 109
    Nicky Says:

    Well S the market is selling off so do they really believe it either?

  110. 110
    Nicky Says:

    Everything indicates that may be about to change Z

  111. 111
    zman Says:

    if you support the dollar how do you export your way out of a recession?

  112. 112
    Sambone Says:

    Fed + US$ = Lip service

  113. 113
    Nicky Says:

    thats down the line. For now the $ should be about to put in a low.

  114. 114
    zman Says:

    112,113 agree. on a call for a bit.

  115. 115
    Nicky Says:

    As I have just seen someone else comment – the dollar weakness is a fraction of oil’s strength! A lot of the move this week is likely to be short covering – just food for thought.

  116. 116
    apbd Says:

    Bloomberg says it all:
    http://www.bloomberg.com/apps/news?pid=20601087&sid=aJqdkUpzOMMY&refer=home

    apbd

  117. 117
    Popeye Says:

    I go for a bike ride and leave you guys in charge and look what happens.

  118. 118
    Nicky Says:

    Oil marching up after the close.

  119. 119
    Nicky Says:

    WTI is clearly in iii up (of v).

    The minimum upside objective for wave v is the 98.62 record continuation high, A possible wave v target is 105.27 where wave v equals wave i.

  120. 120
    Nicky Says:

    Asia should take it up overnight to the minimum target.

  121. 121
    Nicky Says:

    I suppose someone is now going to say that wti is going up because the broader market is going up!

  122. 122
    Sambone Says:

    Dow now slightly postive. 268 point swing today or 2%. “What me worry”?

  123. 123
    Sambone Says:

    Hey Nicky, how do you like the charts on GM and FRE? That’s what I call a “waterfall” chart.

  124. 124
    Nicky Says:

    a ‘waterfall’ is such a dangerous pattern….

    PPT at work into the close I don’t doubt.

  125. 125
    Nicky Says:

    interestingly CNBC reporting that the oil shares are responsible for this late day rally

  126. 126
    zman Says:

    ok I’m off, fantastic story report on the way.

  127. 127
    zman Says:

    I will refrain from saying that.

  128. 128
    Sambone Says:

    N – PPT has been absent lately.

  129. 129
    Sambone Says:

    Crazy market, looks like it wants to go down now.

  130. 130
    zman Says:

    Nicky I think we know why oil is rising and it’s not the djia.

    1) senior traders are out
    2) dollar is weak and the move gets exaggerated
    3) I said it would, lol

    this is very bad from a cost standpoint as Apache pointed out in a speech yesterday although it’s nice if you run a service co.

  131. 131
    Sambone Says:

    Need a Tini after this roller coaster ride.

  132. 132
    ram Says:

    What’s a Tini?

  133. 133
    ram Says:

    Apparently it was a very obvious answer and that is why no one responded. I “googled” “Tini Time” and the first response was “Colleen Graham’s Cocktails Blog”. Ahhhh, Martini’s!

  134. 134
    Nicky Says:

    Z re #130 – the one that makes the most sense is 3) you said it would!

    As said earlier crude move is far great than dollar.

    Heat crack is no higher than a week ago so cold weather is garbage.

    I suspect length is entering but no where no as strong as the length that is exiting! Therefore when the rug is pulled from under this market there will be blood on the streets.

    The economic news has to improve or oil will tank.

  135. 135
    ram Says:

    HI NICKY. #70 did come true. Are we still bouncing above a trend line?

  136. 136
    zman Says:

    oil trading 98.80; hit 99.29 earlier.

  137. 137
    Nicky Says:

    Asia running it up Z which is pretty predictable.

    Ram – for now we hold above that key level. That said Dow Transports have already broken the equivalent level.

  138. 138
    Nicky Says:

    It feels truly stupid to me when they run it up like this overnight.
    So we are all supposed to wake up in the morning and say wow it hit 100! Big deal when its for no reason.

  139. 139
    zman Says:

    I think we kiss $100 and retreat if we don’t get a big crude draw.

  140. 140
    zman Says:

    unless of course Cushing falls and then they will fight like hell to close it in trip digits

  141. 141
    TTupp Says:

    is anyone here smarter than me, and would be able to figure out what portion on the dow’s gain is attributable to XOM’s huge move (looks like at least 4 SD’s).

    when you factor tht out loks pretty grim– im thinking we see aug lows.

  142. 142
    TTupp Says:

    i get 31 pts. with the rest of the components ceteris paribus lol

  143. 143
    zman Says:

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    The pair said they tentatively expected to deal to be completed by 27 November.

    However, they said the deal remained under investigation by the UK’s Office of Fair Trading.

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