11
Dec

Tuesday

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Commodity Watch

  • Crude Oil. Closed off $0.42 to $87.86 after trading in a dollar weakness and fog supported way early in the morning followed by a recession fearful way in the afternoon hours. This morning crude is trading up $0.80.
  • Early Read on Inventories (from the Dow Jones survey):
    • crude up 100,000 barrels,
    • gasoline up 1.3 mm barrels, and
    • distillates up 500,000 barrels.
  • Early read from Alaron: 3 mm barrel draw on crude, 1.5 mm barrel build in gasoline and 2.0 mm barrel build in distillates.

  • Norway's finance minister says output may fall for environmental reasons. Kristen Halvorsten, Norway's finance minister and leader of the local socialist party would like to look into adding new taxes to oil and gas production to help comply with new environmental treaties by deliberately reducing production. Norway produces about 2.5 million bopd and is the worlds 5th largest exporter of oil. In her own words:
"One can imagine a situation in the future where oil, in the worst case, is prohibited and valued at zero,"
  • Imports: HSC was closed yesterday for fog and is likely to see more fog closures in coming days as its just that time of the year.
  • Sudan Watch: rebels attacked a Chinese oil field near Darfur.

My army attacked the oilfield in Kordofan at 6 am (0300 GMT)," JEM leader Khalil Ibrahim told Reuters on Tuesday. "We defeated 1200 Sudan Army soldiers who were protecting the field. We now have control of the field." Comment: Sudan has made no official comment and I have not seen anything out of CNOOC as of yet.

  • Alaska Watch: state budget numbers show oil production from the North Slope (which feeds the Alaska pipeline) is set to slip again next year. Production peaked in 1988 at ~ 2 mm bopd. By 2002, this had fallen to 1 mm bopd. This year production is seen totaling 731,000 bopd and is expected to fall to 709,000 for fiscal year 2009. 
  • Natural Gas closed down $0.12 to $7.03. This is a pretty critical level for gas as you can see here and here. This morning gas is trading up a dime.
  • Imports: LNG imports were essentially flat on the week at 0.65 Bcfgpd (still near the lows for 2007). Canadian imports were up 0.4 Bcfpg to 8.5 Bcfpgd. Total gross imports were down 0.7 Bcfgpd, which is the same as last week's YoY deficit.

Cracks Spreads Continue to tread water. 4Q numbers are in most cases going to be down from year ago levels and while this should come as no surprise a rebound in cracks has faltered in recent weeks. I just don't see a lot of reason to get excited about the group yet despite its relative cheapness. With another draw in crude stocks likely and expected product inventory builds in this week's EIA report I would not expect a sharp rebound in margins for the group. I think we are setting up for a great buying opportunity as margins are very likely to expand in late winter (earlier if we get more cold weather in Jan/Feb) but I just am not enthusiastic from a call buying perspective at present.

cracks-120707.jpgclick to expand

Holdings Watch:

CALLS:

  • Out DO $115 December Calls for $13.80 up 294%
  • Out half of my 2x position in APC Dec $60 calls for $3.00, up 67% to average cost of $1.80.

PUTS: No Action

Stocks: No Action

 

Odds & Ends

Analyst Watch: Nada

Housekeeping Watch: I will be out of the office today from 11:00 CST on. 

47 Responses to “Tuesday”

  1. 1
    zman Says:

    HSC at least partially open this am.

    http://www.chron.com/disp/story.mpl/front/5368050.html

  2. 2
    rseidman Says:

    Good Morning Z
    Are we here alone?

  3. 3
    irished Says:

    no

  4. 4
    Sambone Says:

    I’m here

  5. 5
    apbd Says:

    What about me? I’m here. And Sambone says I’m a funny guy.
    apbd

  6. 6
    rseidman Says:

    OK! Is CHK Dec calls going to shine?

  7. 7
    jiveyjr Says:

    nope, I’m here…nuttin to contribute tho

  8. 8
    zman Says:

    had to step out for a bit. nice to see continued green from group in face of down or up (today) oil.

    CHK still inching higher, I think it’ll be fine longer term but the trepidation in the stock is the possibility that NG doesn’t hold the $7 mark. Fail that and we could easily see Jan gas tumble to $6.50 and then the Dec $40s are likely to be toast. I hold the Dec 40s and the Jan 37.50s and $40s. I think CHK will do well if gas stays over $7 because the stock is underperforming to the group and will play catch up. Thursday’s gas number needs to be triple digits to support gas for now and we need to see some more cold weather.

  9. 9
    zman Says:

    ZTRADE: Out half HAL December $37.50 calls for $1.35 for a 10 day double. Time to play with house money on a name like this as we approach an uncertain reaction to today’s Fed decision.

  10. 10
    Sambone Says:

    9:54 am EST

    Nymex Crude Rises Before Fed Rate Decision

    By Matt Chambers
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures were higher Tuesday before a Federal Reserve meeting where a quarter-percentage point interest cut is expected to be agreed on.

    Analysts say a bigger than expected cut could drive the dollar down further, buoying crude prices. Dollar weakness has been a big factor in crude’s recent run-up to near $100 a barrel, increasing the spending power of traders using other currencies and blunting the potential demand erosion of higher dollar-denominated oil prices.

    “People are waiting for the Fed decision and whether it will be able to pull crude prices out of their range” of between $85.82 and $90.23 a barrel that they have been trading in since the start of December, said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago. “If there was a 50 basis point, cut it could drive crude above $91; it will be seen as making crude demand more rambunctious’ because it increases the spending power of consumers.

    Light, sweet crude for January delivery on the New York Mercantile Exchange was recently up $1.31, or 1.5%, at $89.17 a barrel. Brent crude on the ICE futures exchange rose 90 cents to $88.94 a barrel.

    Still, not all analysts are expecting a bigger drop to be helpful for crude prices because of what it might say about the U.S. energy demand.

    “A counter argument can easily be offered in which a large half-percentage point reduction in rates would generally indicate concerns over a rapidly weakening economy,” said Jim Ritterbusch, president of trading advisory firm Ritterbusch and Associates in Galena, Ill. “As a consequence, we feel that the odds favor a lower close today regardless of the Fed’s decision.”

    The decision is expected around 2:15 p.m. EST.

    Beyond the Fed decision, traders will look to Wednesday’s weekly inventory statistics from the Department of Energy for further direction.

    U.S. crude inventories are seen building by 100,000 barrels in data due Wednesday from the Department of Energy, according to the mean forecast in a Dow Jones Newswires survey of analysts. Gasoline stockpiles are expected to grow by 1.3 million barrels and distillates, which include heating oil and diesel, are seen growing by 500,000 barrels. Refinery use is expected to grow by 0.1 percentage point to 89.5% of capacity.

    Front-month January reformulated gasoline blendstock, or RBOB, rose 2.29 cents, or 1.%, to $2.273 a gallon. January heating oil rose 2.26 cents, or 0.9%, to $2.50 a gallon.

    —By Matt Chambers, Dow Jones News

  11. 11
    zman Says:

    Dollar up a little, market off a little, I assume everyone is now going to be disappointed with a 25 bps cut?

  12. 12
    zman Says:

    ZTRADE:

    Exited second half of APC December $60 Call position for $3.80, up 111% to average costs.

  13. 13
    Sambone Says:

    Dow jones reporting that pipelines in OK shutdown. Isn’t Cushing in OK?

  14. 14
    Popeye Says:

    FCEL is up 12.5% today after recovering from recent losses.

  15. 15
    zman Says:

    Sam – yes

    P – there’s an area I should pay more attention to, used to trade Ballard Power…does the industry have actual revenues now.

  16. 16
    Popeye Says:

    One of our Canadian brothers here is the authority on that Z. I dumped my calls some time ago unforunately. I have no idea what is driving the price today.

  17. 17
    zman Says:

    P – a very interesting play at some point will be a battery coming out of APC if they still have it. Kerr-McGee was developing a very impressive battery before they were acquired. Unless APC decided to punt it and I missed it then I would suspect that it could be a very big thing and maybe a spin out some day.

  18. 18
    TTupp Says:

    Canadian brethren unite! lol

  19. 19
    TTupp Says:

    has anone here bought stocks off the pink sheets?

  20. 20
    Sambone Says:

    The great PF

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

  21. 21
    Sambone Says:

    T – yes

  22. 22
    Sambone Says:

    I own COSWF

  23. 23
    TTupp Says:

    sam-

    i was looking at lafarge out of France, lfrgy. i can trade on the CAC, and also hold mostly euro & CAD, but i was curious how this worked. thse are traded otc right? could you maybe share some thoughts about trading pink sheets.

  24. 24
    TTupp Says:

    That’s scary, why don’t you buy it on the TSX in a strong currency (CAD). you can trade canadian markets right?

    although it looks like they went to the pink sheets in September since the volume has gone from 1m/d to 100k/d.

  25. 25
    Sambone Says:

    T – I use this site for info.
    http://www.pinksheets.com/pink/index.jsp

    You won’t be able to get minute by minute quotes on Pink sheet stock. The stock I own is Canadian Oil Sands Trust which trades on the Toronto exchange. COSWF is the pink sheet stock which trades OTC (Over the counter). There are market makers that make a market in the stock. The reason that it is not listed is because COS-TX doesn’t want to do the fileing with the US exchanges. The only thing you have to watch is “Blue sky” regs. Talk to your broker about that.

  26. 26
    Sambone Says:

    Three pipelines down in Cushing, OK for a total of 410,000 b/d because of power outages due to the recent ice storm. No time set on being back up yet.

  27. 27
    TTupp Says:

    how can something so crucial have no emergency power backup??!!

  28. 28
    TTupp Says:

    blue sky means when a prospectus is okyed by all levels for final listing by SEC/ IDA in my books. can’t you trade on tsx?

  29. 29
    kiaora Says:

    Z- What’s your thoughts on YGE

  30. 30
    TTupp Says:

    i guess your broker usually rips you off in currency conversion situations… i think they are really starting to gouge, here at the bank and i needed usd so i exchanged cad and the spread was 5%!!!!! i almost choked the teller! in my interactive brokers acct is like a few cent per $1000

  31. 31
    Sambone Says:

    Blue sky = State registration. No don’t trade TSX, too much hassle.

  32. 32
    TTupp Says:

    kiaora- z’s out for the day. you realize yge has a p/e of 672 right lol? look at tsl ‘s growth prospects vs its current price, B/S & I/S; much better company if your hellbent on Chinese solar.

  33. 33
    TTupp Says:

    i don’t trade it either lol. you should see Canada’s sorry excuse for an options exchange too

  34. 34
    ram Says:

    Was NICKY or someone else looking for a short term top on 12/11?

  35. 35
    aaatest Says:

    According to thomson, analysts have much higher numbers on YGE, 672 pe? Not what i see

  36. 36
    kiaora Says:

    T thanks, got out.

  37. 37
    Sambone Says:

    YGE – Street expecting $3.25 in 07, and $6.52 in 08. Year ends in December. 2 say Buy, 2 say Buy/hold, 3 say hold, and 1 says Hold/sell. BAC has a neutral rating. I’m not sure those numbers are good.

  38. 38
    Sambone Says:

    1:17 pm EST

    Nymex Crude Touches $90/Bbl On Storm, Fed

    DOW JONES NEWSWIRES
    From Market Talk:
    [Dow Jones] Nymex crude touches $90/bbl, supported by pipeline outages associated with the Cushing, Okla., delivery point for Nymex futures after an ice storm, and also by an expected quarter-percentage point cut in US interest rates. Nymex crude now +$1.84 at $89.70 after rising as high as $90. Declines in the dollar are also helping. (matt.chambers@dowjones.com)

  39. 39
    Sambone Says:

    .25

  40. 40
    ram Says:

    What’s the verdict?

  41. 41
    Popeye Says:

    What happened?

  42. 42
    sane Says:

    geeze the dow fell off the cliff

  43. 43
    Sambone Says:

    Fed cut only 25 bps, market don’t likum.

  44. 44
    ram Says:

    SAMB – Would it appear that the large inst. money will stay away now, basically settle out by 12/21 and come back after 1/1?

  45. 45
    Sambone Says:

    Ram – Overall market, IMO this is a “Stockpickers market”. I think we’ll see this up/down through the end of the year. The first 10 days of January usally tell us what the market will do the rest of the year. Remember, it will be a new year and portfolio managers will not have to window dress like they have to do at year end. The question you have to ask is where to put money. We’re seeing the 10 year treas going up (Flight to safety).
    Oil – I think that energy names will still be up and down with the market and the price of oil. I don’t see a barrel going to 80, nor 100 before year end.
    Hope that helps.

  46. 46
    Sambone Says:

    TS Olga is currently over Puerto Rico, and wind shear has increased. If Olga dosn’t get ripped apart, then it will track towards Mexico.
    Big “Noreaster” to the US Northeastern seaboard on Sunday. Expecting 1 to 2 feet of white stuff.

  47. 47
    Sambone Says:

    2:35 pm EST

    Nymex Crude Above $90 On Fed, Pipelines

    By MATT CHAMBERS
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures rose above $90 a barrel Tuesday as ice storms stopped flow in key U.S. pipelines and traders bet on a Federal Reserve interest rate cut in a decision expected around 2:15 p.m. EST.

    Light, sweet crude for January delivery on the New York Mercantile Exchange was recently up $2.50, or 2.9%, at $90.36 a barrel after rising as high as $90.50. Brent crude on the ICE futures exchange rose $2.18 to $90.22 a barrel.

    The Fed is expected to cut rates by a quarter percentage point, but analysts say a bigger-than-expected cut could drive the dollar down further, buoying crude prices. Dollar weakness has been a big factor in crude’s recent run-up to near $100 a barrel, increasing the spending power of traders using other currencies and blunting the potential demand erosion of higher dollar-denominated oil prices.

    “People are waiting for the Fed decision and whether it will be able to pull crude prices out of their range” of between $85.82 and $90.73 a barrel that they have been trading in since the start of December, said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago. “If there was a 50 basis-point cut it could drive crude above $91; it will be seen as making crude demand more rambunctious” because it increases the spending power of consumers.

    Still, not all analysts are expecting a bigger drop to be helpful for crude prices because of what it might say about U.S. energy demand.

    “A counter argument can easily be offered in which a large half percentage-point reduction in rates would generally indicate concerns over a rapidly weakening economy,” said Jim Ritterbusch, president of trading advisory firm Ritterbusch and Associates in Galena, Ill. “As a consequence, we feel that the odds favor a lower close today regardless of the Fed’s decision.”

    A massive power outage in Oklahoma following an ice storm has suspended operations at major Midwestern pipelines, including three pipelines leading in and out of Cushing, Okla., the nation’s largest oil storage hub. Power could be out for up to 10 days, Oklahoma Gas and Electric said.

    Enbridge Inc. (ENB) shut down its 170,000 barrel-a-day Ozark pipeline after losing power, severing the main route for oil to travel from storage terminals in Cushing to refineries in the Midwest. The company’s 125,000 barrel-a-day Spearhead pipeline, carrying Canadian crude to Cushing, is also down, said spokesman Bill Stephens.

    The Osage crude pipeline, which carries 115,000 barrels a day from Cushing to El Dorado, Kan., is also down, Magellan Midstream Partners LP said Tuesday.

    Beyond the Fed decision, traders will look to Wednesday’s weekly inventory statistics from the Department of Energy for further direction.

    U.S. crude inventories are seen building by 100,000 barrels in data due Wednesday from the Department of Energy, according to the mean forecast in a Dow Jones Newswires survey of analysts. Gasoline stockpiles are expected to grow by 1.2 million barrels and distillates, which include heating oil and diesel, are seen growing by 300,000 barrels. Refinery use is expected to grow by 0.1 percentage point to 89.5% of capacity.

    Front-month January reformulated gasoline blendstock, or RBOB, rose 5.30 cents, or 2.4%, to $2.3031 a gallon. January heating oil rose 6 cents, or 2.5%, to $2.5374 a gallon.

    —By Matt Chambers, Dow Jones Newswires

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