19
Dec

Wednesday – Oil Inventory Day

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House Passes Streamlined Energy Bill. The House passed yesterday and President Bush is going to sign it into law today. Major takeaways from the bill:

  • Corporate Fuel Economy CAFE Standards Increase to 35 MPG ......by 2030. Big deal. Increases do not begin until 2011. We need better fuel efficiency more than any piece of energy related legislation, even more than unlocking drilling in some place you'll never go where the animals would barely know the wells are there after they're drilled but I digress. This is week legislation and Congress touts it as a victory. Well, I guess the Dingle of Detroit did his job. Lousy.
  • Renewable Fuel Programs. Calls for a 600%- increase in Biofuel production from 6.5 billion gallons mandated at present to 36 billion.
    • Places a cap on ethanol grown from corn at 15 billion which is roughly double what the U.S. will produce this year. Incredibly inflationary and a poor use of corn and acreage.
    • The rest to come from cellulosic (non-food) sources. Hello (STKL)!
  • Energy Efficiency - touches everything from light bulbs to appliances to building practices. I have not seen the details on this other than the light bulbs but I applaud the effort. Again, this will be inflationary.
  • Incentives For Renewable Development and Use. Wind, geothermal, solar all to benefit.
  • What's Not In The Bill. Punishment of "Big Oil" for doing its job. Hard to believe it was in in the first place. How can these guys say things like "get the U.S. off foreign oil (good luck by the way) and then go about lambasting oil companies like they sell cigarettes to your toddler? Anyway, just thought you should know what your tax dollars did and did not do over the last couple of weeks.
  • Oh that reminds, the latest federal budget that also will make its way to the president's desk this week contains 8,983 congressional earmarks with an aggregate price tag of $7.4 billion. Nice. I wonder what kind of new energy efficiencies we could come up with for $7.4 billion? 

Commodity Watch

  • Crude oil. The February contract (CL/G8), now the front month, traded off $0.97 to close at $90.08 after a brief "Turkish rally" yesterday morning. This morning crude is trading flat as it awaits the EIA inventory report.
  • Iraq/Syria pipeline to reopen. The two countries agreed to re-open the 300,000 bopd line connecting the Kirkuk oil fields in northern Iraq with Syria's port city of Banias in the Med. The pipeline was actually blown up by the U.S. in 2003 and has been opened and bombed (by insurgents) numerous times since. Syria's own production is on the decline while, like most in the region, its domestic demand is on the rise.
  • French refinery worker strike is spreading. Now reported to include a 120,000 bpd XOM refinery in addition to 5 (TOT) plants.
  • EIA Oil Inventory Expectations (from the Bloomberg survey)

exp-121807.jpg

Zcomment: the size of the draw has been coming down in the various surveys since the week started. This week it's really a crap shoot as we don't know what if any impact fog closures of the HSC had last week. I continue to expect crude inventories to fall well into 1Q however further evidence of OPEC quota topping is filtering out and the valley may be less shallow than I previously thought. Also, obviously much depends on weather. As far as the size of the expected crude draw falling I smell rat as the once bullish, now bearish crowd are now proffering large draws in an attempt to pull the average down and create a disappoint. Gasoline continues to build as more blend stocks are added and despite high demand. Distillate down 0.8? Sure, why not? Oil prices are trading with the minute to minute consensus of whether or not the U.S. is headed into depression and the fundamentals only come into play with large deviations from "expectations".  Unless we get negative job growth, I would not expect a slowing U.S. economy still kill oil demand, as you can see from the following chart it has not killed demand in the past...that takes significant negative job growth.

gdp-vs-oil-demand-121807.jpg

  • Natural Gas traded up a dime yesterday to $7.14 and is also trading flat this am.

 

 

Holdings Watch: no changes.

Stocks of Interest:

Gastar (GST), or as I now to them "the incredibly ever shrinking stock", announced 2 successful wells: 1 additional successful deep Bossier and 1 Knowles lime well.

    • The deep Bossier well (the Wildman Trust #3) was an offset to an earlier 2007 success and had approximately 50% more pay than the discovery well (the Donelson #3) which IP'd at 20,000 Mcfepd in August and was producing 13,700 Mcegpd when they reported their third quarter results in mid November.  GST expects the 54% NRI well to be online in early January. (CHK) owns the remaining interest in this well.
    • The Knowles Lime well (LOR#3) will be Gastar's first stimulated horizontal lime test and encountered 155 feet of pay. They plan to frac it by early January. GST holds a 37.5% NRI here. A previous horizontal lime well flow 8,000 Mcfepd (gross) in 
    • They came up dry on a Yegua test
  • Production growth is not the problem: being a micro cap with a high debt load in the current market environment is. Funds are registering shares to sell by the day here in advance of year end.
    • 3Q production was 22,700 Mcfepd, up 66% YoY and 50% sequentially!
    • Costs are falling as you would want on a unit basis with LOE now running under a buck per Mcfe.
    • Although 4Q is expected to be down due to a combination of natural declines in its gulf coast ops and curtailments due to low prices in its Wyoming unit you can see what a pop 1Q08 will enjoy if the Donelson turns out to be the analog for the Wildman when/if it comes in. Big PR probably all typed up already on this one.
  • This is one to consider for a trade in the last days of 2007.

(CRK) announced a "monster well" 8,400 Mcfepd test at its first horizontal test in the Cotton Valley. That's quite a bump of your more typical 1,500 Mcfgpd IP (vertical) and serveral 3 and 4 mm/d horizontals and I'd expect that even with the $4.8 million cost of the well they come in with finding costs well under the $2/Mcfe mark that is typical of vertical wells in the play. Other players here include (DVN), (GDP), (EXCO) but CRK has the most exposure to the Cotton and more results like this would be a game changer for them.

Odds & Ends

Analyst Watch: (BP) cut to hold at JP Morgan, (GRP) cut to hold at B of A.

Friedman Billings Raises Oil Price Forecast to $80 for 2008 from $60. Out years climb to $60. Here's their reasoning.

98 Responses to “Wednesday – Oil Inventory Day”

  1. 1
    Sambone Says:

    8:40 am EST

    Crude Steady Before Oil Inventory Report

    DOW JONES NEWSWIRES

    [Dow Jones] Crude oil futures are steady ahead of data expected to show a 1.5

    million-bbl draw in US crude inventories for the week ended Dec 14. Analysts

    also see distillate inventories falling by 500,000 bbls, while gasoline

    inventories are expected to grow by 700,000 bbls. Nymex Feb crude +13c at

    $90.21/bbl. (greg.meyer@dowjones.com)

  2. 2
    Sambone Says:

    Part I

    US Oil Use Up Or Down? Depends Who You Ask

    By DAVID BIRD
    A DOW JONES NEWSWIRES COLUMN

    NEW YORK — Oil demand in the U.S., the world’s largest consumer, is either growing at modest 1.2% rate, or slipping by 0.3% — it depends on who is asked.

    The divergent views come from two of the most widely watched sources in the global oil market: the U.S. Energy Information Administration and the International Energy Agency, the energy watchdog for the major industrialized countries.

    As if the market doesn’t have enough trouble keeping the alphabet soup of EIA and IEA straight, forecasters at the two groups said they use differing methodologies to reach their opposing market views. The implications for oil prices and global economy, though, are far more important than just variances in accounting methods.

    The U.S. accounts for a quarter of global oil demand, even as China — the number two consumer — is driving worldwide growth these days.

    If the Paris-based IEA, the energy wing of the Organization for Economic Cooperation and Development, has the correct fix on demand, high oil prices are having a significant impact on consumption, especially gasoline use.

    If the U.S. EIA is correct, oil demand, including gasoline, is fairly buoyant, or at least not contracting, despite lofty prices.

    By the IEA’s measure, U.S. oil demand fell 2.7% year-on-year in October, and then fell again in November, by 0.3%.

    IEA, in its monthly Oil Market Report, published Dec. 14, said October U.S. oil demand plunged by more than 500,000 barrels a day, to 20.22 million barrels a day, with declines in gasoline, heating oil, jet fuel and other oils.

    “The weakness in gasoline demand is arguably related to both worsening economic conditions and the effects of high oil prices,” IEA said. “For the first time in two years, (U.S.) gasoline deliveries contracted both in October and November (respectively -0.7% and -0.1% year-on-year.”

  3. 3
    Sambone Says:

    Part II

    Watching For Trend
    Still, IEA said, “it is arguably too early to establish a definitive conclusion regarding the short-term outlook for U.S. gasoline demand.”

    Eduardo Lopez, IEA’s oil demand analyst, said he takes EIA’s weekly data and adjusts the figures to try to anticipate likely eventual monthly and annual adjustments to derive IEA’s figures.

    EIA, for its part, shows U.S. October oil demand narrowly below the year-ago level, but about 500,000 barrels a day above the IEA’s indication, and gasoline demand above the year-ago level.

    In November, EIA says U.S. oil demand grew by 1.2% to 20.9 million barrels a day, based on four-week data through Nov. 30. Gasoline demand managed 0.2% year-on-year growth in the month, counter to IEA’s assessment, despite retail prices which were 85% above year-ago levels.

    EIA doesn’t measure actual gasoline consumption, but tracks volumes of petroleum supplied to the market via movements from primary storage, such as refineries, as a proxy of demand.

    If EIA’s four-week November assessment holds up for the month, it would show the strongest-ever U.S. oil demand in the month and the most for any month since August. That November figure would also mark the first time since May that U.S. oil demand was above the year-earlier level.

    EIA issues weekly oil supply and stocks each Wednesday at 1030 EST, current to 0700 EST from the previous Friday. The weekly data aren’t adjusted. In its Weekly Petroleum Status Report, EIA also publishes rolling four-week demand data, which it measures against the year-earlier data.

    But the year-earlier four-week data are recalculated from revised monthly and annual figures, so they don’t reflect what EIA actually reported a year earlier.

    IEA’s Lopez said that method, which he called “fundamentally flawed,” muddies the picture and makes for uneven comparisons. Lopez stressed he isn’t saying the EIA was “inappropriately” measuring U.S. demand.

  4. 4
    Sambone Says:

    Part III

    Confusion, Revised Or Otherwise
    “They say: “the weekly? Forget about it. This is the monthly,'” said Lopez. “Analysts get crazy.”

    For its part, EIA has always stressed that weekly data are the least reliable of the strata of analysis they publish. With a two-month lag, EIA publishes monthly supply and demand data and issues final, revised data usually about nine months into the following year.

    “The year-ago comparisons in the weekly data have always been a source of confusion,” said EIA analyst Doug MacIntyre.

    “Many analysts compare the current four-week data to the most similar four-week weekly data last year so that an apples-to-apples comparison is made,” he said. “EIA compares the “best” data now vs. the “best” data a year ago,” be it the revised monthly or annual figures, he said. “While (it) is sort of an apples-to-oranges comparison, (it) does attempt to use the most accurate data in each year,” he said.

    EIA said in its monthly outlook on Dec. 11 that it has seen indications that high oil prices have impacted demand in recent months.

    EIA projects U.S. oil demand this year will rise by 0.3% to 20.76 million barrels a day, and rise by 1.2% to 21 million barrels a day in 2008. The stronger growth rate in 2008 comes despite an expectation that U.S. benchmark crude oil prices will rise 17.7%, or nearly twice the 9.1% rate of 2007, to $84.83 a barrel.

    U.S. retail regular gasoline prices are forecast to jump 10.7% in 2008, to an average of $3.11 a gallon, following a 9% rise this year. Despite the price jump, gasoline demand is expected to rise by nearly 1% year-on-year, up from a 0.65% growth rate in 2007.

    IEA sees U.S. oil demand rising by 0.2% in 2007, to 20.75 million barrels a day, and rising by 0.9% in 2008, to 20.94 million barrels a day. Projections for both years are less than the EIA’s expectations.

    IEA has been at the forefront, with U.S. assistance, in improving the quality of supply/demand data from far-flung corners of world, particularly the vibrant, fast-growing developing economies in Asia and the Middle East. That makes the disparity over the abundance of U.S. data somewhat ironic.

    “There is a lot of (U.S.) data, unfortunately, it’s very difficult to figure out,” said IEA’s Lopez.

    –By David Bird, Dow Jones Newswires

  5. 5
    jy Says:

    Edge Petroleum EPEX, per their press release of yesterday evening “has retained Merrill Lynch & Co. (“Merrill Lynch”) to evaluate and advise the Board of Directors regarding strategic alternatives to enhance shareholder value including the potential sale or merger of the Company. There is no assurance that the review of strategic alternatives will result in Edge changing its business plan, pursuing any particular transaction, if any, or, if it pursues any such transaction, that it will be completed. Edge does not expect to make further public comment regarding the review until the Board of Directors has approved a specific transaction or otherwise deems disclosure of significant developments is appropriate.”

    Seeing that Edge stock has tumbled ~70% this year, most of that drop since the first of October, this may be the best result for the shareholders. The stock has tumbled from $32/share in Jan 2006 to $5+ yesterday.

  6. 6
    kaman Says:

    Jan 85 put on ATW…unusual volume yesterday…cheers-K

  7. 7
    zman Says:

    Thanks Sam

    JY – saw that, didn’t bother to mention. As investors have shunned many of the little names their stocks have stanked this year. Someone should put together a reserves per share table table to see which are likely to be bought out relative to recent deal prices.

    K – ATW has had a heck of a run.

    group opening mostly green, meaningless before inventories.

    drybulks oopening red, just no follow through there yet. Bill posted a good link on DRYS last night.

    tankers getting hit hard on the open…if everybody is worried about demand slackening you’ve got to wonder about the short and medium term sustainability of the recent run in VLCC, Suezmax, etc rates.

    solars opening up with energy bill. still like my cheap in group YGE

  8. 8
    Sambone Says:

    9:45 am EST

    Nymex Crude Rise Slightly Before Stockpile Data

    By Gregory Meyer
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures rose slightly in light trading Wednesday morning as the market awaited U.S. data expected to show a drawdown in oil stockpiles.

    Light, sweet crude for February delivery was recently up 37 cents, or 0.4%, at $90.45 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange climbed 61 cents to $90.73 a barrel.

    Analysts surveyed by Dow Jones estimate that U.S. crude oil stocks fell by 1.5 million barrels the week ended Dec. 14, notching a fifth straight week of declines. The data, from the U.S. Energy Information Administration, is due out at 10:30 a.m. EST.

    “If we see a larger-than-expected draw again, the bears are going to have the wind taken out of their sails,” said Gene McGillian, an analyst at TFS Energy Futures in Stamford, Conn.

    Predicting how futures prices will respond to a decline has been a dicey business in recent weeks, however, as one-off factors ranging from a pipeline explosion to fog in the Houston Ship Channel have affected how much crude flows into U.S. inventories.

    Two weeks ago, futures prices fell despite a 7.9-million barrel draw in U.S. crude stocks that was largely blamed on fog in the ship channel. Last Wednesday, futures prices made their largest percentage gain in nearly 11 months after another draw in crude stocks.

    “You have to guess how the market is going to react,” said Stephen Schork, the Villanova, Pa.-based editor of energy market newsletter the Schork Report. “The bottom line is the market is going to react violently.”

    Last week, fog again descended on the Houston Ship Channel, temporarily blocking vessels’ access to Gulf Coast refineries.

    Analysts also project that U.S. gasoline stockpiles rose by 700,000 barrels last week, while stocks of distillates, which include diesel and heating oil, fell by 500,000 barrels. Refinery use is seen growing by 0.3 percentage point to 89.1% of operable capacity.

    Prices had jumped around earlier Wednesday after news of strikes at Total SA’s (TOT) French refineries had ended. A strike at ExxonMobil Corp.’s (XOM) Fos-sur-Mer refinery in France was called off, an ExxonMobil spokesman told Dow Jones Newswires Wednesday.

    The refinery did not cease production as a result of the strikes, he added, but declined to comment on whether there was a reduction in production at the refinery.

    Front-month January reformulated gasoline blendstock, or RBOB, rose 2.06 cents, or 0.9% to $2.3249 a gallon. January heating oil rose 1.21 cents, or 0.5%, to $2.5675 a gallon.

    —By Gregory Meyer, Dow Jones Newswires

  9. 9
    zman Says:

    Thanks Sam. Interesting how its just France and not some remote corner of the globe and still you get conflicting stories on what’s going on. I read this morning that the strikes were still on and that the XOM plant was shut down.

  10. 10
    zman Says:

    fire on the white house compound near VP’s office.

  11. 11
    irished Says:

    vp burning the evidence

  12. 12
    Sambone Says:

    No, the tapes again.

  13. 13
    zman Says:

    Solar table updated: things of note:

    not all stocks in the group advanced during the last two weeks

    The biggest performer was CSIQ

    my YGE is up about 25% in two weeks which ranks it third out of 15.

    My FSLR counter short is up 10% during this time.

    SOLF saw a huge jump in earnings estimates and is basically in a tie on forward multiples with YGE trading at just under 3x expected 2009 earnings

    Click here to see the revised tables:
    http://zmansenergybrain.com/subscriber-data/odds-ends/

    EIA in 5 minutes

  14. 14
    zman Says:

    crude down 7.6 mm bbs
    gasoline up 3.0 mm bbs
    distillate down 2.1 mm bbs

    crude at time of report: up $0.63 at $90.70

  15. 15
    doc Says:

    SNG-I mentioned recently, Check news & charts. Good Crap-shoot. Will hit Yes or No pay zome in 2 to 4 weeks. I have a big position.

    “”Canadian Superior Energy Inc. (SNG) announced on Monday December 17, 2007, as Operator of the “Victory” well offshore Trinidad, that Canadian Superior and its partners, BG International Limited (“BG”), a wholly owned subsidiary of the BG Group plc and Challenger Energy Corp. (“Challenger”) have unanimously agreed to case and conduct flow tests on the 16,150 foot “Victory” well located approximately 60 miles off the east coast of the island of Trinidad. Canadian Superior is a Calgary, Alberta, Canada based oil and gas exploration and production company with operations offshore Trinidad and Tobago, offshore Nova Scotia, Canada and in Western Canada.

  16. 16
    zman Says:

    Good luck with that Doc

    Energy stocks should run pretty well on these numbers. Kind of a mixed bag for refineries as that build in gasoline may limit price advances but so far gas is pacing crudes advance.

    Again, the once bulls, now bear camp aren’t overly excited about a huge draw that once upon a time would have made them salivate…speaks to their motivations. Today, they’re going to right off the drop as completely imports which it largely is (imports fell by almost 1 mm bpd) …notice I’m not doing any trades as I think that while we will stay green, I want to see if this move has any legs going into lunch.

  17. 17
    zman Says:

    Sane – any API yet?

  18. 18
    sane Says:

    Havent seen yet

  19. 19
    zman Says:

    oil now up less than when the report came out. stocks giving it a luke-warm reaction other than the deepwater drillers who are taking it pretty positively

    Goldman upped SLB this morning to Buy knocking it up 4%…not translating to any move in HAL yet.

  20. 20
    doc Says:

    Heard on TV that European refiners will export to US this winter to hurt stock price of US refners? Is he Serious?????

    Huge food shortegs will create next big sector. Anybody out there follow AGRECULTURE???????? OWN moo & dba

  21. 21
    zman Says:

    crude battling with the 91 level. Still not playing, stocks look unimpressed with the import influenced draw. APA most tempting here; among refiners SUN…but I’m still not playing

    Doc – they export to use, we export to them…nothing new there although VLO and others here are sending more diesel to Europe than in the past.

    re agri – I watch very loosely. AGU picked up an upgrade this morning. The new energy bill is going increase demand for fertilizer (and thereby nat gas)

  22. 22
    zman Says:

    anyone seen or heard the NG estimates for tomorrow?

  23. 23
    Sambone Says:

    Doc – You can trade TNH. NG is it’s biggest expense, so if NG goes down, their earnings go up. I bght it recently around 100 and sold at 130.

  24. 24
    zman Says:

    ZTRADE: Sold Jan 115 PBR calls acquired Monday for $2.70, up 32%. Continue to hold my original position here.

  25. 25
    sane Says:

    API

    Crude down 8.9
    Gasoline UP 2.8
    Distillates down 1.9

  26. 26
    sane Says:

    Oops Crude down 8.5

  27. 27
    zman Says:

    Thanks Sane…second week in a row API’s numbers are confirming EIA’s. Well, I guess stranger things have happened.

    Any thoughts on the truckers yet?

  28. 28
    sane Says:

    It is slow on the trucking end. I have been seeing quite a bit of reaction to fuel prices. The talking heads are rambling about streamlining routs for efficiency and fuel usage. The heads are watching for a downturn. Though our steel hauling division is rocking. Mainly due to plate steel going for $1000+ a ton both domestic and international.

  29. 29
    zman Says:

    What’s all the plate going into? Ships?

    Any truckers you like/dislike right now? Anyone do a particularly good or bad job with the hedging or are unable to pass fuel costs along as a surcharge?

  30. 30
    bill Says:

    topt is starting to move as well as my other tanker favorite nat

  31. 31
    sane Says:

    Plate is being used in every thing from ships to trains to roads to the bottomless black hole called China.

    Trucking companies. Almost all over the road carriers pass the fuel along, LTL’s though try to hedge.

    I am not a fan for J.B. Hunt right now. Last quarter showed slowing for them. Revenue up due to acquisition, but income down and a miss on their eps. Look to be on a down turn.

  32. 32
    zman Says:

    Thanks Sane. Are the guys who transport all the agri stuff to the ethanol plants able to pass it along, any names there?

  33. 33
    sane Says:

    I am unsure on that, but I would say yeah they can pass it on.

  34. 34
    TTupp Says:

    is it me or does fslr’s chart look like drys @130 ish?

  35. 35
    Sambone Says:

    11:37 am EST

    Nymex Crude Up On Crude Stock Draw

    By Gregory Meyer
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures rose slightly on a report of a surprisingly large drawdown in U.S. crude oil stocks, climbing past $91 a barrel.

    The U.S. Energy Information Administration reported that U.S. crude oil stocks declined by 7.6 million barrels, to 296.9 million barrels, amid curtailed oil imports for the week ended Dec. 14. Crude oil stocks are now at their lowest level since Feb. 2005.

    The agency also reported a 100,000-barrel build in stocks at Cushing, Okla., the delivery point for crude oil traded on the New York Mercantile Exchange.

    “The fact that Cushing stocks have been rising for the last four or five weeks, at pretty comfortable levels, is going to keep the front-month (futures contract) from spiking too high,” said Rick Mueller, a Netherlands-based senior oil analyst at Energy Security Analysis Inc. “There’s certainly no shortage at the delivery point.”

    Light, sweet crude for February delivery was recently up $1.09, or 1.2%, at $91.17 a barrel on the New York Mercantile Exchange. It traded at about $90.70 a barrel just before the EIA’s 10:30 a.m. EST data release. Brent crude on the ICE futures exchange climbed $1.20 to $91.32 a barrel.

    The draw in crude stocks centered on the U.S. Gulf Coast, where fog last week at times hemmed in tankers attempting to make oil deliveries.

    “Imports fell by a million barrels a day. Nobody expects that to continue,” with higher output slowly appearing from members of the Organization of Petroleum Exporting Countries and visibility expected to improve along the Gulf Coast, Mueller said.

    Analysts surveyed by Dow Jones had projected a 1.5 million-barrel draw in crude stocks.

    Front-month January reformulated gasoline blendstock, or RBOB, rose 3.00 cents, or 1.3% to $2.3343 a gallon. January heating oil rose 3.88 cents, or 1.5%, to $2.5942 a gallon.

    The EIA reported stocks of gasoline rose by 3 million barrels last week, versus the analysts’ projection of a 700,000-barrel build. Stocks of distillate, which include heating oil and diesel, fell by 2.1 million barrels last week, more than a 500,000-barrel draw predicted by analysts.

    —By Gregory Meyer, Dow Jones Newswires

  36. 36
    zman Says:

    JBHT chart not too bright…just looking around the group and see some other vulnerable but not terrible patterns. Let me know if you think of anyone else who could suffer here.

    T – FSLR chart does remind of that and its expensive to its peers to boot.

  37. 37
    zman Says:

    anyone see a NG number for tomorrow? NG looking like it wants to test $7 again.

  38. 38
    ram Says:

    It seems like the only way to make money on options in CHK is to sell them.

  39. 39
    Sambone Says:

    Uncle Phil

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

  40. 40
    doc Says:

    sambone: Thanks

    My non-short-term Shorts mostly leaps:

    QQQQ SPY CROX GRMN DELL

    LEA AMAT CSCO-these probobly will be total loss unless I get Lucky.

    SAMB. Do you do any longer term shorts.

  41. 41
    Sambone Says:

    MBI, ABK. Long SKF

  42. 42
    cattleman Says:

    Doc – Ref #20, Article on Monsanto (mon)in current issue of Business Week. They are profitable and the kings of engineered seed (corn and soybeans). Think they had GMO alfalfa out a couple of years ago but it was pulled back, supposed to be available on the market next year according to a producer I know. That means they have a lock on all the major feed crops. Strong chart.
    Z – You mentioned another position in HK coming up, chart looks promising.

  43. 43
    zman Says:

    Ram – true

    Sam – he’s gone from perma bull to perma bear. The fundamentals don’t matter, it’s just the trade you’ve got on the books.

    My favorite quote of his today:
    The volatility in oil in part reflects indecision by the bulls and the bears. The market wants to be bullish but is having a more difficult time justifying these price levels. Maybe today the inventory report will give us some direction. If the $100 dollar dreamers are to have a shot at the $100 dollar Promised Land then this report has got to be wildly bullish.

    Wonder what his takeaway is from the inventory report. He said it might provide direction. Does a 7.6 million barrel draw on crude provide direction?

  44. 44
    zman Says:

    Cattleman, I read that article, one with the blue ear of corn on the cover, last week. Meant to mention here, thanks, stock up like 1000% since the early 2000s but it looks like its unlikely to stop soon.

    Re HK: yeah, I’m watching it bounce around….very cheap.

  45. 45
    Sambone Says:

    Z – He just wants your account. LOL

  46. 46
    zman Says:

    I think he got Nicky’s

  47. 47
    Sambone Says:

    Phil kinda remeinds me of that guy in “Hunt for Red October”.

    “Listen, I’m a politician which means I’m a cheat and a liar, and when I’m not kissing babies I’m stealing their lollipops. But it also means I keep my options open”.

  48. 48
    Sambone Says:

    Is that why Phil does options? LOL

  49. 49
    zman Says:

    bingo! too funny

  50. 50
    TTupp Says:

    rig’s getting super pinned, bet it opens up $3 monday

  51. 51
    Sambone Says:

    Good for us = oil prices (Up), bad for US if they depeg.

    http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/12/17/cnsaudi117.xml

  52. 52
    zman Says:

    oil popping up now $1.80 approaching 92.

    surprised no move in APA and little in SU
    XOM down with DJIA, HAL down because of the market and because I own it.

  53. 53
    zman Says:

    T: I’m out of the RIG/DO/ATW etcs right now but considering getting back long soon.

  54. 54
    ram Says:

    Z – Waiting for the ng numbers before deciding on CHK?

  55. 55
    zman Says:

    Ram – very little to decide. The 40s are toast, for the 37.50s yes I’m waiting and for my longer dated stuff I’m not about to sell.

  56. 56
    ram Says:

    Z – Would you “leap” to the APRIL CHK’s or move to JAN?

  57. 57
    TTupp Says:

    look at the rig chart and take a look what happens after exp day

  58. 58
    TTupp Says:

    apa, su & pbr all have most of their oi under $100, look to see then finish there this week

  59. 59
    TTupp Says:

    drys, well, is just a piece of junk- like ive always said

  60. 60
    TTupp Says:

    fslr – $150 by jan 31/08. winners looking to sell it in a new tax year to defer… thats how it works in the U-S and A right ?

  61. 61
    TTupp Says:

    has anyone caught a glimpse of the hes chart?

  62. 62
    TTupp Says:

    z- write my prediction in your ledger lol

  63. 63
    zman Says:

    Tupp – very good point on the RIG chart. That’s uncanny and worth a trade. I planned on getting back in anyway …looking at Jan 135 and 140s bid side today.

    Ram – Jan 37.50s not too bad on premium now

    T – does look like pinning action starting early this week.

    HES = overdone in my book but I don’t track it closely. Rally is off a recent upgrade.

  64. 64
    zman Says:

    T: and I really hope you are wrong on APA

  65. 65
    zman Says:

    cattle – check your email

  66. 66
    jiveyjr Says:

    maybe Santa is gonna make the APA’s good

  67. 67
    zman Says:

    I’m just not happy that I’m no longer long APC….just looks like it wants to run here . APC is in an interesting position with a good mix of production that puts its threshold gas price lower than most of its peers.

    Group turning decidedly more green as the broad market just crosses into positive territory on the day.

  68. 68
    Sambone Says:

    TECHNICALLY SPEAKING

    Oil Stocks May Face A Slippery Slope

    By KAREN TALLEY
    A Dow Jones Newswires Column

    NEW YORK — While the overall stock market continues skidding, energy shares stand to end the year as the market’s best-performing industry group this year — but there is mixed opinion about where they head from here.

    The energy sector, up 27% so far this year, the best-performing of the 10 industry groups that make up the Standard & Poor’s 500 Index. The next closest groups, utilities and materials, are both up 17%.

    The energy group’s advance comes as crude itself has risen 49% since 2007 began.

    “While slightly premature to name the 2007 sector champ with less than two weeks of trading left in this extremely volatile market, the big-cap energy sector has a comfortable lead and looks poised to take the 2007 crown, for the third time in four years,” said Andrew Burkly, technical analyst at Brown Brothers Harriman. “The energy bull market continues.”

    In fact, coming off only a mild correction, the energy sector is back within striking distance of its all-time high of 601.29, hit on Oct. 16 of this year.

    Also, there is a strong prospect of the strength continuing, Burkly said.

    Historically, leadership from one segment of the market is able to persist over time.

    For instance, technology led five times from 1993 to 1999.

    “Therefore, just because the energy bull market has run for a number of years, the end is not nigh,” Burkly said.

    Drilling down, Burkly prefers the oil and gas industry group over energy equipment, although both look technically attractive.

    “I prefer oil and gas in the coming months,” Burkly said. “The group has held up better in recent market action and is reversing a downtrend versus energy equipment.”

    But not all technicians are in agreement over oil. Carl Birkelbach, market analyst at Birkelbach Investment Securities, feels the sector faces a slippery slope.

    Exxon Mobil (XOM), for instance, the largest energy stock by market cap, has been in an uptrend for quite some time, but its chart indicates the stock may soon face challenges, Birkelbach said.

    Shares, now at $91, reached their record closing high of $95.05 on Oct. 18.

    But then choppiness kicked in, with the stock proceeding to retreat as $84.11 on Nov. 19, and then bounce back to its most recent peak, $92.72 at Dec. 13.

    “It appears there may be substantial resistance at $92.72 and $95.05 because around those levels there has been substantial increases in selling volume,” Birkelbach said.

    ConocoPhillips (COP) another oil major, appears to have already run into headwinds.

    The stock marked its all-time closing high on July 13, at $90.17.

    It then proceeded to push lower, even breaking below its 200-day moving average, before bottoming at $76.06 on Nov. 27.

    Share are now at $84, which is roughly between the all-time high and the latest bottoming, suggesting a sideways trend.

    That’s not a positive state to be in, and Birkelbach feels that more of the energy group is going to begin charting like ConocoPhillips.

    (Karen Talley covers the large-cap stock market for Dow Jones Newswires and also authors the Abreast of the Market Column for The Wall Street Journal.)

    —By Karen Talley, Dow Jones Newswires

  69. 69
    ram Says:

    Just bought the CHK’s JAN 37.5 for 1.70.

  70. 70
    TTupp Says:

    z- on the topic of rig pinning, pull up at weekly chart of oih, look at the weeks ending dec 21, nov 16, oct 19, sept 21, and aug 17.

    this is what i call technical analysis along with support and resistance & some obvious chart patterns; not some sequence of numbers that secretly & magically powers the universe. not to offend anyone- just my opinion.

  71. 71
    zman Says:

    SII – bits and mud…rallying in the wake of the NOV takeout of GRP…ug, I hate when I don’t pull trigger on an obvious one.

    oil closed up $1.40. I’ll be interested to see PF’s take on oil inventories and the oil price reaction tomorrow.

    good luck with the CHK Ram, I think in the money and quick to take profits is the way to go in most stuff right now.

  72. 72
    zman Says:

    T – I think wave analysis works, I just don’t track it closely enough. I’m a S and R guy as you know. Maybe I’ll get fancier in the future but so far it has served me pretty well.

  73. 73
    ram Says:

    Z – also on RIG – you probably have seen that as it passes through the 20dma, it runs up to the upper BB if not through it.

  74. 74
    jiveyjr Says:

    very good movement in SWN

  75. 75
    ram Says:

    S & R = Support and Resistance?

  76. 76
    zman Says:

    SWN should run if gas has indeed found a bottom at $7. Interesting that the expensive mid caps seems to be outperforming the more modestly priced large caps, even the fast growth stories like CHK. Wish NFX would come back to life along the same principals.

    APA and PBR finally moving higher. Got to lose some December APA soon.

    Ram yes S&R. I do see the RIG and have not gotten a fill yet on bid side, in fact I’m well below market all of sudden.

    Added the OIH valuation table to the odds and ends tab at upper left.

  77. 77
    ram Says:

    RIG coming to you – 135’5 or 140’s. Thanks for the OIH table. ATW?

  78. 78
    Sambone Says:

    2:19 pm EST

    Nymex Crude Rises Above $92/Bbl Before Pullback

    By Gregory Meyer
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures pushed past $92 a barrel late in the pit session Wednesday as a report pointing to tighter U.S. oil supply sank in among traders.

    Light, sweet crude for February delivery was recently up $1.83, or 2%, at $91.91 a barrel on the New York Mercantile Exchange after rising as high as $92.35. Brent crude on the ICE futures exchange climbed $1.90 to $92.02 barrel.

    The U.S. Energy Information Administration reported that U.S. crude oil stocks last week declined by 7.6 million barrels, to 296.9 million barrels, as U.S. oil imports were curtailed. Crude oil stocks are now at their lowest level since February 2005 and in the lower half of the average range for this time of year.

    Analysts surveyed by Dow Jones had projected a 1.5 million-barrel draw in crude stocks.

    The data’s release at 10:30 a.m. EST stirred measured buying that broke loose early in the afternoon, driving the front-month contract up more than $2 a barrel.

    “It’s kind of a delayed reaction on some light volume,” said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.

    The inventory data also showed stocks of distillates falling by 2.1 million barrels, largely as a result of lower heating oil stocks on the East Coast, where heating oil is heavily consumed. January heating oil rose 5.84 cents, or 2.3%, to $2.6138 a gallon.

    “Heating oil is dragging up the entire complex,” Flynn said.

    Front-month January reformulated gasoline blendstock, or RBOB, rose 5.18 cents, or 2.3%, to $2.3561 a gallon.

    —By Gregory Meyer, Dow Jones Newswires

  79. 79
    zman Says:

    ZTRADE: RIG Jan $135 calls for $5.70

  80. 80
    zman Says:

    ATW not in the index because of its small size.

    EPS and multiples @91.82 are
    2007: $4.37 (21x)
    2008: $6.97 (13x)
    2009: $10.80 (8.5x)
    2010: $12.57 (7.3x)

  81. 81
    TTupp Says:

    z do you have a free source for eps estimates outside of next year?

    also, have you ever called occ?

  82. 82
    zman Says:

    Ram – the whole sector is just going to keep minting money. On ATW I don’t know how much the % of locked in contracts is in those numbers.

    For RIG I believe even in 2010 over 30% of their EPS number is essentially locked in with signed deals. ATW’s multiples are about the same as RIG and DO and the growth is a little higher but you do have the potential for one rig really messing you up since they have such a small fleet.

    T: I can get you any consensus estimate you want (EPS, CFPS, Rev, EBITDA etc). Not free to me but I’ll send it to you. Need something?

    Never called the OCC

  83. 83
    ram Says:

    Understood. So whether oil is 80 or 120, it’s the working equipment and the lucrative long contracts that will keep RIG rising. Sounds good enough to be in an IRA acc.

  84. 84
    TTupp Says:

    im dialin occ yea you know me,,,, bored , going to the gym ,,,,,, gurr

  85. 85
    TTupp Says:

    ram- re 83- i agree- earnings visibility is synonymous with stability…. ok you got me i stole that from cramer , but it is true

  86. 86
    ram Says:

    Oh Oh – Is Z a closet Cramer lover??

  87. 87
    Sambone Says:

    Z – Looked at the “Fleet Contract Staus” on ATW. Not much info on any new contracts. Not like RIG Fleet Status reports.

  88. 88
    zman Says:

    thanks for the push on RIG T, between ordering gifts on line and trying to understand a chimney sweep I would have let it go for a little while longer.

    Ram – play nice? Cramer, ha. Knew I should have waited until he disliked HAL (again) to get long.

  89. 89
    ram Says:

    HK almost no prem on the JAn 15’s

  90. 90
    ram Says:

    O.K. I will play nice – it’s Christmas time! Now that the market is done today – a side note on how the sub-prime issues reach people.

    A nice handsome family, rents a home in Central CA in Jan 07. Pays customary fees up front. No problems until before Thanksgiving when the REPO man comes looking for the owners of the rented home. So additional digging realizes that a notice of foreclosure was filed in mid-SEPT and the Trustee Sale filed in Mid DEC – home set to Auction in early JAN. Yikes, owners haven’t paid the bank since JUNE, are AOL, and family has to find new place soon. Original monies vanished.

  91. 91
    scoop006 Says:

    Tenants should approach mortgagee and negotiate an extended rental with an option to purchase the property as no lender wants to take possession of a vacant house.

  92. 92
    zman Says:

    Still looking for the consensus gas storage # if anyone has seen it. I’m thinking 120 Bcf withdrawal for the morning.

  93. 93
    zman Says:

    nevermind, found it Street looking for 132 Bcf pull.

  94. 94
    kaman Says:

    Ram-
    … in my neck of the woods: those delinquent owners had better find a different place to sleep each nite (for same reason Saddam did).

  95. 95
    zman Says:

    wow K, tough woods you have there.

  96. 96
    kaman Says:

    Ever been to East Tennessee? Guy shot and killed a burglar coming OUT of his house this past weekend…the DA’s been threatened for even thinking about charges.

  97. 97
    gps for truckers Says:

    gps for truckers

    One of the biggest advancements in technology is not only blue tooth, but also the addition of blue tooth gps to the blue tooth system.

  98. 98
    Buying Gym Equipment Says:

    Buying Gym Equipment

    I don’t mean to be too in your face, but I’m not sure I agree with this. Anyhow, thanks for sharing and I think I’ll come to this blog more often.

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