21
Dec

Expiration Friday

Print Friendly

Broad market is looking to open nearly a percent higher this morning with oil looking for a slight boost as well. I'll taking the few remaining profitable positions off the table pretty early as I expect pinning action to quickly set in on this pre-holiday light trading day. 

Commodity Watch:

  • Crude Oil closed down $0.18 to $91.06. Crude appears to be range bound as declining U.S. stocks weigh against an uncertain economic picture. This morning crude is trading $0.50 higher.
  • OPEC Production Easing? According to British tanker tracker Oil Movements, OPEC shipments should fall 230,000 bopd to 24.2 million bopd for the four week period ended Jan. 5. Previously, OM had expected OPEC shipments to rise for this period but the head of the firm said this drop in production was seasonally normal for this time of year.
  • Natural Gas closed down $0.04 to $7.14 in listless trading following a slightly smaller than expected gas storage number. This morning gas is trading off slightly bringing closer to $7.05.

gas-table-122007.jpg

The Street was looking for a 132 Bcf withdrawal. I had been looking for 120 Bcf. Even a blind squirrel occasional finds a nut. No matter, the important thing here is that the next two comps for natural gas will be easy ones (see fifth chart below), and this should result in gas in storage moving much deeper into YoY deficit status. And this should help support gas above the $7 mark.

Natural Gas Storage Picture Show:

gas-graphs-122007.jpg

 

Stocks of Interest Today:

PBR Scores Again In The Deepwater Offshore Brazil. This time above the salt in the southern Santos Basin. In November, PBR put estimates for its Tupi pre and subsalt field at 5 to 8 billion barrels which if accurate would make it the second largest field discovered in the last 20 years. The discovery was made on the BM-S-21 block, one of the southern most blocks in the basin (see map below). From Upstream ~ The 1-BRSA-526-SPS (1-SPS-51) well was drilled in water 2234 metres deep found light oil in the pre-salt layer, Petrobras said in a statement. The well was not tested due to operational and logistics matters.

 

santos-basin.jpgclick to expand map of Santos Basin.(Tupi is the dark set of splotches on the western side of the map.

  • I continue to hold my original position here having traded a double down position for a 30% gain earlier this week.
  • In 2007, PBR brought five platforms or FPSOs on line offshore Brazil at four separate fields. In 2008, they plan to bring another four significant offshore developments on line.
  • Not bad news for the bidding prices of deepwater capable rigs. I re-entered a position in (RIG) this week.

 

(APC). Independence Hub 90% of the way to Full Capacity. Project partner Enterprise Product Parners said the facility is at 900 MMcfgpd and climbing, still expected to reach a Bcfgpd by year end.

Holdings Watch:

Calls

  • SWN Jan $55 CALLs taken for $2.45 after the company posted an "all systems go" capital budgets and production guidance for 2008. See yesterday's post for details.

Odds & Ends

Analyst Watch: Jefco picks up (WLL) with a buy rating and $66 pt.

 

92 Responses to “Expiration Friday”

  1. 1
    Sambone Says:

    8:34 am EST

    Crude Steady As Traders Square Positions

    DOW JONES NEWSWIRES

    [Dow Jones] Oil futures are steady after rising to $91.50 in earlier screen trading. “Light holiday volume and sideways activity should characterize trading for the balance of the day today and should also feed into next week,” says MF Global analyst Edward Meir, “at least until next week’s (US weekly oil inventory) numbers are out.” Nymex Feb crude -10c at $90.96/bbl. (greg.meyer@dowjones.com)

  2. 2
    ram Says:

    HK seems like it wants to run. It will be interesting if it blows through the 17.50 strike.

  3. 3
    zman Says:

    Ram – yeah, its way past due. Same on PQ.

    Deepwater drillers loving another high profile by PBR in the deepwater.

  4. 4
    Sambone Says:

    9:31 am EST

    Nymex Crude Climbs On Strong US Personal Spending

    By Gregory Meyer
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures bounced higher early in the pit trading session Friday as a report showed surprisingly robust U.S. consumer spending.

    Light, sweet crude for February delivery was recently up 36 cents, or 0.4%, at $91.42 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange rose 25 cents to $91.13 a barrel.

    The U.S. Commerce Department reported personal consumption climbed by 1.1% in November compared to the month before, the highest rate of increase since 1.2% in May 2004. October spending also rose an upwardly revised 0.4%, from an original 0.2% estimate.

    “It’s the U.S. consumer that’s really keeping the global economy afloat,” said Rick Mueller, a Netherlands-based senior oil analyst at Energy Security Analysis Inc. Stronger-than-expected consumer spending is “bullish for the market,” he said.

    The dollar also declined against the euro and U.K. pound, following reports Merrill Lynch may receive up to a $5 billion capital infusion from Singapore’s Temasek Holdings, also supporting oil prices.

    Fears of a global economic slowdown have weighed against perceptions of tight oil supply in recent days, leading to a choppy market. Analysts foresee more range-bound trading ahead as major players take their money off the table before the holidays.

    “The recent wild intraday swings in the (West Texas Intermediate crude) pit indicate a market that lacks conviction, thereby underscoring our expressed theory that this market’s heavy hitters are on the sidelines in bonus preservation mode,” said Stephen Schork in his daily energy markets newsletter the Schork Report.

    Barring supply shocks, traders will look ahead to next Thursday’s release of oil inventory data for the U.S., the world’s largest energy consumer. The weekly report from the U.S. Energy Information Administration will arrive a day later than usual because of the Christmas holiday.

    “Light holiday volume and sideways activity should characterize trading for the balance of the day today and should also feed into next week, at least until next week’s EIA numbers are out,” said Edward Meir, a Connecticut-based analyst at MF Global, in a research note.

    Front-month January reformulated gasoline blendstock, or RBOB, rose 1.62 cents, or 0.7% to $2.3438 a gallon. January heating oil increased 51 points, or 0.2%, to $2.5946 a gallon.

    —By Gregory Meyer, Dow Jones Newswires

  5. 5
    zman Says:

    Sam – funny how consumption is up despite all the worry out there. And that was for November. People are just charging their brains out at the stores. Had a 50 something mom or young grandma give me a deliberate hard shoulder in the toy aisle yesterday. I was busy reading Alahambra’s transcript of the Sallie Mae call on my blackberry and I guess she couldn’t wait to get at a remote control tarantula any longer. What’s really bad is all the store cards being pushed these days that, unbeknownst to most consumers, will dash their credit score and up their rates on every other card they’ve got as soon as they apply for a new one at the check out counter. Of course, after paying what I consider to be an insane price for a decent sized digital picture frame I didn’t mind paying $45 bucks to fill up on the way home.

  6. 6
    Nicky Says:

    Morning all – Z I am sure PF will not mind if this is printed – its very good:

    T’was the Last Energy Report before Christmas and all through the pits; the question for 2008 is if oil demand will slip. The oil surged higher because of the liquidity crisis scare; In hopes that the fed rate cuts meant demand would still be there. The Traders were nestled all snug in their beds, While visions of $100 call options danced in their heads; In 2007, $99 was a cap and if you bet on $100 you feel like a sap. But when we came close there arose such a clatter; Demand growth had slowed and the bull dreams were shattered: Away the market turned and changed in a flash and those 100 calls were thrown in the trash. And throughout the country there was a new fallen snow And it served us a reminder that heating oil is low When what to my wondering eyes should appear Oil producing countries acting like black marketers; They are nationalizing their oil, so lively and quick: And at some point in the future it could make our economy feel sick. More rapid than eagles the despots they came And with OPEC and Russia, they are also to blame! Now Venezula, Now Kuwait, and now Iran and Nigeria They controlling the supply from Angola to Algeria But if the economy slows the producers will get scorched They are counting on Asia to carry the torch; The US economy may hit a wall And if slows just a bit then the oil will fall The market in the petroleum will start to stall and the bulls in the oil will dash away, dash away all They will leave this summer if the hurricanes don’t fly And 100 barrel oil will be pie in the sky. The risk premium in oil will fall hard next year As our troops sacrifice in Iraq has lowered the fear. Look to progress in Iran and Iraq as the oil markets guide and Because of good progress oil will continue to slide. In the Middle East the are now talking peace And the risk of war with Iran has begun to decrease! It’s because of our soldiers in lands far away and we still need to pray for them each passing day. For Liberty and Freedom they have put up a incredible Fight So to them and all of you, Merry Christmas and goodnight!

  7. 7
    Nicky Says:

    Anyone tell me why heating oil has been so weak since the inventory report and rbob so strong – inventory report should have had the opposite happening?

  8. 8
    zman Says:

    Very clever but he was a bull until $97 and then turned on a dime to being a bear. “How to pick off clients and generate commish 101.” Again clever, but he employed no fundies on the way up and now he’s citing peace in Iraq without citing all the talk of rising consumption in the producing states themselves. Also, the recent numbers in terms of big draws on crude would have been dream numbers for him just a month ago (when he was a bull) but now he discounts them. Spin, spin, spin, spin, spin. He talked about tightness but I’m not sure he understands how an equation work…it didn’t suddenly go away. Demand in the states has not fallen. And my “just another bump in the road lower” chart is continuing to indeed go lower. I think he made a technical call and is trying to back it up with cute poetry.

  9. 9
    QUARRYMAN Says:

    Hey Z.,

    Nice little pop in RIG calls.

    Any fun expiry plays for today?

    Q.

  10. 10
    zman Says:

    HO down over weather forecast from NOAA saying winter (and they mean the actual start of winter and not what we’ve seen so far in terms of demand) will be as earlier predicted by them warmer than normal.

    Gas up for unknown reasons. Could be that the piece of blending components is higher and that non-finished gas is not as high relative to history as is finished gas.

  11. 11
    ram Says:

    It’s cold everywhere!! Everybody has their ng heaters running.

  12. 12
    zman Says:

    Scoop: there ya go on COP

    Q: pure gambles

    HAL $37.50s for a dime (long shot)

    SWN $55 calls a little later

    PBR $115 for $0.20 or the not so risky more liquid $110s

    RIG $140

  13. 13
    zman Says:

    ram – I was referring to gas(oline) as per Nicky’s question.

    Hey Nicky, got any levels for us.

  14. 14
    zman Says:

    Q:

    should have added APC $65, very little premium.

    ditto HK 17.50s but more risk of it hugging 17.50 from now til the close.

  15. 15
    Nicky Says:

    Despite the talk of all the down days in energy it has actually just traded sideways for a week or so now.

    Until we break either the highs of the 12/13 or the lows of the 6th December not much can be made of this.

  16. 16
    Nicky Says:

    My own thoughts are that oil is at least $20 higher than it should be.

  17. 17
    QUARRYMAN Says:

    I’m going to post an article on Vulcan Materials next. It’s big
    Q.

  18. 18
    QUARRYMAN Says:

    United States vs. Vulcan Materials Co., et al. Proposed Final Judgment

    A proposed final judgment and competitive impact statement have been filed with the United States District Court for the District of Columbia in United States v. Vulcan Materials Co., et al., Civil Action No. 1:07-cv-2044.

    On Nov. 13, 2007, the United States filed a complaint to obtain equitable and other relief against defendants Vulcan Materials Co. and Florida Rock Industries, Inc. to prevent Vulcan’s proposed acquisition of Florida Rock.

    The acquisition, however, was finalized in mid-November. Vulcan is currently in the process of divesting some of the Florida Rock operations.

    The complaint alleges that Vulcan’s acquisition of Florida Rock would substantially lessen competition in the production, distribution, and sale of coarse aggregate in and around Atlanta, Ga.; Columbus, Ga.; Chattanooga, Tenn.; and South Hampton Roads, Va.

    The proposed final judgment, filed on Nov. 13, 2007, requires defendants to divest Florida Rock aggregate quarries in Northwest, West, and Southwest Atlanta, Ga.; Columbus, Ga.; Chattanooga, Tenn.; and Richmond, Va.

    Additionally, Vulcan must divest a Florida Rock distribution yard located in Chesapeake, Va., that receives coarse aggregate by barge from Florida Rock’s Richmond quarry; a Vulcan aggregate quarry in South Atlanta, Ga.; and a Vulcan quarry under development in Southeast Atlanta, Ga.

    Copies of the complaint, proposed final judgment, and competitive impact statement are available for inspection at the Department of Justice, Antitrust Division, Antitrust Documents Group, 325 7th Street, NW., Room 215, Washington, D.C. 20530 (Phone: 202-514-2481), on the Department of Justice’s Web site at http://www.usdoj.gov/atr, and at the Office of the Clerk of the United States District Court for the District of Columbia, Washington, D.C.

    Copies of these materials may be obtained from the Antitrust Division upon request and payment of a copying fee set by Department of Justice (DOJ) regulations.

    Public comment is invited within 60 days of the date of this notice. Such comments, and responses, will be published in the Federal Register and filed with the Court. Comments should be directed to Maribeth Petrizzi, Chief, Litigation II Section, Antitrust Division, U.S. Department of Justice, 1401 H Street, NW, Suite 3000, Washington, D.C. 20530 (Phone: 202-307-0924). The case number is 1:07-cv-02044

    Notes about the suit:

    Plaintiff United States of America, acting under the direction of the Acting Attorney General of the United States, brings this civil antitrust action to obtain equitable and other relief against defendants Vulcan Materials Co., and Florida Rock Industries, Inc. to prevent Vulcan’s proposed acquisition of Florida Rock. The U.S. DOJ complains and alleges as follows:

    I. Nature of the Action

    1. On Feb. 19, 2007, Vulcan and Florida Rock signed a definitive agreement for Vulcan to acquire Florida Rock in a cash-and-stock transaction valued at approximately $4.6 billion. The total blended cash-and-stock consideration for this transaction is approximately $68 per share.

    2. Vulcan and Florida Rock both produce and distribute in the United States building materials, including, among other things, construction aggregates (which includes coarse aggregate), and ready-mix concrete. Vulcan is the largest supplier of construction aggregates in the United States. Florida Rock is also a leading supplier of construction aggregates in the United States. Combined, Vulcan and Florida Rock will have construction aggregates reserves totaling about 13.9 billion tons.

    3. The United States brings this action to prevent the proposed acquisition of Florida Rock by Vulcan because it would substantially lessen competition in the production, distribution, and sale of coarse aggregate in and around Atlanta; Columbus, Ga.; Chattanooga, Tenn.; and South Hampton Roads, Va., in violation of Section 7 of the Clayton Act, 15 U.S.C. 18.

    II. Parties to the Proposed Transaction

    4. Defendant Vulcan is a New Jersey corporation with its principal place of business in Birmingham, Alabama. Vulcan produces, distributes, and sells, among other products, construction aggregates, ready-mix concrete, hot-mix asphalt, and asphalt coating to customers in 21 states, the District of Columbia, and Mexico.

    5. Vulcan is the largest producer of construction aggregates in the United States. It has more than 300 facilities for the production and distribution of construction aggregates and other products. In 2006, Vulcan shipped approximately 255 million tons of construction aggregates, the majority of which was coarse aggregate. In 2006, Vulcan reported total sales of about $3 billion.

    6. Defendant Florida Rock is a Florida corporation with its principal place of business in Jacksonville, Fla. Florida Rock produces, distributes, and sells in the Southeastern and mid-Atlantic states, among other products, construction aggregates, ready-mix concrete, pre-stressed concrete, and cement.

    7. Florida Rock is one of the largest United States suppliers of construction aggregates. In 2006, Florida Rock shipped approximately 45 million tons of construction aggregates, the majority of which was coarse aggregate. In 2006, Florida Rock reported total sales of approximately $1.4 billion.

    III. Jurisdiction and Venue

    8. Plaintiff United States brings this action under Section 15 of the Clayton Act, as amended, 15 U.S.C. 25, to prevent and restrain defendants from violating Section 7 of the Clayton Act, 15 U.S.C. 18.

    9. Defendants produce, distribute, and sell coarse aggregate and other products in the flow of interstate commerce. Defendants’ activities in producing, distributing, and seIling these products substantially affect interstate commerce. This court has subject matter jurisdiction over this action pursuant to Section 12 of the Clayton Act, 15 U.S.C. 22, and 28 U.S.C. 1331, 1337(a), and 1345.

    10. Defendants have consented to venue and personal jurisdiction in this judicial district.

    IV. Trade and Commerce

    A.The Relevant Product Market

    11. Construction aggregates consist primarily of crushed stone, gravel, and sand produced from natural deposits of various materials and removed from quarries, mines, or pits.

    12. Coarse aggregate is a type of construction aggregate. Coarse aggregate is crushed stone produced at quarries or mines and used for, among other things, road base and the production of ready mix concrete and asphalt. Coarse aggregate typically is mixed with other materials to produce ready-mix concrete and asphalt. Different sizes of coarse aggregate are needed to meet different project specifications.

    13. There are no reliable substitutes for coarse aggregate because it differs from other products in its physical composition, functional characteristics, customary uses, consistent availability, and pricing. To the extent that any substitutes exist, customers already use these to the full extent possible in light of the limits on their availability and the amounts that can be used in a given product, and could not use more of them in place of coarse aggregate in response to an increase in the price of coarse aggregate.

    14. A small but significant post-acquisition increase in the price of coarse aggregate would not cause the purchasers of coarse aggregate to substitute another product or otherwise reduce their usage of coarse aggregate in sufficient quantities so as to make such a price increase unprofitable.

    15. Accordingly, the production, distribution, and sale of coarse aggregate is a line of commerce and a relevant product market within the meaning of Section 7 of the Clayton Act.

    B. The Relevant Geographic Markets

    16. Coarse aggregate is a bulky, heavy, and relatively low-value product. The cost of transporting coarse aggregate is high compared to the value of the product.

    17. Transportation costs limit the distance coarse aggregate can be economically transported from a quarry or mine to a job site or a ready mix concrete or asphalt plant. The geographic area within which a coarse aggregate supplier can compete most vigorously thus is limited by the cost of hauling the coarse aggregate. As a result, its distance from customer plants or project sites relative to other suppliers limits the competitiveness of a coarse aggregate supplier in a given area.

    18. Florida Rock owns and operates a coarse aggregate quarry located in Cedarton, Georgia, known as the Six Mile quarry. This quarry serves a geographic area that includes, among other areas, all or part of Floyd, Polk, Haralson, and Bartow Counties in Georgia (referred to collectively as Northwest Atlanta). Customers with plants or jobs within Northwest Atlanta may, depending on the location of their plant or job sites, also economically procure coarse aggregate from Vulcan’s Adairsville, Bartow, and Rockmart quarries and from another competitor’s quarry located in Cartersville, Georgia. Other quarries cannot on a regular basis compete successfully for customers with plants or jobs in Northwest Atlanta because they are too far away and the hauling costs are too great.

    19. A small but significant post-acquisition increase in the price of coarse aggregate to customers with plants or jobs in Northwest Atlanta would not cause those customers to procure coarse aggregate from quarries farther away than those identified in paragraph 18 in sufficient quantities so as to make such a price increase unprofitable.

    (Source: Justice Department Documents and Publications, Federal Register page No. 68180, citation 72 FR 68180, and Aggregates Manager reports.)

  19. 19
    scoop006 Says:

    Z Forget COP. Bought a boatload of AAPL Dec $190C for .20 sold for $2.15 Merry Christmas

  20. 20
    Sambone Says:

    #5 – Z US consumers are charging everything. The default rate is increasing across the board in regards to Credit cards, which includes store cards. We are also seeing car loans starting to come in late. Since the ATM housing market is gone, US consumers are using non secured credit to keep the party going. Just read this at MarketWatch “U.S. consumers spent more than they earned in November, driving the personal savings rate negative for the first time in 15 months but giving a much-needed boost to a sagging economy, the Commerce Department reported Friday”.

    So it will catch up at some point.

  21. 21
    Nicky Says:

    broader markets – looks like we are on track for 1523 and higher in the spx. This rally could extend until 8th January.

  22. 22
    zman Says:

    Nicky agreed. A chart of Feb crude shows basing action.

  23. 23
    zman Says:

    Sam – you think the recent small rally in the dollar will fade then, right?

  24. 24
    Nicky Says:

    If oil is going to take off every time the broader market rallies because its a sign of strong demand then we should easily see 96.50 plus again if not much higher.

  25. 25
    Sambone Says:

    Yes, I’m still bearish on the US$. Helicopter Ben will continue to lower and other countries don’t like that. I’ve done nicely on FXF for holding cash.

  26. 26
    Nicky Says:

    Z with oil we are either still tracing out the b of an abc correction for wave 4 or we are already in 5 up to new highs. The former looks more likely to me.

  27. 27
    Nicky Says:

    I mean surely it is going to take something pretty major to take oil over the 100 mark in the next few weeks.

  28. 28
    zman Says:

    Nicky re #24. Too funny but true, that seems to be the pattern. I would much rather crude start to take its cues elsewhere. Also, I’d be happier for the energy stocks if the big question is the prospects of the individual stocks and not $100 oil. I don’t want $100 oil. Psychologically its bad for business and we certainly don’t need it to get the stocks up. I’d be happy if oil would trade to the mid $80s and stay there for a long time. The stocks could then advance on their own merits. Nobody is going to drill less at $80 oil than $100 oil except for the lunatic fringe.

  29. 29
    zman Says:

    HAL suddenly back alive.

  30. 30
    zman Says:

    ZTRADE:

    Out APA $100 calls for $6.50, up 41%.

  31. 31
    zman Says:

    could have made 150% on that HAL trade so far.

    I still had some of the $37.50s that were 0 bid this am and will punt very soon.

  32. 32
    zman Says:

    Solar action looks to be window dressing. The big news for them, the new energy bill is behind us and yet they are catching another updraft here regardless of valuation. FSLR looks to be headed to its all time high on no news. Rest of group pretty green.

  33. 33
    zman Says:

    Hey Q, did you try any of those on for size.

    Alhambra, thanks for the laugh yesterday.

  34. 34
    Dman Says:

    Hey Z,

    what do you make of NOV here. In particular, valuation and whether the recent deal will weigh on it near-term. The P/Es look reasonable but I don’t know enough about the nature of the beast to judge if it’s cheap here.

  35. 35
    aaatest Says:

    Dman,

    I have not gotten on on good feel yet for how the street perceives the deal nor have i yet taken on on good look at their numbers/valuation…SII is runng here on “they may be next” as their line is sort of close. Let me address this in more depth of the weekend

  36. 36
    doc Says:

    Bought more GST to lower my avg. cost.

    Scoop=AAPL Good for you. When IPOD came out I had my finger on those penny calls for days but Chickened out.

    The value being in a board is knowing what other members are trading & thinking even if the sector is not in the prime “area of interest” ie. ENERGY.

  37. 37
    scoop006 Says:

    Thanks DOC. Anytime you hit an almost 10x overnight I think its a trade of a lifetime.

  38. 38
    ram Says:

    Can the MM on HK stall the price at 17.50?

  39. 39
    Nicky Says:

    Volume non existent so not sure how much can be read into this rally.

    CNBC citing people needing to fill up their gas tanks today for the rise in rbob – how ridiculous is that???

  40. 40
    Nicky Says:

    This will be bad:

    http://www.bbc.co.uk/blogs/thereporters/robertpeston/2007/12/the_next_threat
    .html

  41. 41
    doc Says:

    Nicky- your blog post get through. What did it say??

    Phil

  42. 42
    doc Says:

    Nicky-I can’t type woth sh–. I didn’t get the blog.

  43. 43
    ram Says:

    Z – I would assume the key traders are going to want to leave early for a long weekend. Would it be wise to start unloading before the last hour?

  44. 44
    ram Says:

    Sorry – aaatest – #43

  45. 45
    Sambone Says:

    Why is oil up over $2.00 today?

  46. 46
    Nicky Says:

    The next threat
    Robert Peston 20 Dec 07, 12:10 PM Whoops.

    Yesterday’s decision by Standard and Poor’s to downgrade the credit rating of one specialised bond insurer, place four others on “negative outlook” and one more on a downgrade review, is bleak news.

    These insurers underpin the prices of trillions of dollars of bonds, both plain vanilla municipal bonds and the concocted CDO variety.

    They insure the bonds so that they are classed as AAA rated and more or less of the same quality as the best sovereign debt.

    This allows the most risk-averse investment institutions – certain pension funds, banks and other collective investment funds – to buy them.

    So if the bond-insurers’ own respective ratings were downgraded, there would be a knock-on to the rating of the bonds.

    That would have two painful consequences.

    It would lead to sharp falls in the prices of those bonds – forcing huge losses on their holders.

    And it could also lead to forced sales of those bonds by institutions which for regulatory or contractual reasons are simply not allowed to hold lower quality bonds – precipitating a further downward spiral in bond prices.

    The consequence would be a further serious erosion of banks’ capital and losses for those of us dependent on pension schemes and insurers for future retirement income.

    Or to put it more starkly, the weakness of these specialised insurers – known as monolines – is a potential threat to the soundness of the global financial system, at a time when the confidence of banks and financial institutions is already at a low ebb.

    The weaker insurers are trying to raise new capital to prop up their credit ratings.

    And it’s in the interest of banks and funds to supply this capital – since the cost to them of not doing so, in the form of a bond-market crash, would be devastating.

    Reason dictates that a commercial solution will be found.

    Bankers tell me they are confident the worst can be avoided.

    But if the monolines can’t be recapitalised by the private sector, batten down the hatches and pray that the US Government will fill the breach.

  47. 47
    Nicky Says:

    Heaven knows why Sam – volumes are non existent so I guess they are just pushing buttons. Completely unjustified move surely.

  48. 48
    Nicky Says:

    That said watch the 24198 level in RBOB – that goes and we are up up and away.

  49. 49
    Nicky Says:

    equivalent level in wti is 9472

  50. 50
    Sambone Says:

    N – #46, they will downgrade MBI and ABK. When they do, watch out below.

  51. 51
    Nicky Says:

    distillates the level is 26686

  52. 52
    Sambone Says:

    Hmmmm, I wonder if GS is hedged for that?

  53. 53
    zman Says:

    wow DO, and Dooohhhh! b/c I’m not there. That’s $10 in 2 days. ug.

    RIG move is a nice consolation though

    Thanks for the levels Nicky

    SWN acting nicely, this move for it should have legs.

    NG up a nickel getting drawn up by oil.

    I see no reason for the rally in oil except for that’s the direction it picked (and that was due to comments from Oil Movements)…this over done but I like the in your face it puts on that flip flopper Flynn.

  54. 54
    zman Says:

    buy stock in White House/Black Market…I just funded their dividend, lol.

  55. 55
    zman Says:

    Ram – sent you an email, definitely subject to pinning at this point and yes they can keep it at 17.50 spot on to kill the OI on both sides of the mark.

  56. 56
    TTupp Says:

    sam, i bout some aapl calls yesterday too, but i went for the less speculative 190’s. the rimm calls were ridiculously overpreiced and i think i doubled what i would have made in rimm calls on 1/5 the move

  57. 57
    zman Says:

    Scoop – lovely trade! Merry Christmas to you too!

    Doc – I think GST should recover after the tax loss selling it has been subject. There is that lawsuit but the company seems to think it is completely w/o merit.

  58. 58
    zman Says:

    yippee-skippee, RIG playing catchup now.

  59. 59
    ram Says:

    HK is above BB. Probably short move over?

  60. 60
    zman Says:

    Ram – HK should be over 20 based on my experience given their prospects and valuation. When it gets there I cannot say. I own the Jan 15s which are down a bit and the stock, also down a bit. I think the next move is back to the old high at 19 but to put in line with its peers, it would trade lows 20s, maybe by mid spring we are there.

  61. 61
    zman Says:

    Ram – re HK, if it will go to 19 and not through, I’ll write those calls against my position

  62. 62
    ram Says:

    NFX seems lagging. Could possibly play catch up soon?

  63. 63
    zman Says:

    Bill, you think after year end that the dry bulks are back quickly to the long side? Just looking at rates and expected earnings (which look pretty current) they are exceedingly cheap. My thought is that if the group comes back, it will be led by the former leaders like DRYS and EXM.

  64. 64
    ram Says:

    Mucho thanks.

  65. 65
    zman Says:

    NFX own a little there still and have missed three chances to flip it at a gain of late plus numerous other opportunities. I want to definitely be long more around earnings time and reserve replacement report time (should be concurrent) as they are going to knock people’s socks off, not so much on finding and development costs but reserve replacement…also, Woodford EURs are likely to come up yet again. This should finally get us to $55. In between, I see little catalyst aside from a possible rally in gas prices to buoy the stock.

  66. 66
    ram Says:

    Bulk guys have no $$ pushing them. They are yawning in todays action. That being said – DRYS MARCH 100’s for 5 bucks?

  67. 67
    zman Says:

    Ram, I think that’s not a bad bet. Bill I know would agree that it’s not at all a longshot and thanks for the prompting to look at how the premiums have shrunk…wow.

  68. 68
    zman Says:

    CHK up $0.53 at HOD, what the hell is it thinking? I still own December and longer calls and it just doesn’t make sense for the stock to be advancing while I own it on opex day.

  69. 69
    Dman Says:

    Q for Z: Is it just the PBR find getting DO & RIG all jiggy and can it be sustained here??

    Estimates for DO seem to have been revised down lately, but the stock is going nuts!

  70. 70
    Sambone Says:

    off subject – Pretty cool vid. Takes awhile to load.

    http://www.glumbert.com/media/koreanfreestyle

  71. 71
    bill Says:

    do and rig are the 2 biggest gainers on my watch list.

    damn , we were just talking about these 2 names earlier in the week

    Im not going to chase and buy at highs after my experience in drys

  72. 72
    zman Says:

    Dman,

    I think RIG has been a little hesitant after their debt deal which confused people on the potential dilution. RIG is actually cheaper but their exposure to the shipyard is greater as well…say the bottom drops out of oil (unlikely) and people start backing out of deepwater contracts (even more unlikely) then they would be in a worse spot as they have the biggest newbuild fleet under construction. I think the impetus is not just PBR although that is another sign of deepwater demand strength. The failed deal earlier this week at Ocean Rig over price, the sentiment that Mexico may be getting ready to be busy, busy, busy and the increased dw activity in more regions over the last year all are contributing to a sense that people who want rigs will have to pay up and the rig owners feel they can pass on what would have been a great day rate just 6 months ago because they know that some higher bid will come along quickly (again Ocean Rig).

  73. 73
    bill Says:

    quarryman-18

    what play do you suggest buy florida rock?

  74. 74
    zman Says:

    Bill, I took the RIG on Wednesday after Tupp pointed out the interesting chart pattern pre and post options expiration. I wanted back in anyway and would have done a little better with DO but you can’t kiss all the girls (if you do you will eventually come down with something and lose all your mojo)

  75. 75
    bill Says:

    is pbr still a buy here

  76. 76
    zman Says:

    Bill – yeah, I definitely want to own them in January (but will be in and out in between) as they will be putting up reserves from their Tupi discovery and perhaps quantifying their more recent finds. I like buying them on weakness related to oil (not today) and I consider this one a trade in and out situation as it trades equally with the Bovespa and the energy stocks in the states. Also, my info here is not as good as I’d like (I think the estimates I have are in rials or some such). Main thing is after taking a year off from growth (2007) they are back to it and 2008 is looking to be very good. When you look at the chart and say “wow, if that’s what they do in a non-growth year, maybe its all factored in” normally I would agree with you but here I think the big reserves are not yet fully discount. Just know that when I talk about these guys, its with less surety than when I talk about a NFX or a SWN which I used to follow on the Street. Judging by what I read and having never talked with anyone at PBR, they look to be onto several big things and I plan to build a simple model or the holidays just so I have better handle on costs, prod growth etc.

    DO and RIG moves just sick now. ATW looks like it wants $100 (at $95 now)

  77. 77
    scoop006 Says:

    z Any sense buying some puts on DO/RIG in anticipation of profit taking?

  78. 78
    Nicky Says:

    Wow that was incredibly weak close for products…

  79. 79
    zman Says:

    I would not on a break out like this …could be window dressing takes it higher next week. You could do it but you’re doing the opposite of “catch a falling knife” …if I did one of the two it would be DO.

    Hear ya Nicky, think its just profit taking after a run that was undeserved (especially on gasoline)?

  80. 80
    zman Says:

    ZTRADE: Out Dec CHK $37.50s for $1.55, up 11% but the Dec 40s will go off the board at a complete loss. Still hold the Jan calls here.

  81. 81
    zman Says:

    Someone sent me this:

    To All My Republican Friends:
    Merry Christmas and a Happy New Year!

    To All My Democrat Friends:
    Please accept with no obligation, implied or explicit, my best wishes
    for an environmentally conscious, socially responsible, low-stress,
    non-addictive, gender-neutral celebration of the winter solstice
    holiday, practiced within the most enjoyable traditions of the
    religious
    persuasion of your choice, or secular practices of your choice, with
    respect for the religious/secular persuasion and/or traditions of
    others, or their choice not to practice religious or secular traditions
    at all. I also wish you a fiscally successful, personally fulfilling
    and
    medically uncomplicated recognition of the onset of the generally
    accepted calendar year 2008, but not without due respect for the
    calendars of choice of other cultures whose contributions to society
    have helped make America great. Not to imply that America is
    necessarily
    greater than any other country nor the only America in the Western
    Hemisphere . Also, this wish is made without regard to the race, creed,
    color, age, physical ability, religious faith or sexual preference of
    the wishee.

  82. 82
    jy Says:

    Z- Thanks for the RIG Jan 135 idea! In at 5.40 yesterday at 9:45AM. Out today at 10.0 at 3:17 PM. Up 85%. That’ll pay for some subscription time.

  83. 83
    Popeye Says:

    Market closed on mon?

  84. 84
    Sambone Says:

    Off subject again, another cool vid. 700 mph at 20 ft off the water.

  85. 85
    Sambone Says:

    Mkt closes at 1pm I believe.

  86. 86
    zman Says:

    JY – glad it worked!

    eggnog thirty has arrived. smart people would sell half or all their RIG Jan $135s taken Wednesday for about a double. I’m holding.

  87. 87
    scoop006 Says:

    Z Are you saying that you are not smart?

  88. 88
    zman Says:

    uuuuuuummmmmmm…me drink eggnog now.

  89. 89
    scoop006 Says:

    ENJOY

  90. 90
    zman Says:

    see you guys over the weekend or on Monday. Dman, will take a closer look at NOV. Thanks for a good week everybody and have a safe and non-frustrating last few hours of shopping.

  91. 91
    Popeye Says:

    Z, check the vol on HK today.

  92. 92
    zman Says:

    P – that is some big volumes.

    Check the late trades in my little DNE, up 28% at the close.

Leave a Reply

You must be logged in to post a comment.

Zman’s Energy Brain ~ oil, gas, stocks, etc… is is proudly powered by Wordpress
Navigation Theme by GPS Gazette

s2Member®
Get Adobe Flash player
%d bloggers like this: