31
Dec

Mellow Year End Monday + An Energy Sector Deal

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Expect a light and potentially volatile trading session today in the commodities and equities as most players are still on break. With the recent run in crude, which was again made during holiday-thin sessions the potential for a sudden move to the downside of multiple dollars exists throughout this week. If you missed the weekend wrap click here.

Housekeeping Note: Did You Know The Cost Of Subscribing To An Investment Newsletter May Be Tax Deductible For YOU? As always, I don't provide advice (especially not tax advice!) but I would suggest consulting with your tax professional as you may be able to write ZEB off.

Commodity Watch

  • Crude Oil: closed last week up 3.2% to a one month high of $96.27. This morning oil is trading up $0.10 to $0.20.
  • Iran Watch: Iran said over the weekend it will begin generation from a Russian built and fueled 1,000 Mw nuclear reactor in southern Iran by Summer 2008. Zcomment: Can you say Operation Opera II?
  • Tropical Cyclone Watch: The Atlantic tropical season may be done but the Pacific one is just getting started. A tropical storm off Australia has forced the shuttering of just over half of Australia's oil production. And if you see anybody hyping this tell them to get real, the Aussies only produce about 25,000 bopd. The one threat to energy production from this season is that storms can and sometimes do make their way into Arabian Sea disrupting tanker traffic from the Persian Gulf.   
  • Natural Gas: closed up almost a percent last week to $7.38. Remember we have another easy comp coming up for this week's report. This morning natural gas is trading off a nickel.
  • Gas-Weighted Heating Degree Days.
    • Expected: 182,
    • Actual: 196. This is the fourth consecutive week actuals have exceeded the Climate Prediction Center's weekly forecast. This compares to last week's reading of 200 HDDs which yielded a withdrawal of 165 Bcf.
    • So we should be looking for another 150 to 160 Bcf number this week versus a year ago withdrawal of 47 Bcf.  This means storage should end the year with a YoY deficit of around 230 Bcf or about 7%. How quickly things can change as we are currently at a YoY storage deficit of 3.8%.
    • Moreover, this week's earlier read is for a season high 205 HDDs which should yield a withdrawal north of 165 Bcf.

hdd-123107.jpg

 

Holdings Watch: We're ending the year on a pretty light note with only a few positions in oily and gassy names and oil service, and no refiners.

Stocks We Care About Today Watch:

Refiners: 4Q07 vs 4Q06 Shaping Up To Be A Downer For Crack Spreads. This shouldn't come as a shock to anyone as during most of the quarter products failed to keep pace with advancing crude oil which is about to set a 1 year percentage gain record. Recent weeks have seen a slight improvement in most regions but it's too little too late. This will mean that 4Q results will almost certainly decline for the second quarter in a row on a YoY basis. I'm happy be on hiatus from the names at present but will be re-entering soon as I believe they will begin to anticipate record summer gasoline prices somewhat earlier than usual. 

Gasoline Cracks Are Down in All Regions Relative To Year Ago Levels ...

cracks-122107.jpg

... And the same goes for diesel with the exception of the Gulf Coast. 

cracks-122107b.jpg

Refiner Multiple: For the most part the group is still very cheap by historical standards. 

refiner-multiple-122807.jpg

Note that the smaller refiners have been subject to year end tax loss selling. This should present an opportunity to enter (FTO) prior to 4Q earnings when they should report another respectable quarter (they should get out of jail free pass for any miss due to the downtime from the minor fire earlier this quarter) and outline a strong 2008.   

Tracinda is Hot For Energy. After bailing on their offer for a stake in TSO, Kirk Kerkorian's private investment firm is taking a 35% stake in small cap E&P Delta Petroleum (DPTR) for $19 per share or a 23% premium to Friday's close.  An offer by a financial investor (as opposed to one made by an operator) will have less of an impact among the small cap E&P sector as it will be seen as a one time event and likely not as the beginning of another sector shopping spree. If an arb to the takeout price remains after the open I will take options designed to close the gap as this looks like a done deal. Management and Tracinda mention use of proceeds in the announcement and I'm sure shareholders will be happy to have the extra flexibility Kirk's cash will give them.

Odds & Ends 

Analyst Watch: nothing.

Texas Watch: Texas hits record gas production in October ...

texas-gas-123107.jpg

...But While Lower 48 Production Has Lept This Year, It Is Still Well Below Levels From Just Four Years Ago

gas-production-l48-123107.jpg

65 Responses to “Mellow Year End Monday + An Energy Sector Deal”

  1. 1
    Sambone Says:

    7:45 am EST

    Oil Rises On Technicals But Activity Muted

    By Lananh Nguyen
    Of DOW JONES NEWSWIRES

    LONDON — Crude oil futures traded higher in London Monday, boosted by bullish technical charts and tight fundamentals.

    But market activity remained subdued ahead of the New Year holiday.

    At 1226 GMT, the front-month February Brent contract on London’s ICE futures exchange was up $0.47 at $94.35 a barrel.

    The front-month February contract on the New York Mercantile Exchange was trading $0.16 higher at $96.16/bbl.

    The ICE’s gasoil contract for January delivery was down $7.00 at $838.00 a metric ton, while Nymex gasoline for January delivery was up 129 points at 247.26 cents a gallon.

    The upside price trend for Brent crude oil remained firmly intact Monday, according to Glen Ward, an energy broker at ODL Securities based in London. Brent prices are now in a “double top” — two consecutive rises to the same price level — pattern after approaching, but failing to surpass, Thursday’s intraday high of $95.87.

    The Brent contract is trading above technical moving averages — a bullish sign — but “with the short trading hours, we would be surprised if the double top of the past two sessions would be breached today,” Ward said.

    Another London-based oil broker concurred.

    “All markets are above their moving averages, which should bring some support,” the broker said. But he also didn’t expect Brent to breach last week’s highs.

    The oil market’s supply-demand balance was also pushing prices higher, said Michael Davies, head of research at Sucden.

    “The oil market remains very tight and is likely to become tighter in the coming years and will therefore remain very susceptible to supply shocks,” he said. Monday trade was putting Nymex light, sweet crude on course to finish the year up 57% from its start at $61 a barrel, Davies added.

    Meanwhile, investment data were drawing a line under prices, after figures from the U.S. Commodity Futures Trading Commission Friday showed large speculative funds retaining their net long positions in crude oil and products.

    Large funds are holding seasonal record net length in oil products ahead of the Goldman Sachs commodity index rebalancing, according to Olivier Jakob of Petromatrix. “We would expect support to be maintained until the end of the roll,” Jakob said.

    “For the next 10 days the reweighing of commodity indices should be a prevailing market factor and maintain support to oil commodities,” Jakob added. Going forward, passive investment from pension funds would also provide a strong price floor in the first quarter, Jakob said.

    Separately, oil contract spreads were in focus as participants sought to lock-in favorable year-end price valuations, a London-based broker said.

    “(We) could see the spreads rather active.” The premium of front-month Nymex crude over Brent is “about where it should be for the (arbitrage) to be open, which hasn’t happened a lot in the past year.”

    Nymex crude will continue to face “fairly good resistance” around $99.20 a barrel, as the contract has failed to breach that level several times, the broker said.

    —By Lananh Nguyen, Dow Jones Newswires

  2. 2
    zman Says:

    Morning Sam,

    Today’s a full day. I had previously thought it was a half.

    after a brief dip, oil now making a run up.

  3. 3
    Sambone Says:

    Bond market closes at 2, market closes at 4. Year end tax selling.

  4. 4
    Sambone Says:

    Friday, 4:23 pm

    Starting ’08, Big Oil Traders May Not Halt Run

    By MATT CHAMBERS andGREGORY MEYER
    Of DOW JONES NEWSWIRES

    NEW YORK — While low volumes helped crude-oil prices again approach $100 a barrel this week, there are no indications a return to busier trading will halt the rush toward triple digits.

    In fact, if trading in the past two years is any indication, the return of more normal volumes could accelerate the move.

    This week, light, sweet crude oil for February delivery rose $2.69, or 2.9%, to close at $96 a barrel on the New York Mercantile Exchange. Analysts say low volumes exaggerated moves that were triggered by falling U.S. crude oil stockpiles and the death of Pakistani opposition leader Benazir Bhutto, but that the move to $100 could well continue with the return of normal trading volumes in 2008.

    “The lighter volume has certainly helped contribute to the ease with which the market has been able to climb this week,” but it doesn’t seem there will be a trend change when volumes return, said Tom Bentz, an analyst and broker at BNP Paribas Commodity Futures in New York. “The market is still in a trend toward all-time highs. We have crude inventories that have fallen quite sharply in the last couple of months, and we are still heading into heating oil season.”

    Prices have risen 57% this year amid forecasts for continuing tight supplies, with front-month Nymex crude futures hitting an intraday record $99.29 a barrel on Nov. 21. Northern Hemisphere heating oil consumption is expected to pick up in January and February and any variance from normal temperatures is likely to have an impact on prices.

    A Trend-Setting January
    Trading in Nymex crude-oil futures has this week produced daily volumes less than half the November average. The drop-off is similar to what happened in 2006, when volumes between the Dec. 25 Christmas holiday and New Year’s Day were slightly more than half the November average.

    While many are expecting some sort of pullback in prices as traders return from their vacations, over the past two years, the trend over the holiday period has continued into the New Year. Last year, prices fell $1.36 to $61.05 a barrel in that period before slumping to an intraday low of $49.90 a barrel by Jan. 18. After Christmas 2005, prices rose from $58.28 a barrel to $61.04 by the New Year, before then shooting as high as $69.20 on Jan. 20.

    “The key is the willingness of traders to establish new positions as the month (of January) goes on,” said Gene McGillian, an analyst at TFS Energy Futures in Stamford, Conn. “If you see traders willing to establish long positions, this week’s run-up in oil prices should continue.”

    Evidence that traders are starting to take longer-term positions came Thursday as open interest, or the number of contracts outstanding, had their biggest jump in nearly two months. Open interest rose by 23,867 contracts to 1,356,423, the biggest nominal move since Nov. 7, as crude prices gained on a report that U.S. crude stockpiles fell and on Bhutto’s death after a suicide bomb attack. A jump in open interest amid rising prices is seen as an indication that speculators are establishing long positions, or betting on a price rise.

    As always, though, the movement of prices after the holiday hinges on the whims of the big traders that return in the New Year, and also on any new developments that could affect the supply and consumption of crude oil.

    For example, many analysts attribute the decline in U.S. crude oil stockpiles in the past month to companies minimizing taxes and expect inventories to recover from nearly three-year lows.

    If this is instantaneous, it could weigh on prices from the second week of January. It won’t show up in the first report, released next Thursday, because that report is for the week ended Dec. 28.

    “At the end of next week, we could see a counterbalance, such as oil companies coming back in and commercial selling,” said Jim Ritterbusch, president of trading advisory firm Ritterbusch and Associates, in Galena, Ill. “With the (crude-oil inventory) number looking bearish the week after next, we might see some hedge funds taking profits ahead of those reports.”

    —By Matt Chambers, Dow Jones Newswires

  5. 5
    Sambone Says:

    This should help gasoline. $4.00 by spring.

    “Gasoline futures have been pushed to new records in recent days, in part by the Goldman Sachs Commodity Index’s plan to boost its gasoline futures holdings next month.”

    I guess GS is long the RBOB contract.

  6. 6
    Sambone Says:

    “The $90 billion (61 billion euros) fund, administered by Standard & Poor’s, will boost its gasoline futures holdings by about $3 billion (2 billion euros), according to Tom Kloza, publisher and chief oil analyst at the Oil Price Information Service. That would raise its percentage holding in gasoline futures to 4.55 percent of the fund from 1.37 percent.”

  7. 7
    zman Says:

    Yep, GS moves these around from time to time to help with everything from their own performance to presidential approval ratings, lol. Remember they cut them mid last summer and gas prices soon rolled lower. Thanks for the heads up as it can really move prices and I have not seen it yet. See today’s crack spread charts start to rally unless oil continues to rally.

  8. 8
    zman Says:

    PBR and SWN creeping up , rest of energy mixed to slight down on the open with the market.

  9. 9
    kiaora Says:

    Z…My technicals say that it’s a good point to add to TLM. What’s your opinion?

  10. 10
    zman Says:

    K – it did well last week and I’ve been waiting for the year to end to see how it reacts (I think it has been getting flushed with YE TL selling). They added new prod off Australia but I have seen little other news of late…would like to see more news out of Vietnam. Technically it looks good to go and fundamentally it remains very very very cheap at less than 3x 2008 expected CFPS.

  11. 11
    zman Says:

    Jazzkool sent me a note earlier saying some talking head on CNBC was bearish on US nat gas but bullish on oil and gasoline. I’d point him to the upcoming gas comps and also point out that so far withdrawals are running ahead of average…just because we started from a high point in gas storage in November does not mean we will stay that way. We have already reversed the YoY surplus in storage into deficit and now we are eating away at the surplus to 5 year as well.

  12. 12
    Sambone Says:

    Jim Cramer’s predictions for 2008

    http://nymag.com/news/businessfinance/bottomline/42392/

  13. 13
    Sambone Says:

    9:41 am EST

    Nymex Crude Rises Amid Political Uncertainty

    By Gregory Meyer
    Of DOW JONES NEWSWIRES

    NEW YORK — Nymex crude rose Monday in light volume amid ongoing concerns about the security and sufficiency of world oil supply.

    Light, sweet crude for February delivery was recently up 66 cents, or 0.7%, at $96.66 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange rose $1.18 to $95.06 a barrel.

    Brent’s gain of more than $1 came as London traders squared year-end positions during a shortened trading session. A London-based oil broker said the Brent rally was staged ahead of the one-minute price marker on the ICE, which was moved forward to the minute between 13:29 GMT to 13:30 GMT ahead of the New Year holiday.

    Underpinning oil’s price strength were concerns about potential conflicts in oil-producing regions.

    Iran’s weekend announcement that it will start operating its first nuclear power plant next summer and Turkish Prime Minister Recep Tayyip Erdogan’s statement that his country will press on with cross-border raids on Kurdish rebels based in Iraq helped support oil prices as the trading week begins, said Gene McGillian, an analyst at Stamford, Conn.-based TFS Energy Futures.

    “Geopolitical instability has recently been a big part of the premium we have had in the oil markets,” he said.

    Political uncertainty in nuclear-armed Pakistan in the wake of the assassination of opposition leader Benazir Bhutto last week also seemed to fuel the market.

    Oil futures traded as high as $97.92 last week after U.S. government data showed domestic crude oil inventories had fallen for the sixth straight week. Analysts say they will be focusing on new inventory data due out this Thursday for direction.

    “If we see the kind of draw we’ve seen in the last four, six weeks, I think the bulls are going to be taking over again,” McGillian said.

    Contracts for January delivery of heating oil and reformulated gasoline blendstock, or RBOB, expire Monday. Both were showing higher percentage gains than the Nymex crude contract.

    Front-month January RBOB rose 2.28 cents, or 0.9% to $2.4825 a gallon. January heating oil gained 3.40 cents, or 1.3%, to $2.6710 a gallon.

    —By Gregory Meyer, Dow Jones Newswires

  14. 14
    Nicky Says:

    Morning all.

    Product expiry today – they seem to be dragging crude along.

    Nat gas – short term Z technically it looks bullish to me and appears to be putting in a ii wave up towards $8. It is going to break down I think but not yet….

    I still think energy is going to chop higher for the next couple of weeks – still favoring 5 playing out as an ending diagonal.

    DMHervey if you are around – just a thought but if this is in fact still wave 4 it is now starting to look very disproportionate to wave 2 which is making it look less attractive as the preferred count.

  15. 15
    coco Says:

    crude just went negative- any news out there?

  16. 16
    zman Says:

    Morning Nicky, near term gas looks bullish to me to withing the constraint that it goes little higher than if even to $8. Don’t think it trades below $6.50 anytime soon either.

    Coco – just end of year noise I think. I had written in the post I expect a minor move off with volatility soon and then I see I’m not alone in the thought that profit taking could crop up soon after the thin volume rally we’ve had. The only news out today is geopolitical in nature and would be presumably supportive of prices.

    You gotta love the DO

  17. 17
    scoop006 Says:

    Z CNBC mentioned LTR= Loew’s Corp is undervalued. I think they are the largest DO shareholder

  18. 18
    Nicky Says:

    WTI has support at 94.50 and then 93.73

  19. 19
    zman Says:

    Thanks Scoop

    mostly red day everywhere now. things that are getting more tempting as adds or new positions:

    SWN, CRK, RIG, SII, OII

  20. 20
    Nicky Says:

    Distillates has support/resistance at 26279 and then 26058

  21. 21
    zman Says:

    Take a look at a daily chart of WNR. Ending the year where it started and still not as interesting as FTO or ALJ among the little refiners.

    Still it looks overdone and may be worth a tax loss recovery trade in the new year.

  22. 22
    Nicky Says:

    Woa – do I hear right – Kilduff saying oil will top out at 100 ish and the geopolitical risk has gone to some extent!
    Adam Hewison saying he sees $130 because of demand from China and also citing that this winter will be colder than average. He needs to get his fact right as the forecasts are indeed for a very warm winter compared to average.

  23. 23
    zman Says:

    JK = who cares

    as for the other guy, I have not seen a warmer than normal forecast anywhere. However, I would point out that the winter demand season (Nov-April) has been colder than last year and pretty, well, normal. I do remember the early forecasts saying both November and December would be warm and that has just not bee the case. We have not had a normal winter in years. What matters is that we don’t swelter, especially for natural gas and that we chew through those surplus (to the five year average) stocks. So far, so good.

  24. 24
    zman Says:

    Just to be clear I’m not adding new positions today and activity has been fairly muted over the last 10 days as I do expect some oil profit taking that could yield better entries. As alway, its interesting to see the money flow changes that follow a new calendar being tacked to the wall.

  25. 25
    Nicky Says:

    The fall I think was on the disappointing EIA data which showed a decline of 1.5% of of total oil use from year ago levels, substantially down on earlier weekly estimates. Within this gasoline demand is down 0.2% year on year and distillate demand down 2.8%.

  26. 26
    Nicky Says:

    Z – re 23 that is simply not true. Early in the winter the forecast was for a colder winter than last year (which was above normal) but warmer than average.
    Granted it was only a forecast.

  27. 27
    zman Says:

    Densie sent me Doug Kass’ list of surprises for 2008. I can’t reprint them here but I would point out one which would be troublesome for oil demand.

    His first surprise is that the housing depression of 2007 morphs into the retail spending depression of 2008 and that by mid year this leads to job losses. This is the only way you cut demand in the U.S. – negative job growth. Recession alone won’t do it, oh it will retard growth, but reversing demand gains only comes with fewer people working. I ran a chart of recession vs oil demand in the U.S. by quarter a few weeks ago…I promise its true. Anyway, if the negative job thing happens you are unlikely to see a major stock build until the second or third quarter which would pressure prices.

  28. 28
    zman Says:

    re 23: meant I have not seen a COLDER than normal forecast anywhere. Got ahead of myself with the thought from the next sentence which was to say that it has not been much warmer than normal and it has certainly been cooler than last year. Apologies for the confusion.

  29. 29
    zman Says:

    Back to Doug cases 20 surprises for 2008. And its a great list and worthy of your attention if you can find it.

    #15 is basically that oil eclipses $135 on terrorist event, that $100 becomes the new floor but that the energy stocks fail to react to this b/c the democrat’s windfall profits tax proposals gain widespread acceptance. What a nightmare. I think he underestimates the power of common sense and the energy lobby.

  30. 30
    Nicky Says:

    #28 – that makes more sense!

    re# 27 – if we aren’t going to see a major stock build until second or third quarter then surely prices will stay high? I must be misunderstanding.

  31. 31
    ram Says:

    If gas is above $4 and going to $5 into late summer, voters will put people in Congress that could change the energy breaks. I wonder if coal is off the hook because of the focus on oil in 2008?

  32. 32
    zman Says:

    N – yeah, I think stocks bottom mid to late 1Q…don’t know that that really propels oil much higher or just holds it in the $86 to $100 range. 2Q I see as the usual seasonal top on inventories. IF we get the negative job growth in mid 2008 then I am saying a big recovery in stocks would occur but not until 3Q.

    Ram – I think 2008 is the year of catchup for coal prices. Big demand China (they have become an importer) and India and no slump in baseline demand in the States. Also, metallurgical coal demand is strong just about everywhere which points you to BTU as a buy.

  33. 33
    jiveyjr Says:

    Doug Kass is very smart…enjoy reading him…he’s been bearish all during this developing credit crunch

  34. 34
    jiveyjr Says:

    he (Kass) was way too early though…maybe that’s okay for an instituional player but I couldn’t take the pain waiting for his views to prove themselves profitable

  35. 35
    zman Says:

    J – agreed, housing was a tough short this past year unless you had your timing perfect. We all saw it coming when the TOLL’s were ringing the sell bell while saying everything looked rosey to them and yet the group was cheap (not for it but compared to the market) and the Street defended the stocks tooth and nail…much the way they are now doing with the financials (that was one of his other thoughts, that the financials won’t recover in 2008.

  36. 36
    zman Says:

    Natural gas, up a dime, tapping on the mid $7s

  37. 37
    apbd Says:

    Highways closed, avalanche conditions, 2000 stranded in CO. Must be Global Warming again.
    apbd

  38. 38
    zman Says:

    A – very funny. That (GW) must be the same reason NG is advancing beyond $7.50 now.

  39. 39
    Dman Says:

    Is it my imagination, or are HAL and CLB gettin’ jiggy??

  40. 40
    zman Says:

    HAL at up $0.02? Gettin’ jiggy? Wow, this is a lame market. But I agree, its time and a good year end holding for fund managers to show.

    As to CLB, I should be clubbed for not having gotten in when I started chatting it up from the low teens. I’ll wait out the day now but as you know, the prospects their look particular bright amongst a somewhat cloudy oil service landscape.

  41. 41
    zman Says:

    Check out oil raging back to evenish

  42. 42
    Dman Says:

    Erm.. well I guess when it comes to lumbering old HAL, what I meant by “gettin’ jiggy” was sort of, you know, “looking like one day it might wanna… erm…if it can be bothered, like, maybe, get out of bed”. And being up 2c on a down day, well for old HAL that’s quite a feat. I was just about to sound the alarm for the SLB, ‘cos it was up 2c too! But now it’s down 5c so I guess it’s all ove…wait! It’s up 12c!! Nope, back to even. OK, OK, I give up.

  43. 43
    dmh Says:

    Nicky: re #14

    Nat gas. The move from Aug low to Nov high looks impulsive to me, and Nov to Dec low looks corrective. So when you say it’s currently in wave ii are you saying that Nov-Dec move is impulsive?

    Crude. What time frame are you discussing? I’m thinking about the whole move from early 07 low, with 2 potential counts.
    1. Wave 3 ended in early Nov and traced a 4th wave flat and we’re possibly in a diag. triangle with wave iv started this morning.

    2. Wave 3 ended in mid Nov and the move to the Dec low is a 4th wave ‘a’ and we’re still in ‘b’.

    Either way it sems to portend a decent correction ahead?

  44. 44
    zman Says:

    D – If the broad market closes with a NYE rally those will jump along with everything energy at or just above par on the day.

  45. 45
    doc Says:

    Housing: I also was early. Lost a lot with CFC puts going dead January 07.

  46. 46
    zman Says:

    WHAT’S UP DO, LONG TIME NO SPEAK?

  47. 47
    zman Says:

    Looks like Appalachia and Power River Basin (Wyoming) coal are going to end at highs for 2007. This is a sharp reversal from where they started the year. I’ll some thoughts on coal in Wednesday’s piece.

  48. 48
    zman Says:

    volume is pathetic in E&P land, less than half of last year’s closing day on average in the big names

  49. 49
    Nicky Says:

    Hi DMH –

    Crude – yes whole move from 07 lows:

    Not sure if this is your option 1 but I don’t think so as I think your count says we are still in wave 4. But an alternative is that 3 ended at the November high of 99.29. 4 Down into mid December ending at just below 96.
    Currently in 5 up which looks like an ending diagonal and we are still in iii.

    Nat gas is much more difficult count imo. I agree move from November to December looks corrective. That said big picture the downside does not look done. Whole move from the 2006 lows looks like a sideways consolidation.

    Big jump into the close…..

  50. 50
    Sambone Says:

    1:05 pm EST

    If Oil Breaks $100, Buy Big Oil

    By ROB CURRAN andGEOFFREY ROGOW
    Of DOW JONES NEWSWIRES

    NEW YORK — The charts say that oil’s recent rally looks set to continue, and yet the magic $100 number has twice formed a psychological and technical barrier. If you think oil is going to hit $100, drillers, oil-service stocks and integrated giants look like good buys, according to some technical analysts.

    Since the drum roll for $100 oil began in late October, the rally has failed twice — peaking at $98.03 on Nov. 6 and $99.29 on Nov. 20.

    On both occasions, the future contract price retreated to around $90, before regaining upward momentum.

    “The triple digits is certainly a (major) psychological number and it stalled there in November, but it had a very minor pullback and now it’s coming on again,” said Phil Roth, chief technical analyst at brokerage Miller Tabak.

    Marc Prado, technical analyst at Cantor Fitzgerald, said that to play crude’s run, it’s important to make a distinction between those that benefit from high oil prices and those that don’t.

    “If you’re in service, do the drilling or own drilling equipment, you can do really well,” said Pado, who noted refiners were one example of energy stocks typically hampered by high oil prices thanks to squeezed profit margins.

    To illustrate his point, Pado compared the recent movement of the American Stock Exchange Oil Index, or the XOI, to refiners such as Valero Energy Corp. (VLO), which are both energy related.

    XOI, which Pado notes is heavily tilted toward major oil companies such as Chevron Corp. (CVX) and Exxon Mobil Corp. (XOM), as well as drillers, has been at record highs in recent weeks. Meanwhile, Valero is down 5.3% for the last six months.

    Even the OIH, which is oriented toward infrastructure and equipment companies, hasn’t had the same success, and is down 0.9% for the last three months.

    Nevertheless, Roth, of Miller Tabak, said the OIH, trading recently at $190, is in a “favorable long-term pattern” and may pick up short term. The ETF doesn’t face major resistance until the November high of $198 and the all-time high of $204.62 in hit in October.

    “I think it can challenge that zone,” Roth said.

    The OIH is poised near support of around $188, where it bounced to during a big move on Dec. 21. Another safety net of support lies around $173 to $175 — the November lows.

    Among the drillers Pado noted as specifically geared to benefit from the rise in oil prices is W&T Offshore Inc. (WTI), which has been on a steady climb since mid-August and has been trading above its 50-day-moving average for almost all of the last four months. After reaching a short trough in early December at just above $26, the stock has rallied to and passed $30 in recent days. On Monday, it slipped 2.8% to $29.93.

    Like W&T Offshore, oil and gas exploration company Apache Corp. (APA), recently around $107.50, has also been a strong performer for about four months. The company dropped to a low of around $73.59 in late August, before rising steadily, and has remained above its 50-day-moving average almost exclusively since then.

    Other companies Pado cited as benefiting as the price of crude oil creeps up to $100 a barrel, are do-everythings like Chevron, Exxon and Royal Dutch Shell PLC (RDSA). Pado, however, warned not to forget about companies in the best position to compete with oil.

    “Natural gas companies have been doing great,” said Pado.

    —Rob Curran, Dow Jones Newswires

  51. 51
    Nicky Says:

    Wishing you all a Happy and Peaceful New Year – see you on the flip side!

  52. 52
    Denise Says:

    Good afternoon-if anyone would like the Kass list shoot me an email and I will send it tonight or tomorrow
    sknitch@earthlink.net

    Happy New Year! Look forward to being more active next month in your sector.
    I enjoy reading everyone’s posts.

  53. 53
    zman Says:

    Have a great and safe New Year’s Eve Nicky and Denise…speak at ya next year.

  54. 54
    Denise Says:

    Also forgot to add my ace chartwoman is also bullish on Ng(as of a few days ago)

  55. 55
    ram Says:

    Happy New Year to all. May we all have a safe and prosperous New Year. Thanks Z for all you do!

  56. 56
    Nicky Says:

    I agree short term nat gas chart looks bullish….

  57. 57
    zman Says:

    Re gas: obviously me too but I think, apart from some spikiness caused by the occasional cold snap $8 or $8.50 is about the top for this season unless the forecast is just completely borked.

  58. 58
    kyleandy Says:

    u can just google doug kass surprises 2008 to get his list

  59. 59
    Sambone Says:

    With Ngas up, I’m surprised that TNH is rocking like it is.

  60. 60
    Sambone Says:

    3:24 pm EST

    Nymex Crude Ends Flat For Day, Up 57% For Year

    By GREGORY MEYER
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures closed out a roaring 2007 in subdued fashion Monday, ending flat in thin volume on the last trading day of the year.

    After ranging more than $2, light, sweet crude for February delivery settled 2 cents lower at $95.98 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange fell 3 cents to $93.85 a barrel.

    For the year, Nymex crude turned in an eye-popping performance: up 57.2%. That’s the largest annual percentage gain for the front-month contract since 2002, when Nymex crude climbed from $19.84 a barrel to $31.20.

    “The percentage is massive,” said Peter Donovan, a vice president at Vantage Trading on the Nymex floor. “The dollar increase is even more massive.”

    Since oil reached an all-time nominal intraday high of $99.29 a barrel on Nov. 21 it has traded above $85 a barrel, still more than the highs of any prior year. Because of global demand growth, a weaker dollar, global security concerns and steady production quotas from the Organization of Petroleum Exporting Countries, among other factors, many traders aren’t ruling out higher prices in 2008.

    “There is potential for a dip, but overall the trend is still up,” said Tom Bentz, an analyst and broker at BNP Paribas Commodity Futures in New York. “At some point we will see $100 oil. It’s just a matter of time.”

    On Monday, however, the market moved indecisively as traders squared positions before year-end. January contracts for heating oil and gasoline expired, and strength in those products supported crude, analysts said.

    Worries about global politics drove prices as high as $96.78 a barrel early in the session, after Iran, the world’s fourth-largest oil exporter, announced it will start operating its first nuclear power plant next summer. As well, Turkish Prime Minister Recep Tayyip Erdogan said over the weekend that his country will press on with cross-border raids on Kurdish rebels based in Iraq, which exports several hundred thousand barrels a day across the border with its northern neighbor.

    Prices then dove as low as $94.73 a barrel as the dollar gained against the euro, making dollar-denominated oil more expensive for buyers with other currencies. Assisting the greenback was a report by the National Association of Realtors that showed existing U.S. home sales rose by 0.4% last month.

    “The dollar roared back. That’s why we fell out of bed,” said Michael Cambria of Eagles Futures on the Nymex floor.

    The NAR also reported the median price of a previously owned home fell 3.3% to $210,200 in November from $217,300 in November 2006. Some saw this figure as a proxy for weakening oil demand ahead.

    “As the price of your house devalues, you start to be more conservative about spending,” said David Beavers, a broker at Alaron Trading Corp. in Chicago.

    Volumes were light before Tuesday’s New Year’s Day holiday, when markets will be closed. When traders return Wednesday, focus is expected to shift to the latest U.S. oil inventory data from the U.S. Energy Information Administration, due at 10:30 a.m. EST Thursday.

    Analysts surveyed by Dow Jones Newswires on average foresee a 1.8 million-barrel draw in crude inventories, the the seventh straight weekly decline. They predict gasoline stockpiles to rise by 1.6 million barrels, distillate stockpiles to fall by 300,000 barrels and refinery use to rise by 0.4 percentage point to 88.5% of capacity.

    “Although trading volume will not likely return to normal until next week, there should be plenty of news later this week to crank up volatility considerably as Thursday’s EIA stats could provide some bullish impetus,” said Jim Ritterbusch, president of Galena, Ill.-based energy trading advisory firm Ritterbusch and Associates, in a note to clients.

    January heating oil rose 74 points, or 0.3%, to settle at $2.6444 a gallon. January reformulated gasoline blendstock, or RBOB, rose 1.61 cents, or 0.7%, to $2.4758 a gallon.

    —By Gregory Meyer, Dow Jones Newswires

  61. 61
    apbd Says:

    And I heard him exclaim as drove out of sight: ” Happy New Year to all, and to all a good night.”
    Blessyaall in 2008
    apbd

  62. 62
    Sambone Says:

    1:00 pm EST

    Crude Seen Sliding For 7th Week

    Dow Jones Newswires

    NEW YORK — U.S. crude oil stocks are expected to fall for the seventh week in a row in data due Thursday from the Department of Energy, according to a Dow Jones Newswires survey of analysts.

    The data, put out by the department’s Energy Information Administration unit and covering the week ended Dec. 28, are due at 10:30 a.m. EST Thursday. The weekly report will arrive a day later than usual because of Tuesday’s New Year’s holiday.

    Crude oil inventories are expected to slip 1.8 million barrels, according to the mean of six analysts’ forecasts. Five of the six expect a draw, while one expects a build.

    Gasoline inventories are seen growing by 1.6 million barrels, according to the analysts’ average. Stocks of distillate, which includes heating oil and diesel fuel, are expected to fall by 300,000 barrels.

    Refinery use is seen increasing by 0.4 percentage point to 88.5% of capacity, with every analyst surveyed predicting an increase.

    According to EIA records, U.S. oil inventories have slipped in the last recorded week of December every year since 1996. Among the factors behind the annual decline are tax considerations, as oil companies try to alleviate levies on end-of-year inventory.

    “Seasonally, this is a period of time when crude oil inventories are drawn down,” said Eric Wittenauer, an analyst at A.G. Edwards in St. Louis, who predicts a crude stockpile decline of between 2 million and 2.5 million barrels. Absent a surprisingly large draw in crude, oil prices could come under pressure later this week, he said.

    At 293.6 million barrels, U.S. crude oil inventories now stand at their lowest level since January 2005, and are in the lower half of the average range for this time of year.

    Analysts’ Estimates
    Analyst Crude Gasoline Distillates Refining
    A.G. Edwards -2.25 +1.75 +0.75 +0.5
    Bank of America -0.2 -0.6 +0.1 +0.5
    Cameron Hanover -3.5 +2.05 -0.6 +0.45
    Citigroup -3.5 +3.5 +1.5 +0.5
    MF Global -2.8 +0.8 -3.1 +0.2
    Ritterbusch & Assoc. +1.4 +2 -0.6 +0.5
    Average Estimate
    -1.8 +1.6 -0.3 +0.4
    Figures in millions of barrels, except for refining use, which is reported in
    percentage points. Figures are rounded to two decimal places in table, one decimal place in averages and story. For analysts providing forecasts in a range, the
    average of the upper and lower ends of the range is used.
    —By Gregory Meyer, Dow Jones Newswires

  63. 63
    Sambone Says:

    11:38 am EST

    US Oct Oil Use -1.5% Vs Year Ago, At 20.455 Million B/D — EIA

    By DAVID BIRD
    Of DOW JONES NEWSWIRES

    NEW YORK — Revised U.S. oil demand in October averaged 20.455 million barrels a day, down 1.5% from a year ago, latest data from the Energy Information Administration show.

    October marks the fifth straight month that oil use has lagged year-ago levels.

    But the trend isn’t all in pointing in one direction. Demand for ultra-low sulfur diesel fuel, which fuels the trucking industry vital to the U.S. economy, jumped 4% from September to its highest-ever level in the month.

    Total oil demand was revised down 1.2% from the earlier estimate for the month.

    Demand for gasoline, the most widely used petroleum product, averaged 9.25 million barrels a day in October, revised down 0.7% from the earlier estimate of 9.318 million barrels a day.

    October gasoline dipped 0.2% below the year-ago level — snapping a streak of 23 consecutive months of year-to-year gains, dating back to November 2005. Gasoline demand was the lowest in October since 2005 and just 6,000 barrels a day above the September level.

    Demand for distillate fuel, the umbrella group encompassing diesel fuel and home-heating oil, fell 2.8% from a year ago, led by steep drops in heating oil and a type of diesel fuel that is being phased out.

    Use of high-sulfur heating oil, which is largely limited to heating homes in the Northeast U.S., after changes in regulations related to railroad and ship fuel usage, averaged just 500,000 barrels a day in the month, the lowest on record, and 35% below a year ago.

    Demand for low-sulfur diesel, which is being phased out in favor of ultra-low sulfur fuel, fell 47%, to 474,000 barrels a day in October, also the lowest on record for the month.

    Demand for jet fuel jumped 2% from a year ago, to 1.638 million barrels a day, the most for October since 2005. The figure was revised up by 3.9% from the earlier estimate.

    Demand for heavy residual fuel oil averaged 625,000 barrels a day, down 12.6% from the estimate, but 2.1% above a year ago, and the most for October since 2005.

    —By David Bird, Dow Jones Newswires

  64. 64
    Sambone Says:

    4 minutes to “Tini time”. Ya’ll have a goodun, and keep the chalk off your shoes! Be good and if your not, be good at it! LOL Happy, Happy, Joy, Joy. I’m outta here!

  65. 65
    zman Says:

    Cristal Time! Be good yada, yada, yada what Sammy said. Be safe and I’ll talk to you next year!!!

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