09
Jan

Wednesday Morning – OIH Multiples, Good CHK News

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Would someone just shoot the heads of subprime (and then pick off their golden parachutes) so we can get this blood letting over with? The daily waffle between worrying about whether we are going into a recession or are already in one is getting to be a bore and a drag on energy sector performance which has a long term growth story unparalleled among other segments in the S&P500 despite being severely discounted to the group. Today looks to be another bloody open. In today's continuing beginning of the year look at energy sector multiples I take a look at the members of the OIH but first a few words about what the EIA thinks about the global crude oil supply and demand picture. 

EIA Short Term Energy Outlook (STEO) Forecasts Tight 2008, Easing 2009. Key points and comments:

  • Oil demand expected to grow 1.5 mm bopd in 2008, largely China. This is higher than expected non-OPEC supply growth as further declines are anticipated from Mexico (I agree with several recent voices that they will likely be a net import in 5 years (they are now the #2 supplier to the U.S.)) and from Norway.

  • Non OPEC supply expected to rise 0.9 mm bopd, up from 0.6 in 2007. In 2009 the EIA sees Non-OPEC volumes causing the "easing" in tightness from the headline and I would point out that this is largely contingent upon volumes from Russia leaving Russia. Of late, there have been measures taken to keep the Rodina's volumes in the mother land.

  • EIA pegs the current OPEC surplus at 1.6 mm bopd. That is historically pretty low. They see volumes from new projects in Saudi Arabia (1 out of 4 of which have already been delay), Algeria, Angola, Nigeria (yeah sure), Qatar, and UAE driving this surplus to 4-5 mm bopd by the end of 2009. Honestly, I just don't see that happening with the rally in "local" demand the middle east is experiencing. Moreover, that rise in surplus capacity is contingent upon everything working in both Non-OPEC and OPEC countries. If it were to occur I would venture that oil would trade back into the $60 to $70 range.

  • Finally, EIA estimates OECD inventories at YE07 were 2.54 billion barrels or about 4.5% below year ago levels and just below the five year average. 

 

Commodity Watch:

  • Crude Oil: rallied $1.24 to $96.33 yesterday due to rekindling threats in Nigeria, a weaker dollar, and money flows from equities to commodities. This morning crude is trading $0.50 before the inventory numbers.

  • Flip Flop Watch: ``We are still in the midst of a broad commodity market rally,'' said Phil Flynn, a senior trader at Alaron Trading Corp. in Chicago. ``Energy is trending higher with gold and other precious metals. The weakness of the dollar is also a major factor.'' Zcomment: I have no comment other than something like LOLROFLMAO. 

EIA Inventory Report Expectations (from the Blolomberg survey)

exp-010808.jpg

ZComments:

Crude: The range for a crude draw down is very wide with the consensus amongst the different surveys with Dow Jones looking for a draw of 0.8 million barrels and Bloomberg eying a draw of 2.1 million barrels. The reaction in crude, barring more threatened or actual geo-political unrest, will be negative to anything short of a million barrel draw in crude.

  • There are also a few analyst/traders out there looking for the first build in crude stocks in 8 weeks due to the much trumpeted inventory tax effect. Just looking back at the last several years the first report of the year has not often been witness to a big build and when it has there was a large import surge which I really don't expect this week.
  • It could happen but we may not see it if demand from refiners continues to grow towards seasonal norms and/or if imports back off (which I suspect they will.)
  • Natural Gas: Closed up 9 cents at $7.97 on the back of a strong oil market and in advance of the prospect of seeing the biggest inventory draw down of the season this Thursday. This morning gas is up a whopping $0.18 to $8.15.

Current U.S. Gas Storage: 5.2% below last year, 8.2% above the 5 year average.  Click here to see all the charts that go with.

gas-table-010408.jpg

OIH Multiple Update

oih-multiple-010808.jpg

Key Observations and Takeaways

1) earnings remain almost unchanged (a penny to a nickel up or down in all cases) since mid December. 

2) At just under 13x, the group remains highly discounted on a forward basis to the S&P500 (closer to 18x if analyst estimates are to be believed). While I would never expect this discount to fully go away, the gap is slowly narrowing.

3) Within the group:

  • (HAL) is slowly narrowing the gap to (SLB) and I will be long (HAL) prior to 4Q numbers.
  • (ESV) is cheapest and working hard to solve some of the utilization and day rate stagnation issues and I'm warming up to that story as well.
  • (SII) continues to look interesting to me in this environment. More on that soon.

Tune in Thursday for a look at the Transports and Friday for the E&Ps.

Stocks We Care About Today:

In comments on Monday I wrote: CHK may have some exit rates to talk about or they may wait until the first week of Feb which doesn’t help you out on the Januaries. In past years they have either waited for reserve report which comes out first 10 days of Feb and prior to the 4Q report or they have gone ahead and gotten it out early along with some Barnett Shales stats. The decision tree there is complex but if the stock caves much more I’d say there is a good chance they get something out early. Remember that they delayed hookup of a number of wells in the Barnett during the 4Q to prop gas prices (call it what you want but that was the reason) and so 4Q average and 4Q exit will show a wider divergence than typical.

Today Chesapeake Announces Small Barnett Acquisition & Exit Rate.

  • Gross Barnett Shale rate > 600 MMcfepd, or 400 MMcfepd net, up sharply from the 330 MMcfepd net they were producing as of the 3Q press release from early November. The gross exit rate for 2006 was 250,000 Mcfepd.
  • This makes (CHK) the second largest producer in the shale.
  • They established a YE2008 exit rate target range of 900-1,000 MMcfepd per day
  • Acquired 8,600 acres in the heart of the play bringing total acreage to 255,000 acres (215,000 in Tier I core). Drilling locations now at 2,800.
  • (CHK) plans to continue to add 40,000 acres per year which adds about 500-600 locations per year. 

(RDC) signs new deals for two of its Gorilla rigs. Signed a $56 million, 6 month deal for Gorilla 2 or 3 (undecided as to which just yet) with (CNR) starting in late 2009 off the east coast of Canada. BG is expected to pick another of the harsh environment jackups in 2010 also for a 6 month stint. Rowan is a quality operator and these rates equate to roughly $300,000 per day which is very stout. From my comments in yesterday's post on the shallow water guys:

Shallow water drillers: Dayrate trend: Up. Jackup utilization remains high at 88.8%. The dispersal of several once upon a time GOMEX only rigs to points abroad has helped to stabilize rates in the Gulf. National oil companies in particular are expected to step up shall and deepwater drilling this year and into the near future.

Here's The Trend In GOMEX Rig Counts

gom-rigs-010808.jpg

And Here's The Trend For International Offshore Drilling (both shallow and deep but you get the idea, demand is increasing). When you start to see day rates north of $500,000 per day among the deeper capable rigs and north of $250,000 per day in the modern shallow water rigs you know demand is exceeding supply (in those markets) and then you see this migration with firms like RDC and ESV sending higher percentages of their fleets abroad.

international-offshore-rigs-010808.jpg

 

 

 

Holdings Watch: No changes

Odds & Ends

Analyst Watch: (LDK) raised to hold at CIBC, (TSO) cut to underperform at BS, SWN price target raised from $65 to $76 at UBS. (BTU) raised to buy from add at Calyon, (RAIL) cut to hold at Keybanc,

Chavez Watch: 0, 8, net -100??? Just a guess at the latest terms from Hugo Chavez for foreign oil companies dealing with state run PDVSa which is now requiring payment within 8 days ... or else. Once again, my hat is off to Hugo for mismanaging one of the world's biggest hydrocarbon reserves right into the ground.
vz-production-09307.jpgclick to expand.

Upcoming Solar Conferences:

Merrill Lynch Solar Investor Forum on January 10-11, 2008 at the Merrill Lynch Client Service Centre in Hong Kong.
CLSA Asia Investors' Forum on January 14-15, 2008 at the Four Seasons Hotel in Las Vegas, Nevada.
Photon Expo 2nd PV Production Equipment Conference and 2nd PV Investors Conference on January 16-17, 2008 at the Shenzhen Convention & Exhibition Center in Shenzhen, China.
Deutsche Bank Access China Conference on January 23-24, 2008 at the Grand Hyatt Hotel in Beijing. 

 

117 Responses to “Wednesday Morning – OIH Multiples, Good CHK News”

  1. 1
    Sambone Says:

    7:48 am EST

    Crude Higher As US Crude Stocks Seen Dropping

    By Nick Heath
    Of DOW JONES NEWSWIRES

    LONDON — Crude oil futures traded higher in London Wednesday on expectations the latest U.S. oil inventory data will reveal another drop in crude stockpiles.

    Prices extended Tuesday’s rise as speculation mounted that the U.S. Department of Energy will report Wednesday that crude oil inventories fell for the eighth straight week.

    Crude remained supported by reports that Nigerian militants are planning to attack oil installations in the country’s main oil producing region, meanwhile, while investment flows into commodities in general were also seen to help prop up prices.

    At 1237 GMT, the front-month February Brent contract on London’s ICE futures exchange was up 44c at $95.98 a barrel.

    The front-month February light, sweet, crude contract on the New York Mercantile Exchange was trading 66c higher at $96.99 a barrel.

    The ICE’s gasoil contract for January delivery was up $1.25 at $840.50 a metric ton, while Nymex gasoline for February delivery was up 79 points at 248.18 cents a gallon.

    U.S. crude oil inventories are expected to have fallen by 800,000 barrels in the week to Jan. 4, according to the average of a Dow Jones survey of analysts.

    A 4-million-barrel drop in crude oil stocks last week pushed crude oil inventories to their lowest level in three years, boosting fears of tight oil supplies, and helping crude oil prices climb above $100 a barrel.

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

    Reports of Nigerian militants planning assaults on the country’s oil facilities Tuesday kept prices higher Wednesday.

    “It’s supportive for the market, but I would think we need something to actually happen before any big moves,” a London-based trader said.

    Oil prices were also being seen to be supported by investment flows from funds, that have boosted the commodity complex as a whole recently.

    “Support on oil yesterday was part of cross commodity gains…and commodities remain supported by investment and asset allocation flows,” said Olivier Jakob of Petromatrix in Switzerland. But he warned that crude prices remain susceptible to downside risk when the asset allocation process finishes, particularly if uncertainty over economic growth persists.

    While immediate attention focussed on Wednesday’s data release and Nigerian militant threats, fears of an economic slowdown continue to prevail in the longer-term outlook.

    Weak employment data Friday fueled concerns that the U.S may be heading into a recession, a development that could toll on crude demand.

    “If U.S. demand growth is flat in 2008 it might not make that much of a difference to the oil markets — if we start to get negative demand growth in U.S and elsewhere in the OECD, then you’re starting to offset growth elsewhere — that’s what the market gets worried about,” said Mike Wittner at Societe General in London. “It’s not just a recession per se, it’s the fact that a recession could cause softening in crude oil demand.”

    —By Nick Heath; Dow Jones Newswires

  2. 2
    coco Says:

    GS report that US reccession likely hitting everything.

  3. 3
    zman Says:

    Thanks Coco

    Saudi out this morning saying they pumped 9 mm bopd n December, have capacity to pump 11.3. This reversed the slight gains in crude in the very early morning hours and flies in the face of the EIA’s statement yesterday that OPEC surplus capacity is at 1.6 mm bopd at present.

  4. 4
    zman Says:

    Furthermore, Saudi says it could go to 11.3 mm bopd now with no extra effort. Sounds like price cooling talk to me and I doubt the ease and perhaps the ability of them to just flip the switch on an additional 2.3 mm bopd. They have announced plans to go to 12.5 mm bopd (capacity) in 2009.

  5. 5
    Sambone Says:

    Weak opening

  6. 6
    Sambone Says:

    9:23 am EST

    Nymex Crude Slips Before US Inventory Data

    By Matt Chambers
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures were slightly lower Wednesday before U.S. government inventory data due Wednesday that is expected to show crude oil stockpiles fell for the eighth straight week.

    The futures pared early gains as the dollar strengthened, making oil more expensive for traders using other currencies, and after Goldman Sachs said it is predicting a recession in the U.S.

    The inventory data, due at 10:30 a.m. EST from the Department of Energy, is expected to show an 800,000-barrel drop in crude oil stockpiles, according to the mean forecast in a Dow Jones Newswires survey of analysts. Gasoline stockpiles are seen rising by 1.6 million barrels, and distillates, which include heating oil and diesel fuel, are expected to fall by 300,000 barrels. Refinery use is seen growing by 0.1 percentage point.

    Light, sweet crude for February delivery on the New York Mercantile Exchange was recently down 49 cents, or 0.5%, at $95.84 a barrel. Brent crude on the ICE futures exchange fell 54 cents to $95.00 a barrel.

    “For the most part, the choppy price activity simply represents normal consolidation ahead of the weekly data,” Jim Ritterbusch, president of trading advisory firm Ritterbusch and Associates said in a research note.

    Front-month February reformulated gasoline blendstock, or RBOB, fell 2.19 cents, or 0.9%, to $2.452 a gallon. February heating oil fell 1.14 cents, or 0.4%, to $2.6249 a gallon.

    —By Matt Chambers, Dow Jones Newswires

  7. 7
    zman Says:

    6-10 day forecast suddenly has a big spot of blue in it. The next 30 days were supposed to be solidly red (above normal temps) so this has gas a little excited this morning.

    http://www.accuweather.com/maps-temperature.asp?partner=accuweather&traveler=0&site=us_&large=0&fday=2&type=temp

    here’s a story about the death of the big heat wave forecasters have been talking about.
    http://www.accuweather.com/news-story.asp?partner=accuweather&traveler=0&article=5

    This means the CPC will once again have underestimated the cold with its 140 pre liminary reading for this week.

  8. 8
    zman Says:

    DO is just getting savaged…I am not going to try to pick a bottom in this market… maybe a quick trade after the numbers though.

  9. 9
    zman Says:

    Energy sector greening with the broad market. Don’t trust it…keep the sell button handy. Nothing means anything in energy land (except the CHK news which was really good) before the numbers come out.

    DO mounting a recover (now only down $3) again, not to be trusted but I am very tempted.

    Refiners teetering before the numbers, which if consensus is right on products, should yield no relief for cracks. Also, the Bear downgrade of TSO is not helping although that guy is usually late to the party.

  10. 10
    Sambone Says:

    Z – When are Analyst early?

  11. 11
    zman Says:

    PBR for PZE rumor debunked this morning by at least one analyst. Points out that Cramer got it wrong yesterday, admitted as much last night and still told viewers to buy PZE but was sketchy on the reasoning. The analyst was not sketchy on his reasoning saying PZE was now over-valued and downgraded the stock.

    One more thing and I’ll shut up for a bit. IOC, that E&P looking for gas off Papua New Guinea should have drilling news around month end. Stock is taking a pounding. Now, no one knows if there is enough gas to support a LNG project there yet except maybe the company. I’m going to wait a little longer and take some OOTM Feb calls here. I don’t normally trade on exploration or tips but this one has taken a large hit while burning through cash and waiting on news. Should be a pretty good sized squeeze if they hit it. They also speak at a small Energy conference tomorrow.

  12. 12
    zman Says:

    Sam – is that a trick question? How about when they arrive for an interview.

  13. 13
    Denise Says:

    Mr K saying the fed will ease today-says he has good indication
    Hope so we need all the help we can get
    Good morning

  14. 14
    Sambone Says:

    #12 – My experience is that they are early for interviews only. By the time they recommend a stock, it’s already moved up at least 20%.

  15. 15
    zman Says:

    Morning D,

    If he’s right it may help the market temporarily but then you’ve got inflation to worry about.

    Sam – LOL. Glad I’m just a writer.

  16. 16
    zman Says:

    DRYS – wow … be afraid, be very afraid. Should have done my short from yesterday at $70.

  17. 17
    zman Says:

    Dropped by 6.8 mm barrels

  18. 18
    zman Says:

    Bad for refiners

    Gasoline up by 5.3 mm barrels
    Distillate up by 1.5mm barrels

  19. 19
    zman Says:

    Big jump in refinery utilization to 91.3%

    Crude imports were off slightly so you can’t blame the big drop on that. This was purely,um, DEMAND.

  20. 20
    kaman Says:

    Gonna have to write a song about a dog named Valero, “had to be put down cause he just wouldn’t hunt no more…”

  21. 21
    zman Says:

    ZTRADE: Jan VLO $65 puts for $3.30. Jan SUN $65 puts for $2.35. Bad numbers for refiners.

  22. 22
    zman Says:

    Cushing stocks increased from 17.5 to 17.7 despite the huge draw on total stocks .

    Oil should catch on fire soon.

    I guess the tax low inventory effect will take place, um, next week, lol.

    Wonder if PF and co goes bullish now.

  23. 23
    zman Says:

    Sane, any word from API yet?

    Funny how the bears go away when the data doesn’t work for them.

  24. 24
    Sambone Says:

    10:39 am EST

    Nymex Crude Shrugs Off Big Crude Stock Fall

    DOW JONES NEWSWIRES
    From Market Talk:
    [Dow Jones] Nymex crude prices show little net reaction to a bigger-than-forecast fall in US crude stockpiles, which is offset by bigger-than-expected gasoline and distillate stocks and refinery use. Nymex crude -46c at $95.87, roughly where it was trading before the DOE released its weekly data at 10:30 a.m. EST. (matt.chambers@dowjones.com)

  25. 25
    zman Says:

    CNBC guest trader said he sees rising cracks in the near term. I say, the much worried about 90% utilization level has been breached to the upside (many said we just couldn’t do it this year). This will pressure products as their stocks build faster than normal. He pointed to lower crude prices after the number as evidence traders are moving out of the front month. Completely lame argument of tax inventory.

    Oil is going green. Refiners are falling. Maybe next week we see this big tax related reversal in crude stocks but we are well below year ago and below 5 year average on stocks and this will support crude prices and depress cracks for the next month or two, and maybe longer if indeed January stays warm.

  26. 26
    zman Says:

    Sam – the initial reaction was wrong…where is Nicky today?

  27. 27
    Sambone Says:

    My question is why is Ngas up? Warmer weather, etc.

  28. 28
    zman Says:

    Sam – Forecast has gotten a little cooler…I think we getting a bit of a squeeze on that giant (near record) short interest number report. Also, you’ve got the biggest draw of the season likely off the prior week’s coldest of season weather. Still, I agree, coming tough comps will check this move.

  29. 29
    zman Says:

    Oil trading around $97, up $0.60ish

  30. 30
    sane Says:

    Haven’t seen API yet. Still waiting.

  31. 31
    zman Says:

    Crude up $1.40, $97.70 … Again, those numbers were bullish crude, bearish products and refiners. Talking head on CNBC could not have been more wrong.

  32. 32
    Sambone Says:

    Hmmmm, got that feeling again about the overall market today. Looks like dark clouds on the horizon.

  33. 33
    Sambone Says:

    Z – You might want to buy some puts on MBI. I think they will go under.

  34. 34
    zman Says:

    Sam – what’s the rule on first 10 days of the year, lol? Seems like the discount brokers are going to get thumped as people take the year off …

    Thanks for MBI, will have a look. I’m much more comfortable in my hydrocarbon saturated little world.

    Those refiners will get drop kicked if this market goes red.

  35. 35
    zman Says:

    Drybulks getting hosed again, down an average 10% on the day.

    Bill, a penny for your thoughts?

  36. 36
    Nicky Says:

    Morning all.

    Staggering draw in crude looks like it is giving us the iii of v up.
    That is if the top isn’t in! If the top is in then this is just part of ii up.

    Interesting thought from Denise if the info is right and the Fed cuts inter meeting – dollar will tank and wti have another excuse to go up.

  37. 37
    zman Says:

    Nicky, did you see Effffersson. She was tripping over herself to get out the 6.8 mm number…then she talks to a trader and he says ehhh, not that big a deal and she completely changes her tune. What an independent thinker she is, lol.

  38. 38
    Nicky Says:

    Broader market – yesterday negated the triangle count finally and is therefore now bearish. That said I am still expecting a very good bounce. Cycles forecast this starting anytime between 9 – 11th January. A possible downside target for this leg is 13300 area on Dow and 1350 on SPX which would then give us two equal legs down.

  39. 39
    Nicky Says:

    She drives me nuts Z – totally hysterical idiot!

    Interestingly some of the European markets still have the triangle working -ie FTSE and DAX. Hang Seng also still has a triangle playing out. Nikkei looks very bearish.
    So what we could see is some of the markets make new highs whilst others just put in a wave 2 for a lower high.

    I guess its make your mind up time for wti – does it now roll over with the weaker economy picture?

  40. 40
    zman Says:

    N – Stands to reason we see a small boost in imports next week. OPEC said December was up another 300,000 bopd and I suspect that Saudi is turning a very blind set of eyes to anyone who wants to cheat at these prices as they would like to see oil cool and thereby not further stress the global economy.

    If we get any pullback in utilization and/or that inventory effect actually has an affect (so far no show) a smaller draw or even a build and then yeah, I think WTI comes into the low $90s

    Thanks for the market levels…would you do the same for RBOB count? tia.

  41. 41
    zman Says:

    bye-bye refiners

  42. 42
    Nicky Says:

    Well it was a crazy mixed picture Z wasn’t it with the good builds in products. Maybe the Houston shipping problems contributed.

    The picture is the same for RBOB Z. We need to either see Mondays high of 25157 taken out or its low of 24155.

  43. 43
    Nicky Says:

    Did you see Gartmann on CNBC earlier – long nat gas and short crude. I am thinking there is some speculation taking nat gas higher here. Fundamental picture is pretty bearish. That said I still have a target of mid 8’s.

  44. 44
    zman Says:

    Nicky – missed Gartman but I’m with you on max nat gas near term of mid $8s. See #28 for near term thoughts.

    Longer term you can’t deny U.S. gas production is likely to rise again in 2008. Big wild cards are imports. LNG competition is fierce and little is coming to the U.S. since they paying about $18 and MMBTU for it in Japan right now and Europe is higher than U.S. as well. Also, Canada should be lower this year than last as production there dwindles and local demand rises.

    Analysts are pretty much all sporting lower 2008 and than 2007 price decks for natural gas…lots of folks taking their estimates down to an average of about $6.50 to $7.00.

  45. 45
    Sambone Says:

    11:31 am EST

    Nymex Crude Rises As US Stockpiles Fall

    By MATT CHAMBERS
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures rose Wednesday, boosted by a bigger-than-expected drawdown in U.S. crude oil stockpiles.

    U.S. Department of Energy data show crude oil stockpiles fell to their lowest level since October 2004. A bigger-than-expected increase in gasoline stockpiles and an unexpected lift in distillate inventories tempered gains immediately after the data, but prices soon took off.

    Light, sweet crude for February delivery on the New York Mercantile Exchange was recently up $1.33, or 1.4%, at $97.66 a barrel after trading below $96 before the data was released. March crude was up $1.18 at $97.26. Brent crude on the ICE futures exchange rose 92 cents to $96.46 a barrel.

    “The report was bullish for crude oil, with a larger than expected draw based on higher crude runs and lower imports than anticipated,” said Tim Evans, an analyst at Citigroup in New York.

    The perceived tightness in supplies brought the premium of the front-month contract to its highest for the year.

    When the front-month contract is at a premium to months further out, a situation known as backwardation, it is seen as indicative of tight supplies. The oil market has been in backwardation since mid-2007 and the front-month premium was recently trading at 45 cents, its highest since Dec. 27.

    “The February-March spread is at the highest this year, which should help strengthen prices.” said Michael Cambria, who works at brokerage Eagle Futures on the Nymex floor

    U.S. crude oil stockpiles fell 6.8 million barrels to 282.8 million barrels in the week ended Jan. 4, the DOE’s Energy Information Administration said in its weekly report. That compares with a mean average forecast of an 800,000-barrel drop in an earlier Dow Jones Newswires survey of analysts.

    Gasoline stockpiles rose by 5.3 million barrels, beating estimates of a 1.6 million-barrel build, and distillates, which include heating oil and diesel fuels, rose 1.5 million barrels, compared with expectations for a 300,000 drop. Refinery use rose 1.9 percentage point to 91.3% of capacity. Analysts had expected only a 0.1 percentage point gain.

    Crude oil futures were trading slightly negative before the data, pressured by a strengthening dollar, which makes oil more expensive for traders using other currencies. The euro was recently at $1.4671, from $1.47 late Tuesday.

    Front-month February reformulated gasoline blendstock, or RBOB, rose 26 points, or 0.1%, to $2.4765 a gallon. February heating oil rose 2.42 cents, or 0.9%, to $2.6605 a gallon.

    —By Matt Chambers, Dow Jones Newswires

  46. 46
    zman Says:

    IOC getting trashed on no news. Will wait for it to stop falling before taking a position but this could be giving us a nice opp for a trade.

  47. 47
    zman Says:

    Congrats to T on those refining shorts yesterday

  48. 48
    zman Says:

    anybody seen consensus for the gas number tomorrow? I’m thinking a 170+ Bcf pull

  49. 49
    Denise Says:

    Interesting column on invisible hands

    http://www.telegraph.co.uk/money/main.jhtml?view=DETAILS&grid=A1YourView&xml=/money/2008/01/07/ccview107.xml
    Looks like it is close to intervention time

  50. 50
    zman Says:

    D – I’m just glad to know someone is paying attention…at times I’ve thought of Ben as being too passive.

    Thinking about losing some / all of my SWN here or in the morning …could be a buy the rumor sell the news event on tomorrow’s gas number.

  51. 51
    scoop006 Says:

    Z-#50 what’s the rumor

  52. 52
    zman Says:

    Scoop – D’s link is talking about the mobilization the so-called “plunge protection team” which includes Paulson and Bernanke and which is apparently getting ready a big stimulus package …I guess they don’t worry much about inflation these days.

  53. 53
    zman Says:

    rally in crude backing off a bit but nevertheless having the desired impact on APA, PBR and the same on the refiners.

  54. 54
    Sambone Says:

    Scoop – The “PPT” has been meeting since Paulson came on board in June 06. Look at the Dow from June to Nov 06. Last Friday is the first time that a sitting President has meet with them.

  55. 55
    zman Says:

    solars getting whacked today, may punt my once dead FSLR puts unless it breaks $200.

    amazing the group think mentality being displayed in this market.

  56. 56
    zman Says:

    BTU getting hit for 5% on no news.

  57. 57
    zman Says:

    Sam – another day, another plummet?

  58. 58
    zman Says:

    oil back to flat in this down market … that’s just wild.

  59. 59
    Sambone Says:

    Z- #32, yea, got that feelin.

  60. 60
    jiveyjr Says:

    people alternate trading based on reason and with their “lizard brains”…

  61. 61
    Sambone Says:

    Financials gettin Spanked again today.

  62. 62
    Nicky Says:

    Almost at the August lows now on the Dow – 12518…..

  63. 63
    Nicky Says:

    If we take out 1379 on the spx then 1350 is next support….

  64. 64
    Nicky Says:

    I can’t help but think that the Fed are going to step in very soon now – I mean why would they wait until the end of the month if they are going to do it?

  65. 65
    zman Says:

    I’d be buying oil stocks were it not for 1) the market being a bucket of … and 2) Nicky keeps repeating that S&P target. No matter how cheap energy stocks are, no matter how leveraged the names might be to oil (APA) or gas (CHK, SWN) there’s no point in banging your head against the markets wall of panic.

  66. 66
    zman Says:

    N – agreed. I might actually watch Cramer to see if he has an aneurysm tonight over their lack of action.

  67. 67
    Sambone Says:

    Z – Off subject but I want to own LM. It’s broken it’s support and now looks headed to the mid 50’s. If so, then I’ll start taking postions and average down. I think that it is a takeout at some point down the road at a higher price.

  68. 68
    zman Says:

    Sam that’s not off subject.

    Refiners, solars, transports getting stepped on now.

  69. 69
    zman Says:

    anybody seen a gas consensus #?

  70. 70
    TTupp Says:

    thanks z. was meeting with a partner and came back and was happy to see my streamer bleeding for once. going to initiate a monster position in vlo if it holds below support prior to the bell.

  71. 71
    Nicky Says:

    Energy needs to hold today’s lows or we have two choices – upside is complete or iv is not!

  72. 72
    zman Says:

    Hear ya T

    Refiners cheap and getting cheaper.

    It’s hard to imagine from a trading standpoint what could get people optimistic on them over the next week. Crude likely to remain mid 90s or better, products likely lower with inventories + economic concerns. Unless some analyst with some swing decides to be a hero its a good bet they go lower …or maybe the Fed cuts a point and then all boats jump out of the water.

  73. 73
    zman Says:

    Hey Nicky, has PF gone back to being a bull yet?

  74. 74
    TTupp Says:

    what the most surprise ratecut you have seen? thats bad for shorts if ben pops out of a closet one day and says SURPRISE”!

  75. 75
    zman Says:

    T: check out the drybulks, how I wish I had done my $70 short on DRYS

  76. 76
    zman Says:

    and our thoughts of lower FSLR are coming to fruition.

  77. 77
    Sambone Says:

    T – Ben cuts, overall market goes up short term. Oil goes up also. Then overall market starts back down after the joy works out and then we’re right back to today. Stagflation.

  78. 78
    TTupp Says:

    i took puts on drys yesterday- wrote it in the same post as when i announced my refiner short.

    should get a pretty aggressive retracement soon on the long fallers though so im tain of the drys and selling call spreads into expiry.

  79. 79
    zman Says:

    T = Nice!

  80. 80
    Nicky Says:

    Samborne re #77 – totally agree.

    Z – PF was still selling according to this morning’s email.

  81. 81
    zman Says:

    N – any site of a gas number for the morrow?

  82. 82
    zman Says:

    Sane – any luck with the API? Just wonder if some of these numbers are balancing out after last week’s divergence.

  83. 83
    Nicky Says:

    Z – can’t find anything on the gas number.

  84. 84
    TTupp Says:

    tso-

    esoro Bear Stearns downgrades Peer Perform to Underperform . Bear Stearns downgraded TSO to Underperform from Peer Perform saying they project Tesoro’s West Coast operations to be negatively impacted by weakening fundamentals in the region. Product inventories have risen amid softening demand and rising imports. With oil prices high, they expect continued high refined product prices to weigh on demand, and for West Coast margins to remain below the levels seen in the past several years.

  85. 85
    Nicky Says:

    Alaron predicting a draw of 173 bcf.

  86. 86
    TTupp Says:

    doesn’t tell us anything us smart folk already know, but it helps- actually a nice motley fool article would be nice.

  87. 87
    TTupp Says:

    vlo’s aruba refinery has the spigot shut off

  88. 88
    zman Says:

    Thanks Nicky … they’re probably low balling given they are long gas now, lol but that’s about where I am too.

    T – re Aruba … bet you start to see more of that (shutdowns for “maintenance”)

    By the way, the gasoline numbers made absolutely no sense today, much like last week. Production was up too little given utilization and imports were off with demand up slightly and we get a huge build…makes no sense.

  89. 89
    zman Says:

    FSLR round tripped that loss going from down $20 to down $2.

  90. 90
    Sambone Says:

    walked away for a few and now Dow is up 84. Can’t find any news.

  91. 91
    zman Says:

    dunno but APA and PBR are liking it mucho

  92. 92
    Sambone Says:

    3:08 pm EST

    Nymex Crude Falls As Refined Product Stocks Build

    By MATT CHAMBERS
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures ended lower Wednesday, paring early gains as a slump in U.S. crude oil inventories to their lowest level since 2004 was offset by gains in refined product stockpiles.

    While crude oil stockpiles have now fallen for the past eight weeks and are at the lower half of their average range for this time of year, healthy gasoline inventories and mild winter weather in the U.S. Northeast, the source of 80% of the nation’s heating oil demand, prevented prices from making a run back up toward $100 a barrel.

    Light, sweet crude for February delivery on the New York Mercantile Exchange settled 66 cents, or 0.7%, lower at $95.67 a barrel after running up as high as $97.97 after the inventory data. Prices hit a record intraday high of $100.09 a barrel on Jan. 3, but are yet to settle with triple digits. Brent crude on the ICE futures exchange fell $1.35 to $94.25 a barrel.

    “It’s surprising how crude oil just continues to make big draws week after week, but the builds in gasoline and distillates are tempering the price rise,” said Peter Donovan, vice president of brokerage Vantage Trading on the Nymex floor. “We’re still above $95, prices aren’t low.”

    U.S. crude oil stockpiles fell 6.8 million barrels to 282.8 million barrels in the week ended Jan. 4, the Department of Energy said in its weekly report. The big fall marks a 10% drop in stockpiles since the week ended Nov. 9, which was the last time inventories rose, and compares with earlier estimates in a Dow Jones Newswires survey for an 800,000-barrel draw.

    Bigger-than-expected inventories for distillates, which include heating oil and diesel fuel, amid heavier refinery use than was predicted, accounted for a big portion of the inventory drawdown.

    “It seems the crude was being used to make products, which is what you want to happen,” rather than there being any supply shocks being responsible for sliding inventories, said Michael Cambria of brokerage Eagle Futures in New York.

    Gasoline stockpiles rose by 5.3 million barrels, beating estimates of a 1.6 million-barrel build, and distillates, which include heating oil and diesel fuel, rose 1.5 million barrels, compared with expectations for a 300,000-barrel drop. Refinery use rose 1.9 percentage point to 91.3% of capacity, its highest level since August. Analysts had expected only a 0.1 percentage-point gain.

    With gasoline stockpiles now at the upper end of their average range for this time of year, and refineries operating at above 90% of capacity, the market looks to be in a good place to get ready for the coming summer.

    Many analysts and traders are also expecting crude oil inventories to build in coming months because many companies are thought to have lowered stockpiles for tax reasons at the end of the year and may be looking to replenish inventory.

    Front-month February reformulated gasoline blendstock, or RBOB, fell 3.84 cents, or 1.6%, to $2.4355 a gallon. February heating oil fell 2.29 cents, or 0.9%, to $2.6134 a gallon.

    Crude oil was also weighed down by a stronger dollar, which makes dollar-denominated crude oil more expensive for traders using other currencies. Oil’s rise to near $100 has been aided by a weakened dollar, which has also had the effect of blunting the demand destruction of higher oil prices in countries with currencies not linked to the dollar. The euro was recently at $1.4655 from $1.471 late Tuesday.

    –By Matt Chambers, Dow Jones Newswires

  93. 93
    kaman Says:

    Crooning “I had a dog, his name was Va-lero…” – still working on the rest, but know how the song ends. Will keep you posted.

  94. 94
    TTupp Says:

    phillip flyn on the google finance homepage – bottom left

  95. 95
    TTupp Says:

    a video

  96. 96
    Sambone Says:

    200 point swing 1 hr 15 minutes.

  97. 97
    TTupp Says:

    maes me feel better that vlo almost ignored the afternoon rally

  98. 98
    zman Says:

    T: very hard to hear him on that video but he mentioned the Master Card survey which shows gasoline demand DOWN, not UP, which would go along way towards explaining todays numbers which for gasoline made no sense at all.

  99. 99
    zman Says:

    FSLR didn’t…almost complete recovery…if we reverse to red it could get clobbered for a quick 10 bucks

  100. 100
    TTupp Says:

    thats some good due diligence on his part no matter how much we hate him

  101. 101
    zman Says:

    I don’t hate him … just think he his very selective in his presentation depending on where his book lies.

  102. 102
    yona Says:

    blmbrg NG survey -167

  103. 103
    zman Says:

    ZTRADE: FSLR $200 Jan puts for $3.90 (a bit riskier than usual)

  104. 104
    zman Says:

    Thanks Yona!

  105. 105
    Sambone Says:

    Phil = “Funny guy/Pikey”

  106. 106
    zman Says:

    Anybody got a reason for the rally?!

  107. 107
    apbd Says:

    I reversed the market. I bought DXD.
    apbd

  108. 108
    Brian08 Says:

    Looks like everybody got bored with killing the financials and started to buy them…

  109. 109
    Sambone Says:

    #106 – Can’t find anything.

  110. 110
    Sambone Says:

    PPT? LOL

  111. 111
    TTupp Says:

    the indexes could be expecting a good number from AA, since it is a large dow component. id sell this rally though.

  112. 112
    zman Says:

    keynes is spinning

  113. 113
    zman Says:

    wow, five minutes and already I’ve taken a medicine ball to the groin on my FSLR puts. nice.

  114. 114
    Nicky Says:

    We hit a key support area at 12500 Dow and 1379 spx – that is what caused the bounce imo.

  115. 115
    Popeye Says:

    Tnx Nicky.

  116. 116
    TTupp Says:

    yea the august lows eh

  117. 117
    TTupp Says:

    corrective wave tomorrwo nicky?

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