10
Jan

Thursday Is Inventory Day – Oil Review and Gas Preview

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In yesterday's note I wrote:

The range for a crude draw down is very wide 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.)
So here we have it, 8 straight weeks of plummeting inventories (another 6.9 million barrels lower yesterday in case you missed it) despite higher OPEC production and tax related machinations be damned! Someone should be yelling, "It's the DEMAND stupid!" Oh right, that's me! Occasionally I do a free post but this is the last free content one during the week I'll do for awhile as the avalanche of 4Q data hits. Want more? Learn how to subscriber here. It's easy and it's less than the price of your daily Starbucks Latte which is only making you fat, not your wallet. Plus, once you become a subscriber there are ways to get that subscription for free!

 

Commodity Watch

Natural Gas: Rallied $0.13 to $8.10 yesterday in anticipation of today's storage number and a slight cooling to the forecast. This morning natural gas is trading flat to up a nickel.

  •  My Number: 180 Bcf withdrawal. This would put storage at 2,740 or about 9% below YoY levels.
  • Weather - This week's number will reflect the coldest of the season at 225 gas-weighted HDDs.

hdd-010908.jpg

  • Imports fell a full Bcfgpd to 9.0 Bcfgpd from the prior week. Canada made up the bulk of the decline but LNG also trailed off to near 52 week lows as competition from Asia and Europe kept cargoes away from U.S. shores.
  • Street Consensus: 167 Bcf. Anything less and gas should be sent packing south of $8 in a hurry. Either way, I wouldn't expect gas to mount a rally much beyond the mid $8s with any endurance as the weather and YoY comps are not conducive to further erosion of the YoY storage comparison. I'll have more on the coming string of "tough comps" in tomorrow's post.

Crude Oil: Fell $0.66 to $95.67 in spite of yet another much bigger than anticipated decline in U.S. crude inventories.  This morning crude is trading between $1.40 and $2.10 lower on renewed fears of U.S. economy weakness. Nothing specific, just one sell led to another and oil fell out of bed. Kind of like the broad markets. 

  • XOM's Kizomba C Project Off Angola On Stream. Initial production 100,000 bopd, 200,000 plateau. Angola is one of the OPEC countries expected to mount a major surge in production in the next 24 months. Angolan production has been on a tear and as of September, production stood at 1.7 mm bopd. This might serve as a modest negative for crude until the market's 15 minute attention span shifts to something else like an economic stimulus package or some other shiny bauble. 
  • Nigeria Watch: MEND attacked four ships in the channel leading to Nigeria's largest export point, Bonny Island (400,000 bopd capacity or 17% of Nigeria's current production). The attacks had no impact on production but are instead part of a re-escalation of hostilities after rebels vowed to bring the country's crude production to a standstill. 
  • PEMEX To Stop Exporting Oil From The West Coast Of Mexico. The volume is a pittance at 20,000 bopd out of total exports of 1.7 mm bopd but it won't do anything good for U.S. West Coast cracks.

EIA Inventory Review

exp-vs-act-010908.jpg

Where We Stand Now:

crude-table-010908.jpg

CRUDE OIL: Huge, Much Bigger Than Expected Drawdown of 6.8 million Barrels. It wasn't imports (they fell only a trifle). And it sort of blew up those tax related inventory reversal theories (there's always next week). Quite simply it was crude demanded by refineries to make product. 

Utilization rose 1.9% to 91.3%. The highest level in almost six months and probably only sustainable for another 3 to 4 weeks if that long.

 utilization-010408.jpg

Refinery Inputs: Week's ago I said a seasonal rally in utilization would produce a 1 million bopd jump in crude consumption and we are now half way there. So far consumption is up about 600,000 bopd (that's 4 million extra barrels per week and rising) and imports just can't cover it so yeah, the supply-demand situation is still tight. 

refinery-inputs-010908aaa.jpg

Oil Imports dipped 200,000 bopd, not a big deal. Imports remain within normal limits for this time of year.

crude-imports-010408.jpg

 

Oil Stocks Continue To Fall. Stocks are down 10% from year ago levels. How much further they fall depends on how long the refiners maintain currently "elevated" utilization runs but typically we should be about to hit bottom as you can see from the red five year average line in the following graph. As an interesting point, U.S. crude stocks shed 71 million barrels from their summer peak at the end of June to present. Just as a point of reference, the closest comparison to this drop was seen in 1991 when the second half of the year saw a 61 million barrel draw down. So you might say that what we have just witnessed is a bit rare and as it was caused in large part by demand and not supply constraints (those imports have been pretty normal) you can surmised that its not going to simply fix itself quickly via the addition of a few extra barrels from OPEC.

crude-stocks-010908aaa.jpg

 

 

GASOLINE: Numbers here made little sense as production was up but so was demand week to week. Imports actually fell. According to the Mastercard SpendingPulse report, gasoline demand was off again last week.  Either way, the sudden jump in stocks is not good for cracks in the very near term and along with the drop in crude (also bad for cracks) prompted to come of the bench with some refiner puts yesterday after the report (see holdings watch below).

Production: up 46,000 bpd to 9.1 mm bpd. This number looks suspiciously low given the jump in both utilization and inventories.

 gasoline-production-010908.jpg

Imports Dropped 131,000 Bpd last week. This is within norms for the season. See how these numbers are failing to line up? I suspect EIA had overestimated demand and/or underestimated production in prior months and what we are seeing now is a true-up. 

Gasoline Demand remains surprisingly strong despite elevated prices. Maybe we've shifted from bargain hunting over the holidays to job hunting in the new year. Maybe the data here is screwy. Prices at the pump ended last week 34% above year ago levels ... and still we drive. 

gasoline-demand-010908.jpg

Gasoline Stocks Are Mounting A Rapid Recover. 

gasoline-stocks-010908.jpg

DISTILLATES: Another odd build for analysts but it's fairly normal for this time of year. Production and demand for distillates as a whole remains at record levels. Production of the dirty stuff used to heat homes has fallen as per mandate and stocks of heating oil continue to drop as demand outstrips supply. The downward trend in overall distillates is likely to resume in the next few weeks as refineries start going down for maintenance and a great burden is placed on invemtories. Moreover the recent cold had to sharply erode home tanks but this has not shown up in the data yet. Such periods of cold, followed by substantial warming, often inspire homeowners and distributors to top off their tanks while the sun is shining and the snow is melting.  

dist-stocks-010908.jpg

 

 

Holdings Watch: Click here to see current holdings.

CALLS: No Action

PUTS:

  • (VLO) Entered January VLO $65 puts for $3.30. Last bid $3.70.
  • (SUN) Entered January SUN $65 puts for $2.35. Last bid $2.75.
  • (FSLR) Entered January FSLR $200 puts for $3.90. Last bid $2.75.

STOCKS: No action.

Stocks Of Interest Today:

Another day, another rig outfit shows off great day rates. Yesterday we had some pretty nice rates out of (RDC). This time it's (ATW) with an impressive series of contracts for one of its rigs. The ATWOOD EAGLE will work for BHP through May at a rate of $170,000 per day, then go to (ENI) for a short stint at $360,000 per day, then commence a 2 year commitment with Woodside Energy for $405,000 per day. The rig is then scheduled to go to CVX for a program off Australia for an indefinite period at $430 to $450,000 per day until the new semi-sub ordered for that contract is delivered.  The EAGLE is a semi-sub capable of drilling in water depths of 5,000'.

Odds & Ends

Analyst Watch: nada.

Housekeeping Item: The Transportation Multiple update has been bumped to tomorrow.  

 

 

90 Responses to “Thursday Is Inventory Day – Oil Review and Gas Preview”

  1. 1
    Sambone Says:

    8:32 am EST

    Nymex Crude Slides On Economy Concern

    DOW JONES NEWSWIRES
    From MARKET TALK:
    [Dow Jones] Crude sustains slide as traders weigh concerns about a slowing economy and boosts in US petroleum product inventories against a drop in US crude stocks. “All factors considered, this market still appears reluctant to relinquish its hard-earned price advances of recent months,” says Jim Ritterbusch of Ritterbusch and Associates. “However, in spite of last week’s hoopla surrounding attainment of the $100 marker in nearby crude, we would note that Feb crude and product futures are little changed from two months ago.” Nymex Feb crude -$1.52 at $94.15/bbl. (greg.meyer@dowjones.com)

    Reported earlier:
    LONDON — Crude oil futures traded lower in London trade Thursday as traders continued to weigh latest U.S. oil inventory data against growing concerns of slowing economic growth, Nigerian militancy and a tight global crude oil supply scenario.

    Directionless in early trade, prices were eventually thrust lower after technical sell orders were triggered to push Nymex light sweet crude futures more than $1 lower to back below $95 a barrel.

    “Over the next few weeks we are likely to see oil prices come under more and more pressure amid the deterioration in economic conditions,” said analysts at Sucden. “However, the market remains tight and therefore is vulnerable to supply stocks, which could trigger a significant spike higher.”

    At 1234 GMT, the front-month February Brent contract on London’s ICE futures exchange was down 82c at $93.57 a barrel.

    The front-month February light, sweet, crude contract on the New York Mercantile Exchange was trading 95c lower at $94.72 a barrel.

    The ICE’s gasoil contract for February delivery was down $21.75 at $815 a metric ton, while Nymex gasoline for February delivery was down 240 points at 241.15 cents a gallon.

    U.S. crude oil stocks dropped to their lowest level since Oct. 2004, after falling by 6.8 million barrels in the week ended Jan 4., the U.S. Department of Energy said Wednesday.

    But a a build in distillate and gasoline stocks struck a bearish note, helping confuse the direction for crude prices Wednesday and into Thursday.

    “It was a bit of a mishmash yesterday — we had a lot bigger drawdown than we thought, but on the other hand, the refinery runs are well up and the products started building again,” said Robert Montefusco at Sucden in London.

    Concerns that global crude oil stockpiles could be under pressure were stoked further by latest inventory data from Japan.

    The Petroleum Association of Japan revealed Thursday that crude oil stocks in the world’s second largest economy, and the world’s third largest consumer of crude oil, dropped last week.

    Falling inventories in leading oil consuming nations could put further pressure on OPEC to increase output when it meets on Feb. 1, some suggested.

    “In Japan, stock levels are 6.1% lower than last year; whereas in the U.S., they are 11.4% lower,” said analysts at Lehman Brothers.

    “As crude stocks continue to deplete in OECD markets worldwide, weaker inventories are sending an increasingly clear signal to OPEC.”

    But OPEC ministers remain wary of a possible global slowdown, particularly in the U.S., that could restrict crude oil demand.

    Economic fears continued to weigh on the crude markets Thursday after Goldman Sachs became the latest investment bank to predict a U.S. recession Wednesday.

    The crude markets will join other financial markets in looking ahead to comments from Federal Reserve chairman Ben Bernanke later Thursday for signs of a possible cut in interest rates, that could offer support to crude prices.

    News of Nigerian militant attacks on ships near Nigeria’s main oil export terminal provided some support to crude prices Thursday.

    Gunmen attacked four ships in the channel leading to the Bonny oil export terminal in southern Nigeria Wednesday. Two people were injured in the attacks that didn’t appear to have any impact on production.

    —By Nick Heath; Dow Jones Newswires

  2. 2
    Nicky Says:

    Morning all – what a difference a day makes. CNBC suddenly turned bearish on energy – citing the turn down in the economy! Hellooooo what planet have they been on for the last six months!

  3. 3
    Nicky Says:

    The wave iv count is on the ropes. This has to bottom out soon or the upside and a further v up is history.
    Line in the sand is still 89.15 but the equivalent level in distillates is 25332 which may give us an early heads up.

  4. 4
    Brian08 Says:

    Gonna be an ugly open…Glad I’m short…

  5. 5
    Sambone Says:

    Kinda red across the screens, eh?

  6. 6
    Nicky Says:

    Yes finally they get it – there is no safe haven – everything is down – gold, oil included.

  7. 7
    Nicky Says:

    I am not necessarily expecting it before we see a correction we if we were to take out yesterday’s lows on the indices it would be very bearish and we could see a waterfall like drop which would go much lower.
    I actually think should bounce towards 1420 – 1435 spx before we see the next decline.

  8. 8
    Sambone Says:

    N – Utilities are up. Flight to safety

  9. 9
    Sambone Says:

    9:35 am EST

    Nymex Crude Drops $2/Bbl On Economy Fears

    By Gregory Meyer
    DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures slipped early Thursday as traders shrugged off tightening oil stocks to focus on a dim economic outlook and a stronger dollar.

    Light, sweet crude for February delivery was recently down $2.27, or 2.4%, at $93.40 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange fell $1.93 to $92.44 a barrel.

    Nymex crude is now down more than $6 from an all-time intraday high of $100.09 a barrel, reached a week ago.

    Fears of a U.S. recession were salved Thursday by a weekly jobless claims report that showed the number of number of workers filing new claims for unemployment benefits fell 15,000 to a two-month low last week, according to the Labor Department. Wall Street economists had expected a 4,000 rise.

    But other signs point to a slowdown, including Goldman Sachs’ prediction Wednesday that the U.S. would tip into recession. Federal Reserve Chairman Ben Bernanke is expected to give his latest assessment of the economic outlook in remarks at 1:00 p.m. EST Thursday.

    “An undercurrent in the market is if the economy slows down, this retreat from $100 is probably going to get stronger,” said Gene McGillian, an analyst at TFS Energy Futures in Stamford, Conn.

    The dollar also gained against the euro after the European Central Bank and Bank of England voted to keep rates steady, adding more pressure to dollar-denominated crude.

    The market seemed to ignore potential threats to supply, including a Nigerian rebel group’s threat of an large attack on the country’s oil industry. “An attack on the Nigeria oil industry that will cause an economic tsunami in the world oil markets is imminent. This will herald the real emancipation of the Niger Delta,” said Jomo Gbomo, spokesman for the Movement for the Emancipation of the Niger Delta, or MEND, in an e-mail Thursday.

    Previous warnings Jomo Gbomo has made to the media have proven accurate, and his accounts of MEND’s activities have strengthened his claim to being part of the group’s inner circle. His name is a pseudonym, however — his real identity is unknown. Henry Okah, who was arrested in Angola last year on suspicion of arms trafficking, is widely believed to have been Gbomo. It is unknown whether someone else is using the pseudonym to continue communicating with the press.

    Adding a temporary hindrance to U.S crude imports, the Houston Ship Channel closed due to fog late Wednesday, according to the Houston Pilots Association, which controls tanker movement on the waterway. The channel serves five refineries and numerous chemical plants and terminals.

    Twenty ships are waiting to enter the port, and 14 are waiting to depart, according to a press release from the U.S. Coast Guard.

    Front-month February reformulated gasoline blendstock, or RBOB, dropped 7.12 cents, or 2.9% to $2.3643 a gallon. February heating oil fell 6.21 cents, or 2.4%, to $2.5513 a gallon.

    —By Gregory Meyer, Dow Jones Newswires

  10. 10
    Nicky Says:

    Tony Blair joins JP Morgan – now I know the end of the world is nigh!

  11. 11
    jazzkool Says:

    Thanks, Sambone.

    Jazz

  12. 12
    zman Says:

    N – what are you thinking on oil prices at present?

    I don’t think we’re in for a large drop for all the reasons I write about every day but I prefer, for the stocks, that oil trade away from $100 so that the focus on the group can return to individual company performance with price falling somewhere further down the list. The stocks, and in this instance, I’m talking about the E&P’s will do fine on current estimated to about $80.

    As far as demand goes, oil demand doesn’t really meaningfully tie to recession until the job market gets whacked and people are out of work. Demand may slacken but you don’t see it go negative by far unless people are out of work. To me it seems we are already in a recession for all intents and purposes if not by strict definition. Not saying oil won’t come off, like into the mid $80s but I don’t see a retracement to anything like year ago levels.

  13. 13
    Nicky Says:

    Nat gas:

    Bloomberg predicting a draw of 162
    Reuters predicting a draw of 155

  14. 14
    Nicky Says:

    Z – two preferred counts on the table (aren’t there always!).

    First says the top is not in for wave 1 of 5 and that we are currently in iv of v of 1 of 5 (!). Basically we should bottom around these levels (iv is playing out as an abc and we are in c which may go as low as 92.50) and then we see the final move up to make new highs. Possible objectives in the 105 – 106 region.

    Alternative says that 1 of 5 is already done and the levels I gave earlier would give us confirmation.

    If so then we are in wave 2 down which will take several months to play out. My target area would be around 75 – 80 for that.

    I agree with all you say in #12 but I think the perception/sentiment is the prevailing factor not the reality which is why energy seems to swing so wildly and leave us all scratching our heads as to how it fits in with fundamentals either on the way up or down!

  15. 15
    zman Says:

    Thanks Nicky,

    Energy stocks showing signs of life with the market. As I like to make my points with a blunt edge at times, the estimates that mosts analysts are employing for next year are substantially lower than the current strip. So a “fall” to $94 or even $84 does nothing to fundamentals. Sentiment, sure but valuations no and the stocks are already cheap … so I don’t expect much downside in the group.

    For instance: the mean estimate for 2008 for oil being used in E&P models is a whopping $76. The first quarter estimate is also about $76 with 73-74 ruling the out quarters.

  16. 16
    zman Says:

    Nicky – Thanks for the counts! and I could not agree more about sentiment and would remark that many a man or woman has gone broke being “right” about the fundies. I do not plan to be one of them.

    Refiners getting disproportionately whacked today. Not only will 4Q numbers stink but 1Q is looking pretty sloppy as well now.

    NFX and SWN actually slightly green….shhhh…don’t tell anyone.

    FSLR trading lower, so far in a 12 point range today.

  17. 17
    zman Says:

    Anybody ever use these guys for news:

    http://www.economicnews.ca

    They want to start quoting the site so I too can become one of those laughed about guys with the “taken out of context” snippets about oil and gas, er um, a talking head, LOL.

  18. 18
    zman Says:

    Here’s one for the green energy file while we await the ng numbers:

    GETG – green earth technologies, maker of “environmentally friendly motor oil” called G-Oil made from beef tallow. I kid you not. Maybe Cattleman could hook up with these guys to supply the feedstock, lol.

  19. 19
    zman Says:

    Natural Gas Withdrawal: 171 Bcf, pretty middle of the road number.

  20. 20
    zman Says:

    Gas pretty unaffected by the storage number…sea of tough comps approaching should make much further headway above $8 increasingly difficult.

    SWN – nice to see some green on such a red day. CHK might join it. No matter what want to be long for the 4Q here. And HK which I will sell the Jans soon for a loss and go into the Febs.

    FSLR – taking a little hit with the rest of the solars.

  21. 21
    zman Says:

    So are we expecting another big dip in the broad markets by the close?

  22. 22
    Sambone Says:

    Uncle Phil

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

  23. 23
    zman Says:

    Drybulks just dying … global depression?

  24. 24
    Nicky Says:

    If Bernanke hints at a .50 cut then I see a conundrum for oil. On the one hand it is dollar bearish and therefore bullish for oil but on the other it points more to a slowing economy which seems to be what is currently spooking oil.

  25. 25
    cattleman Says:

    Ref 18 – If we could run this country on fat we would be home free!

  26. 26
    cattleman Says:

    Oh my gosh, I broke the site, Z if you’re still home what do you think about TDW?

  27. 27
    zman Says:

    Tidewater? I dunno, supply boat business has always been a bit strange to me. Slow growth as you can see from yesterday’s OIH multiple table….not up on the story of late but I doubt much has changed. Will have a look.

  28. 28
    Nicky Says:

    Z for preference I would favor the upside here in the broader markets. We could pull back a bit futher – say to 13600 – but the move off yesterdays highs looks corrective so I favor upside against yesterdays lows.

  29. 29
    zman Says:

    NG up six cents, still holding my SWN, CHK, HK, and NFX (listed in order of gas price exposure)

  30. 30
    zman Says:

    Nicky – I take it you mean a bounce in the broader soon, like today soon? Just trying to gauge the need to cover my FSLR short, its too volatile for my blood and trading tick for tick with the fate of the Dow. Thanks.

  31. 31
    Nicky Says:

    Yes Z. Clearly its still risky here but the bounce off yesterdays lows looked promising. The trade is expecting bad news and my feeling is that the initial reaction to Bernanke may be down but it may prove to be a head fake.
    Don’t get me wrong I am bearish on the market but very short term ie it may only last a few days I think we are due a move up. Levels given earlier.

  32. 32
    zman Says:

    N – thanks as always

  33. 33
    Denise Says:

    Good Morning,
    My master T/A wiz agrees with Nicky
    Rally window open (does not say today)
    but most indicators alligned
    Add in Mr K and a host of others I read-
    I’ll go with it

  34. 34
    Denise Says:

    PS-also the fact the pied pumper of stocks is bearish(Cramer)
    makes me a contrarian

  35. 35
    Denise Says:

    Another PS-food for thought
    seems to be almost universal opinion it will be a short lived rally to sell.

  36. 36
    Sambone Says:

    11:40 am EST

    Nymex Crude Makes New Low For Day; Down $2.17

    DOW JONES NEWSWIRES

    [Dow Jones] Oil futures make a new low for the day as concern over consumer oil demand overtakes US crude stockpiles that are at their lowest levels since 2004. “Indications of a slowing economy continue to mount,” says John Kilduff of brokerage MF Global. “The most damning evidence comes from retail stores, reporting results that suggest consumers may be beginning to feel the pain from rising energy prices by snapping their wallets shut. Fears over weakening oil demand seem to be outweighing concerns over supply, and this has already led to a significant price retrenchment over the last week.” Nymex Feb crude -$2.17 at $93.50/bbl, after dropping to as low as $93.25/bbl. (greg.meyer@dowjones.com)

  37. 37
    zman Says:

    Check out the massive volume in CHK Feb $37.50s … seems odd given today’s action.

  38. 38
    Nicky Says:

    fed released a statement saying they are open to aggressive rate cuts.

  39. 39
    zman Says:

    so if oil is down today because oil is crappy it seems that the fed’s move will only serve to push both the economic ability to buy oil up and the dollar down, both oil bullish.

  40. 40
    Nicky Says:

    actually it seems that his speech has been leaked!

  41. 41
    Sambone Says:

    Ben – “Oil, Housing, Stock market to weigh on consumer in 08”. “Oil prices probably boosting Core inflation”.

  42. 42
    Sambone Says:

    N – As I have said before, “Goldilocks/What, me worry?” Hhmmm, Mad boy Jim Cramer “Buy, buy, buy”! LOL

  43. 43
    zman Says:

    Ben is just now seeing energy inflation bleed through into the core and he doesn’t even sound convinced with that probably in there. These guys need to get out of their ivory tower and go shopping every once in awhile instead of just reading fed reports.

    May double my FSLR short here.

  44. 44
    Sambone Says:

    Fed Funds Futures have 84% chance of 50 bp drop from 68% prior.

  45. 45
    Denise Says:

    He is allegedly calling for additional policy easing and prepared to act decisively.
    Wow was busy typing all the point figure, fibonacci, put/call indicators on my reasoning
    He is playing games-leaked

  46. 46
    Nicky Says:

    looks like he may actually have to cut rather than talk about it to get this rally going….

  47. 47
    Sambone Says:

    Z – Your gonna love this.

    Venezuela Ready for 5% Increase at OPEC Feb. 1, Panorama Says
    2008-01-10 10:58 (New York)
    By Steven Bodzin

    Jan. 10 (Bloomberg) — Venezuela, a founding member of the
    Organization of Petroleum Exporting Countries, will boost output
    5 percent if OPEC decides to expand production Feb. 1, Panorama
    said, citing a state oil company spokesman it didn’t name.

    The country is now producing 3.1 million barrels a day and
    is ready to increase production by 160,000 barrels for the
    remainder of the year, the Maracaibo daily newspaper said,
    quoting the source at Petroleos de Venezuela SA.

    Venezuela’s ability to increase production is debated,
    Panorama said. The newspaper quoted consultant Victor Santamarin
    saying the company has the capacity to increase output to 5.5
    million barrels a day. Rafael Santos, whom the newspaper called
    an oil expert, said a lack of investment will prevent output
    increases.

    Rafael Ramirez, the country’s energy minister, said Jan. 7
    that current production was 3.2 million barrels a day. A
    Bloomberg estimate puts production at 2.44 million barrels a
    day.

  48. 48
    Sambone Says:

    N – No problem because SLM and CFC are up today. No worries. LOL

  49. 49
    zman Says:

    N – agreed re 46, that was pretty pathetic.

    Thought for the board, if housing is in such a bad way is it more or less likely that homeowners will make upgrades to existing homes…the whole solar craze just seems to be a house of cards in a weak economy… I mean, if you are upset about high energy bills that’s fine, but many of the solar popular regions of the country (the West in particular) us a high degree of gas fired electricity and those prices have not been rising anything like oil). So when confronted with slightly higher monthly bills and a weak economy, how many consumers are going to take on a $30 to $50K project (solar panels, inverter and installation) that will take 15 to 20 years to pay for itself? There are tax subsidies to be sure but they don’t foot the entire bill. Just food for thought when people aren’t even filling their gas tanks.

  50. 50
    dmh Says:

    Nicky:

    Re oil counts. I agree with both of your preferred counts, but I do think that the
    move from the Dec low can be a ‘b’ wave in a running flat and we are currently in wave ‘c’ down to 86 approx and then new highs in a 5th wave. If it gets down to the 86 level then the action from there will tell the tale, I think.

    If it doesn’t approach the 86 level before another leg up the the running flat count can be eliminated.

    For me the biggest problem with Elliott Wave is that there can be multiple counts which can drive you nuts trying to figure out which one is the right one, and by that time it’s too late. But once you get into it, it’s hard to look at a chart without trying to figure out wave counts.

    You have written about a diagonal triange, do you mean from the Nov low?

  51. 51
    kiaora Says:

    Denise- Do you hane a link to Kass’ newsletter? All I can get is the fund. If you would…send to : kiaora-7@comcast.net

  52. 52
    zman Says:

    3.1 mm bopd VZ – that is an outright lie.

    Capacity of 5.5 mm bopd ROFLLMAO yada,yada, yada.

    I see, so you kicked everyone out of the country who made it possible to produce oil from some of your more technically complex plays and now you can suddenly double production. With what rigs? With was manpower? I’d say don’t make me laugh but…way too late.

    VZ’s voice has grown smaller and smaller with their production … this is an attempt to sound like they’ve got a pair. Just pathetic. Even OPEC has sent auditors down there in the last 6 months who refuted the 3.1 figure. Just ridiculous.

    Thanks Sam!

  53. 53
    ram Says:

    Us Westerners are hanging on. Coastal people don’t have much to save in Util., climate is always moderate. Inland people have approx. $300 in summer and $200 in winter. Spring and fall barely $100. So if I do the math, I will expect to pay nothing for 15 years – I know that’s not happening. Also, I will vote no on anything that is associated with raising bonds or taxes for solar subsidy.

  54. 54
    Sambone Says:

    #52 Z – Saw it and knew you would love it. LOL I just want to see VZ keep it’s current production. NOT

  55. 55
    sane Says:

    Re 49:

    I think there are more and more people trying to control their own destiny when it comes to energy and price stability. Pay a fixed rate on a loan that may cost more, but will never change, or be at the mercy of the schizophrenic market. I personally would chose the first.

  56. 56
    zman Says:

    Ram – exactly. While I think solar is a very important part of a balanced energy diet and more so than in the past due to some breakthroughs in manufacturing processes and technology I just don’t think the current run makes a lot of sense, especially for the really pricey names. Times are tight, people will look at that kind of expense and say maybe next year in a lot of cases. Like you said the other day, you can’t even get people to bid on cheap houses in foreclosure right now.

    Sane – I agree long term … I just think people will put it off until the economy looks a little better. You don’t mind paying the low rate on the loan IF you are sure you can make that payment. Also, there is A LOT of PV capacity coming on ’08/’09 – if demand eases at all you’ll have a glut of wafers akin to chip companies in the 90’s and we’ll all be looking at book to bill data. Just working through some thoughts re economy vs more debt that I could put off. On the whole, I want to go solar and have the perfect roof on a detached garage with a nice southern exposure to do so … but I’m waiting, maybe there will be a sale.

  57. 57
    zman Says:

    Sam – Hugo has a bridge to sell OPEC. Honestly, I think he’d do better to take a page out of North Korea’s book and just start printing dollars (or maybe Euros would be better).

    Energy stocks lower but listless now.

    Drillers taking it on the chin again. So much the better for buying just prior to earnings.

    Refiners mounted a recovery with the broad market which has since failed.

    Drybulks, another day another 5% off sale.

  58. 58
    zman Says:

    CHK Feb $37.50 call volume at 8,449 today … that’s very high for this stock. These are the Feb’s I’m in and somebody thinks they know something.

  59. 59
    Sambone Says:

    1:00 PM EST

    Nymex Crude Erases Some Losses On Fed Comments

    By GREGORY MEYER
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures erased some losses Thursday after Federal Reserve Chairman Ben Bernanke indicated aggressive interest-rate reductions may be necessary amid what he called “more pronounced” risks to the economy.

    In prepared remarks, Bernanke said, “In light of recent changes in the outlook for and the risks to growth, additional policy easing may well be necessary,” and officials “stand ready to take substantive additional action as needed to support growth.”

    The comments support Wall Street’s hope that Fed officials will lower the federal funds rate by as much as one-half percentage point when they meet at the end of January.

    After trading below $94 a barrel, light, sweet crude for February delivery jumped to $94.74 a barrel on the New York Mercantile Exchange. It remained down 93 cents, or 1%, for the day. Brent crude on the ICE futures exchange was down $1.08 at $93.29 a barrel.

    Lower interest rates could soften a recession’s blow to oil demand. They could also weaken the dollar, which fell to an intraday low against the euro after Bernanke’s comments. The dollar’s relative weakness has supported dollar-denominated crude.

    “Every time there’s a rate cut, it will bring the market up,” said Michael Cambria of Eagle Futures on the Nymex floor.

    Front-month February reformulated gasoline blendstock, or RBOB, was down 5.48 cents, or 2.3% to $2.3807 a gallon. February heating oil fell 2.99 cents, or 1.1%, to $2.5835 a gallon.

    –By Gregory Meyer, Dow Jones Newswires

  60. 60
    jy Says:

    Z- note the nearly equal put volume on the Feb. $37.50. A huge straddle??

  61. 61
    ram Says:

    NG number today still shows consumption more than injections?

  62. 62
    zman Says:

    JY – just saw that, straddle it is! Someone thinks they move big here on reserve and 4Q numbers.

    I was going to suggest one on IOC before month end.

    Ram – the withdrawal was essentially in line with estimates. Gas is up now but I’m think that it will become more difficult as this years warm weather comes up against last years series of big withdrawals in the coming weeks. Price will key off weather first, then its a toss up between YoY storage comparison and what oil does.

  63. 63
    Nicky Says:

    dmh – re #50. yes I had your abc as a possibility. It is now low probability to me as it would mean that 4 was so disproportionate to wave 2.

    Re diagonal triangle – it looks like an ending diagonal if 5 is playing out from November lows.

  64. 64
    zman Says:

    Nicky – #46 could not have been more prophetic!

    Complete text of Ben’s Speech:

    http://www.marketwatch.com/news/story/full-text-bernankes-speech-economy/story.aspx?guid=%7B8D0507F3%2D5DC1%2D438D%2DA5D9%2D424D8D88BC3C%7D

  65. 65
    zman Says:

    Ok, I’m off to get a root canal so my afternoon should be about like my morning. Will check back in awhile.

  66. 66
    Denise Says:

    Well back to status quo
    Nothing like raising the blood pressure only to be let down
    Interesting factoids and stars alligning

    Point and Figure Guru-first time since 10/02 all %’s are bullishly below the 30% level-historically a low risk buying area

    DeMark buy signals on Spy and Naz

    My voddoo wave fib man-better than average probability we we trade up to 1420 and if hold there see’s 1450-1470(this is about as giddy as he ever seems to be)

    My master T/A lady-sees the same levels exactly(UNUSUAL AGREEMENT)

    S&P-77 stocks up year to date, 173 down more than 10% year to date

    USA today 1000 stocks down in S&P1500
    and a host of other smart people with short term rally signals

    Why I held my nose and bought-

  67. 67
    Nicky Says:

    Propane MAY be giving an early warning signal that wave the upside is over for energy. It led the way to the upside setting new highs in August with wti as we knowing following some weeks later. Today Propane has close below its comparable wave 4 which maybe an early warning sign for the rest of the complex….

  68. 68
    Denise Says:

    Bac takeover of Cfc rumor-
    hmmm

  69. 69
    Sambone Says:

    BAC to buy CFC? Throwing good money after bad.

  70. 70
    Denise Says:

    Laugh for the day
    “After BAC’s $2 billion ,$18 strike investment, we should point out it is an excellent way to average into a stock if confirmed”

  71. 71
    Sambone Says:

    D – Ken’s trying to save his skin.

    http://money.cnn.com/2008/01/09/news/companies/bofa_countrywide.fortune/index.htm?source=yahoo_quote

  72. 72
    aaatest Says:

    Can i get close on oil and ng and any update on djia fslr sun vlo pbr apa? Thanks

  73. 73
    Sambone Says:

    Oil 93.94, Ngas 8.26

  74. 74
    Sambone Says:

    Dow up 84 to 12824, FSLR down 10.11 to 223.90

  75. 75
    Sambone Says:

    Sun down .50 to 63.50, VLO up .35 to 62.01

  76. 76
    Sambone Says:

    PBR down 2.32 to 111.84, APA down 2.10 to 105.58

  77. 77
    aaatest Says:

    Thanks sam.

    Cattleman – see article front of marketplace sec of journal

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