14
Jan

Monday Morning Mayhem?!

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Welcome back after a big playoff weekend. Unfortunately for the stock market, the New England Patriots look unstoppable. The last time the Pats, an AFC team, won was at the beginning of 2002 and the S&P500 fell a whopping 23% that year. I'd say take heart in the fact that the energy sector fell a comparatively less lousy 14% as measured by the stocks of the XOI. And then I'd point out that the Super Bowl Indicator is meaningless and go on with the post.

The Week Ahead Watch:

1) This is the big week for the "Tax Inventory Effect" to put up or shut up. Briefly, the theory goes that crude storage operators disgorged barrels by the super-tanker load because they didn't want to pay inventory taxes on their holdings at year end. After year end, they would restock causing a build in inventories and a sinking of $90 barrel oil. This does happen...every year...and every year inventories generally rise in January having fallen in during the fourth quarter. The theory this year (yes, they say this year it's different) goes that because oil was closing in on $100 per barrel the impact of the inventory effect would be exaggerated. Honestly, I'll tell you that the rapid decline in barrels since summer is more a function of supply and demand but we shall soon see if we get inordinately large builds in crude stocks. I don't think it will have a lasting impact nor do I think that it will substantially hurt oil prices.

2) 4Q earnings are still a ways off (about two weeks) but we should get a raft of release dates this week and we could get a reserve report or two and a few operations updates.

3) The Fed may go ahead and cut the fed funds rate early this week. Expectations are that a 50 to 75 basis point cut are on the table from current levels of 4.25%

4) January options expire Friday. I'll be taking profits and losses on the remaining January positions and opportunistically rolling most of my positions into February or March.

5) Updates of the Solar and E&P Multiple tables and my thoughts on each. 

6) The launching of the 4Q Earnings Tab. With all the news and the beginning of the commentary for the stocks we care most about around here. 

7) A New Trade Idea ... a little later this week. Stay tuned.

Commodity Watch

  • Crude Oil has its worst week in the last six falling 5% to close out at $92.86 on recession fears. As you'll recall from last week, crude stocks hit the lowest level since October 2004 due to, er, um, high demand. This morning crude is trading up around $1.50 due to a return of cold weather to the northeast, ever-increasing violence in Nigeria and a bullish OPEC stance towards quotas made over the weekend.
  • Nigeria Watch: MEND Sinks Products Tanker. Rebels attached a remote control bomb to the hull of a tanker in Port Harcourt, detonated it, and set the tanker ablaze. Officials said that it has been destroyed. 
  • OPEC Could Raise Production At Feb 1 Meeting But Supply Is Currently Adequate. These are the words of the new OPEC secretary general on Monday and given this and other recent rhetoric I'd bet they stand pat on levels for now, especially since another meeting is scheduled for March 5.
  • Chinese Production Rose 1.6% in 2007 To 3.733 mm bopd. This is nowhere near enough to feed rising demand here.
  • Weather Watch: After a brief warming spell, cold is expected to return with a vengeance.
      • Early Estimate for last week was: 140 gas-weighted heating degree days
      • Reality:  139 HDDs so the CPC got it right.
      • CPC's estimate for this week: 219. This would be the second coldest week of the season to date and will help support gas a little longer as we move into that series of difficult comps I've been talking about as the HDD reading is in line with year ago levels.  

Stocks We Care About Today Watch

(PBR) Watch #1: Domestic December Production Up 5.3% from November. This is the result of the hand full of new field startups in the deep water Santos and Campos basins they have announced over the last several weeks. Domestic December volumes averaged 1.85 mm bopd while PBR's international segment held steady at 122,000 bopd month to month. The company reiterated their goal of 7% annual growth through 2012.

(PBR) Watch #2: Closed to signing a an exploration deal with Cuba. Brazilian President Lula Da Silva should have a deal worked out for drilling offshore Cuba and a lubricants facility on the island likely to be announced tomorrow.

(SNG) Discovers Gas Off Trinidad. Hats off to Doc for his persistence on the name! SNG said the Victory well has an estimated flow rate of 100 Mmcfgpd (they tested one of three zones at 40 to 45 mmcfgpd) and the company will now move uphole to test at least one of the other 2 zones before starting the second well in this three well exploration program. 

(YGE) Signed Another Nice Contract. I continue to hold my March calls here. 

Odds & Ends

Analyst Watch: (FTO) upped to outperform at FBR, (VLO) and (ALJ) cut from buy to above average at Carris, (DVR) cut from overweight to neutral at JP Morgan. Carris also cut all price targets on the refining group but it looks like they were very late in doing so and that this is just a mark-to-market 4Q adjustment as they maintained their above ratings on most of the group...this is the kind of mixed signal that puts a broker to sleep: "I still like but I'm bring my price target down from a ridiculously high level to an only absurdly high level while cutting my rating on the best name in the group". 

78 Responses to “Monday Morning Mayhem?!”

  1. 1
    Sambone Says:

    7:57 am EST

    Brent Crude Up $1 On Nigeria, Iran Concern

    By Nick Heath
    Of DOW JONES NEWSWIRES

    LONDON — Crude oil futures traded over $1 higher in London Monday as renewed geopolitical concerns stoked traders’ concerns of disrupted oil supplies, and countered fears of lower crude oil demand associated with a U.S. economic slowdown.

    Prices edged higher as unease over Middle East stability resurfaced following weekend comments from U.S. President Bush, while traders remained sensitive to possible militant attacks in Africa’s largest oil producer Nigeria.

    At 1232 GMT, the front-month February Brent contract on London’s ICE futures exchange was up 98 cents at $92.05 a barrel.

    The front-month February light, sweet, crude contract on the New York Mercantile Exchange was trading 89 cents higher at $93.58 a barrel.

    The ICE’s gasoil contract for February delivery was up $4.25 at $801.75 a metric ton, while Nymex gasoline for February delivery was up 220 points at 234.23 cents a gallon.

    Comments from U.S. President George W. Bush Sunday suggesting Iran is threatening the security of the world, contributed to concerns of a fresh step-up in tensions that could threaten oil flows from the Middle East.

    “The United States is strengthening our long-standing security commitments with our friends in the Gulf, and rallying friends around the world to confront this danger before it is too late,” Bush said in a speech in the United Arab Emirates.

    “The tone of the rhetoric between the U.S. and Iran remains highly confrontational,” said analysts at Barclays Capital. “We expect Iran to remain a supportive factor for oil prices over the course of 2008.”

    Crude oil prices had spiked Friday following news of a fire aboard a gasoline tanker in Nigeria’s Port Harcourt, also home to the country’s largest oil export terminal.

    With militants claiming responsibility for the fire, many are worried the development could mark a step-up in militant attacks on Nigerian oil supply infrastructure. Those fears continued to add upwards pressure on crude Monday.

    “Violence is Nigeria is on the increase and in the short-term looks like getting worse,” said Rob Laughlin of MF Global in London. “If any pumping/loading terminal were to be hit, the loss of production would be critical.”

    However, the Nigerian government has disputed claims by prominent militant group MEND that it was responsible for Friday’s fire, suggesting the fire was instead due to a technical defect.

    Concern the U.S. economy is slowing, and which could spell lower oil demand from the world’s largest crude oil consumer provided some counter weight to Monday’s moves higher.

    “Increasing probabilities that the U.S. is entering a recession triggering fears of a global economic slowdown have replaced fears of crude tightness as the primary driver of market sentiment,” said analysts at PFC Energy. “For the moment the downside risks to demand seem to carry the day.”

    Expectations the U.S. Federal Reserve will announce another rate cut as a result of the worsening economic outlook helped the U.S. dollar to further slides against the euro Monday, a development seen supportive for crude prices.

    Looking ahead, traders are keeping an eye on a day of double data releases Wednesday, that will provide an update on crude oil fundamentals. In addition to weekly U.S. Department of Energy inventory data, the International Energy Agency will be publishing its monthly Oil Market report Wednesday, outlining Organization for Economic Co-operation and Development countries’ latest supply, demand, and stock data.

    —By Nick Heath, Dow Jones Newswires;

  2. 2
    Sambone Says:

    Z – I don’t follow Tanker markets, but I found this for your review.

    http://www.compassmar.com/reports/Compass%20Weekly%20Report%20January%2011-2008.pdf

  3. 3
    zman Says:

    Thanks Sam,

    Will have a look.

    What a wonderfully green day for a change. Thought the hue on my monitor might have been broken at times last week.

    Good to see that the right things are green as well as my two remaining shorts FSLR and SUN are down

    APA once again trading perfect with the bounce in crude …best pick among the large cap E&P for management and prospects + sensitivity of CFPS to oil price. I’ll be swapping out the Jan $105 calls for later strikes very soon.

    CHK briefly topped $40

    SWN still best leverage to higher gas prices and while cold is supporting gas (see post) I don’t expect a surge to last beyond mid to late next week now.

  4. 4
    zman Says:

    Thanks again Sam, just realized what that was. It’s the fourth link down on the second set of links (tankers) on the trasports tab at upper left.

  5. 5
    TTupp Says:

    yge upped. you still hold z?

  6. 6
    zman Says:

    T: yes, mentioned in today’s post they got a nice contract for their size. Who upped them?

  7. 7
    zman Says:

    T – FSLR on the brink of a real technical (chart) problem.

  8. 8
    TTupp Says:

    forget , its on briefing.com

  9. 9
    zman Says:

    Piper takes YGE price target from $20 to $65.

  10. 10
    Popeye Says:

    Sure glad I doubled up on HK last week. Now if I could just call the bottom if there is one on DRYS.

  11. 11
    zman Says:

    Popeye – nice on HK … I think that one is a big winner on 4Q call but also for 2008.

    Re Drybulks: that lunch I had Friday was very informative regarding a coming turn here…Feb 8 is Chinese New Year. Iron Ore contracts for the year should be done in advance of that…once settled there is usually a mad dash to contract ships to put it on. Weakness of late has been due to some hiccups Bill mentioned that are not lasting in nature (Brazilian mine closings). I said to the analyst that I was thinking I’d get when I see a U-shaped bottom forming on the charts…he told me I was dead wrong and that it would be V-shaped, that he’s seen it before and that it would be stronger than usual surrounding that Feb 8 date since the pullback in both day rates and the stocks has been severe. In other words, I’ll be taking a long here (in DRYS and one or two others) very soon.

  12. 12
    TTupp Says:

    there i only like 4 analysts covering yge and solf always make for some serious vol.

  13. 13
    TTupp Says:

    but good when they get picked up by firms with clout

  14. 14
    zman Says:

    T – I think the look of the chart and maybe yet another Mot Fool article anti-FSLR is bringing the stock lower. There were a series of Solar analyst conferences last week and the stocks seem unimpressed.

    FSLR all over the map today ($5 down now) but I think it heads lower. A break of $208 would line us up for $200 and then maybe $180.

    SUN short still working nicely.

  15. 15
    Sambone Says:

    9:51 am EST

    Nymex Crude Leaps On Global Tensions, Snow

    By Gregory Meyer
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures leaped more than a dollar Monday as political tensions ratcheted up in oil-producing areas and a snowstorm smothered parts of the U.S. Northeast.

    Light, sweet crude for February delivery was recently up $1.27, or 1.4%, at $93.96 a barrel on the New York Mercantile Exchange, after rising as high as $94.43 a barrel. Brent crude on the ICE futures exchange climbed $1.53 to $92.60 a barrel.

    Prices rose after U.S. President George W. Bush on Sunday urged Arabs to confront Iran, saying the world’s fourth largest oil exporter is “the world’s leading state sponsor of terror.”

    The president’s speech came the same day the International Atomic Energy Agency, the U.N. atomic watchdog, said Iran has agreed to clear up remaining questions on its nuclear program in four weeks. The IAEA announcement “has been largely ignored by the market,” Barclays Capital analysts said in a note.

    Also supporting prices, tension between Nigerian authorities and rebels in the Niger River delta continued to simmer, with the government saying a fire Friday on a tanker in Port Harcourt was a result of technical defects, not an explosive device as claimed by the rebels.

    The Movement for the Emancipation of the Niger Delta rebel group, or MEND, responded that the government was “deliberately misleading the public” in claiming the fire was an accident and creating “a false sense of security which the government has not been able to provide in the Niger Delta region,” according to Agence France-Presse.

    Nigeria has shut in more than 500,000 barrels a day in part due to past militant activity.

    “Nobody expects that MEND is really going to be able to bring the global market to its knees, but they certainly could disrupt some more production there,” said Rick Mueller, director of the oil practice at Energy Security Analysis Inc. in Wakefield, Mass.

    Heating oil futures climbed faster, percentage-wise, than crude as heavy snow covered parts of the U.S. Northeast, the world’s largest heating oil market. “It’s reminding folks that we are still in winter despite the unseasonable warmth we’ve had in the last week,” Mueller said. “That’s going to boost heating oil demand.”

    Monday’s price action follows a week in which crude oil futures fell $5.22 per barrel, or 5.3% to $92.69 amid fears of a U.S. recession. U.S. crude stocks remain at their lowest level since October 2004, a tight inventory picture analysts say has kept prices from falling further.

    New weekly data on U.S. petroleum stockpiles, along with a monthly oil market report from the International Energy Agency, are both due out Wednesday and could help determine price movements later in the week.

    “Growing macroeconomic fears have certainly curbed momentum in the market but with the data flow remaining indicative of continued underlying tightness, we expect the scope for downside to be limited from current levels,” Barclays said.

    Front-month February reformulated gasoline blendstock, or RBOB, was up 3.51 cents, or 1.5% to $2.3554 a gallon. February heating oil rose 5.27 cents, or 2.1%, to $2.5886 a gallon.

    —By Gregory Meyer, Dow Jones Newswires

  16. 16
    TTupp Says:

    http://www.bloomberg.com/apps/news?pid=20601072&sid=atvwNoTvV4gc&refer=energy

    makes a good case for btu. not touching anything long here besides day trades though.

  17. 17
    Nicky Says:

    Morning all – energy slightly concerned about a surprise rate cut it would seem.
    WTI has resistance above today’s highs at 94.50, 95.10 and 95.80.

  18. 18
    zman Says:

    T – agreed re shorter term trading mentality for a bit. I’m going to wait for my expected dip in NG for a BTU trade but I will be there by early Feb or a little sooner.

    Morning Nicky! Dollar testing new lows vs euro. “Surprise” rate hike around the corner.

  19. 19
    Nicky Says:

    Broader market will be very volatile this week methinks. We seem to be tracing out some sort of iv wave which means a lower low yet to come. The bottom of this wave could come at 1385 for the spx or 1340 – 1350.

  20. 20
    Nicky Says:

    Agree TT – need to take profits on the long side very quickly in this market.

  21. 21
    Nicky Says:

    Z – when is the next fed meeting? Seems to me they are running out of time for a surprise cut if it doesn’t happen very soon.

  22. 22
    Nicky Says:

    Doug Kass on CNBC…

  23. 23
    zman Says:

    jan 29-30

  24. 24
    Nicky Says:

    He has turned bullish

  25. 25
    zman Says:

    Kass’ statements about a normalizing credit market don’t auger for a pre-meeting rate cut.

  26. 26
    zman Says:

    Toyota makes pledge to go after the plug in hybrid market by 2010.

    Private AFS Trinity has a 150 mpg Saturn Vue that will soon be available for about $9M over current base Vue prices, putting in the low $30s. Bet they sell like hot cakes.

  27. 27
    zman Says:

    GFET: Gulf Ethanol. USDA 5 year study shows cellulosic ehtanol can return 540% of the power required to make it, far surpassing corn which comes in around 10 to 25% (fertilizer and raising and harvesting costs).

    Penny stock that could be interesting along with STKL. Have not looked them over and just pointing out the study right now but it’s yet another item pointing to the fact that corn is a bad way to make alcohol.

    As a sidebar, I’d point out that although Cuba is going to allow PBR to drill off its coast, Castro turned down an inquiry into Brazil building an ethanol plant on the island saying that it would take production from arable land that is currently used to feed people. For once, I agree with Castro. What ADM or Monsanto needs to come up with is a sugar cane that can be grown in cold climates.

  28. 28
    md Says:

    Good Day Z
    I’ve got Long NG and short CL in equal parts (ignored the BTU ratio) since beginning of Dec. and was able to average costs in and out to lower the losses earlier on. It’s finally doing nicely.
    The Feb HDD’s comps will be difficult comps.
    What do you think timing is like as this upcoming draw will be difficult HDD comp but next week should likely match.

  29. 29
    zman Says:

    Hey MD –

    Not wild about the near term short on CL but it may fall yet into the high 80s…Nigeria is heating up and demand from U.S. refiners may mute the inventory reversal from the tax effect mentioned in the last several posts. Also, the new OPEC is making statements designed to keep oil in a $85 to $100 band in my opinion.

    Re Natural Gas: you may have another two weeks (to next Thursday) of support over $8 but I’d expect that gas is factoring those withdrawals in now. As the 4Q press releases come out you’ll see high volumes with high expectations out of names like CHK (#2 gas producer in the U.S.) on their 4Q call.

    So far weather has been colder than forecasters thought. It must stay cold through Feb to support gas over $8 through Feb. This week’s number will see the first negative comp in quite some time (smaller pull on storage than last year) and the market clearly does not care. But after next week, when we get a big draw, traders have got to be wondering “so now what?” as they face a long series of tough comps.

    If last week didn’t drive a big cover of the short interest and this week it seems unlikely too, it means to me that the speculators are being more patient than usual, knowing that production volumes have to rise as 4Q exit rates exceed 4Q averages in all of the big gas player independent E&P names: CHK, DVN, and XTO with big volume growth from the Barnett Shale first and some other areas, EOG with their Rockies activity, APC with the ramp at the Independence hub in the GOMEX etc, etc… In summary, production is continuing to rise.

    Imports are low to last year and may remain in-line to low for the 1Q at least, so that’s not much of a problem for you. Demand depends largely on weather with no sign of industrial creeping up except maybe from the ammonia producers. Fertilizer demand is one of the largest identifiable units of the chemical sector which is the largest industrial consumer of gas. Steal, glass, food and paper all consume less than the chemical sector and are subject to a slowing economy. Fertilizer needs likely rise this late winter and early Spring with increased corn planted for ethanol. Even so, this could be offset as the other industrial areas fall off if the economy does.

    So that leaves you in the near term with up production, flat imports and flat to maybe down a little bit demand UNLESS it stays cold. Which of course does not bode well for gas prices. Of course, you can always see $10 plus on a cold spike but I’d be quick to take it and run. Hope that helps and thanks for asking. Please ask questions to clarify/quantify any of that.

  30. 30
    ram Says:

    PBR relatively poor because of the Bovesda?

  31. 31
    zman Says:

    R – yep, its trading right in line. I would think the headline tomorrow or Wednesday of “PBR Signs Exploration Deal With Castro” would move it. We shall see.

  32. 32
    zman Says:

    unusual volume in the Jan 15 HK calls.

  33. 33
    zman Says:

    More for the analyst watch

    Simmons & Co cutting rating on refiners today:

    Went to SELL on:
    SUN, TSO, WNR, ALJ

    Went to HOLD on:
    VLO, FTO

    Simmons is an energy only investment bank and brokerage based in Houston. I highly respect their work although in this case they may be a bit late to the blanket party for refiners.

  34. 34
    zman Says:

    profit taking started in NG … getting closer to hitting the eject button on the SWN trade, waiting and re-establishing a Feb position in time to catch earnings.

  35. 35
    zman Says:

    Ram – IBOVBR turning green…so goes PBR.

  36. 36
    ram Says:

    Mucho gracias!

  37. 37
    zman Says:

    R – I need that one to rally a lot more this week … my Jan calls are getting skinned.

  38. 38
    zman Says:

    FSLR: Just came across the wire, Form 144 filing from Merrill Lynch International shows they planned to sell 4.2 mm shares on 1/4/08 for about a $1 B. Had not seen this in the records yet. This has likely been behind some of the recent pressure.

  39. 39
    ram Says:

    NFX trying to get to 55.

  40. 40
    zman Says:

    Ram – shhh, don’t tell anyone, lol. Same goes for CHK at just over $40…who woulda thunk it?

  41. 41
    TTupp Says:

    hold on vlo and fto, was that a downgrade ie was it from buy?
    ?

  42. 42
    doc Says:

    SNG- see full See full Release. SNG hit GAS in Trinidad are drlling another well

    “Looking into the Canadian Superior Energy Inc. (SNG) performance for today we can notice that the American Market reacted with the natural gas discovery. By noon Monday, January 14, 2008 the stock was up 20 percent on 10 times higher than the average trading volume.

    Our research resources have been aimed towards the US Large Caps and the various prospective companies therein Canadian Superior Energy Inc. was among those that we have been closely examining due to their recent news and trading patterns.

    Canadian Superior Energy Inc. (Toronto:SNG.TO)(AMEX:SNG) announced on January 14, 2008 that Canadian Superior and its partners, BG International Limited (“BG”), a wholly owned subsidiary of the BG Group plc (LSE:BGL.L) and Challenger Energy Corp. (“Challenger”) (CDNX:CHQ.V)(AMEX:CHQ) have made a new natural gas discovery on their “Intrepid” Block 5 located approximately 60 miles off the east coast of Trinidad.

    Canadian Superior is a Calgary, Alberta, Canada based oil and gas exploration and production company with operations Offshore Trinidad and Tobago, Offshore Nova Scotia, Canada and in Western Canada. See Canadian Superior’s website at http://www.cansup.com to review Canadian Superior’s operations in Western Canada, Offshore Trinidad and Tobago and Offshore Nova Scotia interests. Canadian Superior has approximately 20,000 shareholders worldwide, including some of the top institutional shareholders in North America.

    Canadian Superior is paying 26-2/3% of the Block 5(c) exploration program cost to maintain a 45% working interest in Block 5(c), with its partners, BG International Limited, a wholly owned subsidiary of the BG Group plc, paying 40% for a 30% working interest and Challenger Energy Corp. paying 33-1/3% for a 25% working interest through Canadian Superior.

  43. 43
    Sambone Says:

    FYI – New Coal ETF = KOL

  44. 44
    zman Says:

    VLO and FTO went from a strong buys to a holds

    Doc – Congrats…you may have noticed I put that in today’s post.

    Corn prices going ballistic. Probably a very good thing for the fertilizer companies: POT, AGU.

    Thanks Sam — will have a look.

  45. 45
    zman Says:

    Doc – by the way, I tried calling you back last week, you didn’t answer.

  46. 46
    ram Says:

    Is it too late to get into SNG? What about other under $5 energy stocks that have long term potential?

  47. 47
    ram Says:

    MOO seems to be a good ETF that tracks the fert and equip makers.

  48. 48
    zman Says:

    Ram regarding single digit midget E&Ps…I’m working up a piece on one, and a less indepth piece on several that I think have potential to be big performers. That market did not enjoy the gains seen by the big, medium and small caps last year and in fact has been largely flushed with tax loss selling. So it’s best to judge them on their individual merits and to think with a pretty long term focus.

    As to SNG, it might have another dollar or even 2 in it. Its a big discover, the kind you can start to think about as anchoring a new LNG facility if the next well hits too. But, gas in Trinidad goes for under $2 per Mcfe so care must be taken when talking about reserve valuations. Like I said when Doc first found this one, Greg Noval is a maverick and a gas finding kind of guy and he’s onto what looks like a potentially viable play but the jury will still be out until a second well comes in. Not that they won’t produce this one via pipe to another facility and barrel up the associated condensate but the big play would be to find enough gas to justify an LNG facility which I doubt they can say they have found at this time. I don’t know if that’s their plan at all but it worked well for EOG and they are in big TCF reserve country. So again, the stock my have another buck in it or more in the next week.

    Thanks re MOO, had not seen that one, great ticker!

  49. 49
    TTupp Says:

    pot and mos are going crazy. i just sold my pot day trade….

    i can see them out my window right now loading drybulk freighters with bright yellow potash are whatever else they sell. its brought in by rail from Saskatchewan. there is on some days a que of 5 or 6 boats all the way under lions gate bridge some days…. this stuff is selling like hotckakes lol!

  50. 50
    TTupp Says:

    thats in coal harbor, Vancouver. wish i had the kahones to hold over night or else i would have gone long pot, agu, mon calls – my own argri. etf

  51. 51
    zman Says:

    Hear ya on the agri’s. They’ve got to plant more to get the margins back to respectable levels for the ethanol and bio-diesel plays. Right now beans are too expensive for the bio-d folks to make a buck.

  52. 52
    ram Says:

    HK has a pretty lopsided call to put ratio for Jan.

  53. 53
    ram Says:

    Actually put/call ratio on HK is almost 0.

  54. 54
    zman Says:

    right, tiny numerator except in the $17.50s which are going to see the puts expire worthless.

  55. 55
    zman Says:

    FSLR now UP $4.

    CFO exercised options and then sold 3,125 shares, has only 5,000 left after sale.

  56. 56
    zman Says:

    For Sane:

    Hummer that runs on banana peel extract:

    http://online.wsj.com/article/eyes_on_the_road.html

  57. 57
    zman Says:

    ZTRADE: Half out SWN Jan $55s for average $5.00; up 104% since Dec 20 entry. Will ease out of the rest in next day or so.

  58. 58
    sane Says:

    Re 56:

    Now getting 6 mpg instead of 9 mpg. 😛
    Its gonna take a lot of bananas.

  59. 59
    zman Says:

    Sane, this is more for you:

    http://www.afstrinity.com/

  60. 60
    zman Says:

    CHK sells $60mm in Montana and Dakota oil properties to CLR. Nice deal for both as the properties are an after thought for CHK with only 700 bopd of prod but 4 mm BOE in est reserves so a nice in the ground purchase price of $15 per barrel for CLR.

  61. 61
    Sambone Says:

    Uncle Phil

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

  62. 62
    sane Says:

    I saw that plugin, but like the rest of them I am still waiting to be able to buy one ( At an affordable price ).

    They say it should run in the mid 30k range, which seems reasonable to me, but I can see 6 months down the road the price going up by about 5k and then another 5k in another 6 months.

    Till then it is all talk talk talk talk……….

  63. 63
    md Says:

    thanks for the feedback.
    I went today Long RBOB Short HO May 08 betting on the swing into spring. I may have been a bit early. Even though weather comps may play. It seems like a hedge on my CL- NG in an odd sense.
    The past weeks distillate numbers lower yoy by 13 M barrels. Yet, the details shows 15PPM for farms and heating oil is DOWN 25 M.
    Do you see the PPM mix having a bearing on the distillate prices with >15PPM inventories where they are or will the

  64. 64
    md Says:

    Correction should read:
    Less than 15 PPM highway fuel UP 9.5M barrles YOY
    Greater than 15 PPM DOWN 25.0M barrels YOY

  65. 65
    doc Says:

    MSFT-Here is another pick for you-MSFT and AAPL will report next few weeks, also, there is a conference call on Mac world tomorrow. MSFT calls all are very cheap and are a buy here for trading and even better for long-term investment. Macs are soon going to be in all the computer stores for the first time, ‘in my opinion” due to the fact Microsoft has created a $300 Windows MAC package. This means every personal computer sold in the entire world from now on will have Windows. I see MSFT growing earnings in double digits and carrying a higher PE.. I bought April April 35 calls today and also own assorted 09 LEAPS.

    Ttupp— Do you still have access to Don Coxe reports He he has been hot AGRE. Since last February. He feels that Agreculture-food is going to be a hot area and there could be a major food shortages within the next nine months. there are very few stocks to buy. MON & POT could be bought here but only for the long-term. I have MOO, DBA & POT.

  66. 66
    md Says:

    Sorry My replies are cutting off.

    #63 cont’d or will the

  67. 67
    ram Says:

    RIG doing o.k. today. Any news? Still looking to unload the other half?

  68. 68
    zman Says:

    md – I plan on being long VLO, FTO and maybe TSO for the same reason as your long RBOB/short HO play by Valentines day.

    I think the dirty stuff, especially 500 ppm+ being down so much YoY is already largely factored into prices. I also think total distillate inventories have to stay low to support HO through at least Feb. So it depends on the weather and on where utilization goes over the next 6 weeks (as in when the maintenance season begins). If they start early, HO could hold up on you but I’d bet you that RBOB outperforms given the season.

    Production of > 500ppm dist. stinks (as per mandate) but inventories are hard to compare since they are not apples to apples until this coming November (again, the higher mandated % ULS production). At some point, I think traders simply say, eh, there’s enough total distillate around, its warming up and the current trade is RBOB.

    As to VLO, they are exporting record amounts of diesel to Europe to satisfy demand there as per their comments on the 3Q conference call while margins here are currently weak. I see no reason to think their thoughts on exports have changed as they saw it as a long-term phenom that would only get stronger for them. So you’ve got the undoubted leader among the independent refiners, with wholesale gasoline prices about to rally after a long stretch of low cracks, you probably don’t have a big move up in oil soon, and VLO is still benefiting from an increasing spread spread between light sweet and heavy sour pricing.

  69. 69
    zman Says:

    RIG – think its just a bit of a bounce….trying to decide whether to take the second piece of the table or wait for the morning. I’ll probably wait as it may get a push in the morning with another up day for oil (just a feeling there). No news that I see.

  70. 70
    TTupp Says:

    i was buying pot for clients in feb 06, they had pot in the top ten list for large cap, and value

  71. 71
    zman Says:

    Ram – take note of CHK up $1. It’s one of those rare days, lol.

  72. 72
    Sambone Says:

    3:32 pm EST

    Nymex Crude Climbs On Cold, Dollar, Supply Worry

    By GREGORY MEYER
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures made their first gains in four sessions Monday as frigid temperatures were anticipated in the U.S. Northeast, the dollar weakened and tensions rose in oil-producing regions.

    Light, sweet crude for February delivery rose $1.51, or 1.6%, to settle at $94.20 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange settled at $92.92 a barrel, up $1.85.

    The market got a boost after a storm dumped snow in the upper reaches of the U.S. Northeast, the world’s biggest heating oil market. The chill is set to continue, as the National Oceanic and Atmospheric Administration predicts below-normal temperatures across the Northeast and much of the U.S. from Jan. 19 to Jan. 27.

    “It seems to be buying ahead of the cold weather coming,” Peter Beutel, president of New Canaan, Conn.-based energy risk advisory firm Cameron Hanover, said of crude’s gains.

    The dollar fell to within a penny of its all-time low against the euro amid economic fears and expectations the Federal Reserve will approve a hefty interest-rate cut this month. The dollar’s weakness has generally bolstered crude as it blunts the effects of price increases on buyers with other currencies.

    Political rhetoric also escalated around two major oil exporting countries, Iran and Nigeria, reminding traders of the risks of disruption to the oil supply.

    In a speech Sunday, U.S. President George W. Bush called Iran “the world’s leading state sponsor of terror” and urged Arab allies to confront their neighbor to the east. Iran said his remarks reflected desperation.

    In Nigeria, the government disputed a militant group’s claim that a fire on a tanker in Port Harcourt last week was caused by an explosive device the group says it planted. The Movement for the Emancipation of the Niger Delta group responded that the government was misleading and attempting to create a “false sense of security” in the oil-rich Niger Delta region.

    Also Monday, Royal Dutch Shell PLC (RDSB.LN) said it declared force majeure on oil exports from Nigeria’s Forcados terminal for January and February, following a separate attack last week.

    “The cold, the weaker dollar and geopolitical conditions are working together today” in pushing up crude futures, said Kyle Cooper, director of research at IAF Advisors in Houston.

    Front-month crude is 5.4% off its all-time settlement high of $99.62 a barrel, hit Jan. 2. Its recent pullback has accompanied concerns about the economy in the U.S., which uses nearly a quarter of the world’s oil supply.

    Traders are expected to glean more insight on the U.S. economy from a raft of reports due out later in the week, including data on retail sales and producer prices Tuesday, consumer prices Wednesday and housing starts Thursday.

    On Wednesday the energy watchdog for industrialized nations, the International Energy Agency, releases updated projections of world oil supply and demand. The U.S. Energy Information Administration will also release data on U.S. crude stockpiles, which have been drained to their lowest level since October 2004.

    Analysts surveyed by Dow Jones Newswires on average expect the U.S data to reveal crude inventories building for the first time in nine weeks, rising 700,000 barrels. Gasoline inventories are expected to climb 2.3 million barrels, while stocks of distillates, which include diesel fuel and heating oil, are seen increasing by 1.2 million barrels.

    Refinery use is expected to fall by 1 percentage point, according to the survey, to 90.3% of operable capacity.

    Front-month February heating oil rose 5.33 cents, or 2.1%, to settle at $2.5892 a gallon. February reformulated gasoline blendstock, or RBOB, climbed 5.25 cents, or 2.3%, to $2.3728 a gallon. Both products outpaced crude’s gains on a percentage basis.

    —By Gregory Meyer, Dow Jones Newswires

  73. 73
    ram Says:

    Gassy guys are great today. Is this probably going to spill over a day or two?

  74. 74
    zman Says:

    Sam – the only comment I have for PF’s column today is that he only talks one side of the issue. If he’s long he points out the number of molotov cocktails the rebels are throwing. If he is short he talks about growing supply (while ignoring the areas where it’s not).

    That absolutism in investing is dangerous since it comes out of a mentality that starts with him “being right”. I like being right as much as the next guy but I like to examine all the angles and that’s what I try to do in the morning post although I cut it short from time to time to keep people from falling asleep. Anyway, when in my book the commodity is ahead of itself based on the speculation and the fundamentals I change direction…right now I’m neutral on crude between $85 and $100.

  75. 75
    zman Says:

    Ram – I think they get a little reprieve given the cold forecast for this week. After that it depends on the weather. Could last another day or two but I’m not betting (buying) into it for now and I hope it actually falls a bit prior to 4Q so I can get long some Febs a little cheaper for the report dates on some of our favorite names.

    The one exception is CHK which I’m just happy to see pushing the 2 year base towards a breakout.

  76. 76
    Sambone Says:

    Tini time!

  77. 77
    md Says:

    News Flash
    EIA world Proved oil reserves just a few minutes ago.
    Venezuela numbers are up 7 Billion barrels from 2007
    Saudi Up 4.5 Bln, Kuwait is up 2.5 Bln Iran Up 2.1 Bln.
    Total reserves up 17 Bln barrels from 2007 to 1332 Bln barrels. Hey what’s the worry.

  78. 78
    zman Says:

    md – overall increase in reserves was one of the smallest this decade, 15 B barrels or 1.1%.

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