16
Jan

It Was The Best of Times, It Was The Worst of Times…And Now For Wednesday

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Commodity Watch

  • Crude Oil got slammed yesterday as economic recession fear re-asserted themselves only a day after every screen had been painted green. Saudi issued mixed comments saying concurrently that it would only raise production if the market warranted it (and that at present there was no such need) and that oil was "over-valued". February crude fell $2.30 to close at $91.90. This morning crude is trading off a dollar this morning as the IEA says it sees global demand growth cooling. They cut their global growth in millions of barrels of oil per day to 1.98, down 130,000 bopd from last month's forecast (which had been revised up). 
  • Mexican Rebel Yell Watch: The Popular Revolution Army (EPR) says it plans to warn the government minutes before any future attack to help prevent civilian casualties. These guys should get together with the nice guys at MEND and have a bake sale instead of playing with matches.

Oil Inventory Expectations (from the Bloomberg Survey)

exp-011508.jpg


  • Crude Comments: This is the time of year when you normally see a bit of a build in oil stocks as refinery utilization peaks seasonally.  Tomorrow most trader/analysts are looking for a build for two to three reasons:
  • The consensus expectation is that refiner utilization will fall by 0.9% to 90.4%. Since it reached a 6 month high just last week its no better than a dice roll to bet on this retreating. I would expect it to fall shortly however as refiners have put off a lot of maintenance and are probably sick of these margins (something taking a little extended downtime could help to correct).  
  • Imports spiked at this time last year and although it was unsustainable they could briefly do so again with the recent increase in OPEC output. So far, this output has not materialized on U.S. shores.
  • And the tax inventory effect which as I said Monday needs to put up or shut up this week.

The economy based lambasting crude took yesterday does not mean that seemingly bullish numbers (if we get them) may be heeded for much longer than it takes the next bank to sack whole offices of fixed income folks. Unless its another huge draw on oil stocks and then only if there is not a strange slump in imports. 


  • Natural Gas fell $0.16 to $8.20 despite a cooling in more recent forecasts. This is probably not the little rollover I'm expecting in gas but instead simply related to the large dip crude took yesterday. This morning natural gas is $0.05 to $0.10.

Holdings Watch

CALLS

  • (RIG) Entered February $140 Calls for $4.00. Stock was down $7 (5%) at the time of the trade on a very sloppy day in the market. Last bid 3.50.
  • (PBR) Entered February $110 Calls for $5.00. Last bid $4.50.

PUTS

  • (FSLR) Exited the January $200 Puts for $4.40, up 28%.
  • (FSLR) Entered the February $210 Puts for $21.10. Last bid $24.20. 

Stocks We Care About Today

(MMR) for subscriber BHR5491:

A little background: 

Deep Shelf Focus: MMR likes the deep shelf (> 15,000 total depth, not water depth) targets (high risk, high cost, high potential) near existing infrastructure (which cuts both the time to get a new discovery on stream and the cost of development).  Success rate of 18 for 33 since 2004. They more than quadrupled the size of the company in terms of reserve and production last summer purchasing a NFX's shelf assets which provided them with 30 some odd deeper pool regions to explore.

They've had a string of deeper pool successes off the coast in Louisiana State water. Former chairman Jim Moffett used to have a great way of describing the early successes here (Mound Point #1 and #2 and the further offshore JB Mountain well) by miming a diagram of a woman's body. That played well with analysts and investors alike but luckily for the company, subsequent discoveries morphed that diagram into more of an amoeba shape. It is this area that gives the story sex appeal and it is in this area that they have again struck with a another discovery this week with a second well at their Flatrock prospect:

Flatrock Discovery Well (MMR#228):

  • drilled to 18,400' in August
  • 8 zones, 260 net feet of pay.
  • October test from the Operc alone flowed 75 MMcfepd gross (14 net to MMR's 18.8% NRI).
  • Initial production expected 1Q08 (next few weeks) through existing, under-utilized infrastructure.
  • To put that in perspective MMR should have exited 2007 producing > 290 MMcfepd.

Second Flatrock well (MMR#229)

  • Appraisal well drilled 1 mile northwest of the discovery well
  • Logged 198 net feet of pay in three Rob-L zones so far (as of 1/14/08).
  • Plan to deepen to 18,100 to target deeper Rob-L and Operc sections found in the first well.

Third Flatrock Well (MMR#230)

  • Drilling ahead at 14,800 feet, 3,000 feet south and down dip of the discovery well.

Flatrock could easily holding between 0.5 and 1 Tcfe of gas (they again would book just under a fifth of that over time so it is meaningful to their 409 Bcfe of current reserves.

Map of the area:

 

mmr-map.jpg

Lots of other interesting prospects and one "Pie in the Sky" prospect: 

  • Blackbeard Re-entry In Planning Stages - This was an unsuccessful (NFX) deep tertiary/lower Miocene target drilled in conjunction with (XOM, BP) via a very deep (> 31,000 feet) but shallow water play know as Treasure Island. Drilling of this kind is unbelievably costly (thankfully you can employ a jackup since its only in 70 feet of water) but it still takes the better part of a year to reach TD and the well itself is on the bleeding edge of drilling technology (massive pressure and soaring well bore temperatures). The Blackbeard target is analogous to Chevron's Tahiti L. Miocene structure seen in the deepwater. Tahiti is estimated to contain 400-500 million barrels of oil (2.4 to 3.0 Tcf).  Date not yet set for the redrill but they might get it spud in the next 18 to 24 months. It will be the most watched well of the year like its predecessor and the ultra-deep Shell operated Shark well (also a dry hole) before that. 

 

Debt: they have quite a bit after the $1.1 B NFX transaction (a little over 1.1 B and at present they are attempting to place a bond offering to swap out $800 million under a bridge facility). This comes to a little over $100 debt to total cap which is high in any case and especially when compared to their peers.


mmr-comps-table-011508.jpg

This debt load is burdening the stock despite the recent string of discoveries discoveries. Now, with the recent discoveries above and a decent gas price in 2008 ($6.50 to $7.50) they should be able, given their smallish capital plan of $200 mm to cut their debt load in half by year end.

Net Gomex Shelf Acreage:  Large at 0.7 million net acres putting them fifth on the list of GOMEX shelf acreage holders.

In a nutshell: I like it. Last year I missed out after taking note of MCF's excellent discoveries on the shelf because of my desire to always avoid the tread mill decline rates of the GOMEX shelf. But, if they hit their targets and constrain their capital budget to something close to the previously stated $200 million level I think they have a real shot at cutting debt in half via cash flow by year end 2008. And that will get noticed as much as the recent well successes.  I probably flesh out a report and play the stock and only occasionally the options as the fixing of their balance sheet is going to take several quarters to realize. Thanks to BHR who brought it to my attention and answer to his query if PXP is a better way to play the discovery I would have to say yes from an options standpoint despite the fact that Plains is a much bigger company and the discovery will have less of a bearing on their reserves and production mix.
 
(PBR) Signs E&P Deal With Cuba. Read all about it here

Analyst Watch: (PCZ) cut from outperform to neutral at Credit Suisse, (MEE) price target raised from $22 to $29 at FBR but still maintain underperform rating (stock is at $34).

110 Responses to “It Was The Best of Times, It Was The Worst of Times…And Now For Wednesday”

  1. 1
    bhr5491 Says:

    Great analysis Z, Thanks!

  2. 2
    Sambone Says:

    8:35 am EST

    Nymex Crude Down Ahead Of Inventory Data

    DOW JONES NEWSWIRES
    From MARKET TALK:
    [Dow Jones] Crude futures fall after the International Energy Agency revises its 2008 forecast for oil demand growth downward by 130,000 b/d, to 1.98 million b/d. Traders now await 10:30 a.m. EST release of US oil inventory statistics, which are expected to show a 300,000-bbl draw in crude stockpiles, a 2.4 million bbl build in gasoline and a 1 million bbl build in distillates. Nymex Feb crude -93c at $90.97/bbl. (greg.meyer@dowjones.com)

    Reported earlier:
    LONDON — Crude oil futures traded lower in London Wednesday as concerns of a U.S. economic slowdown fueled doubts over future crude oil demand, and as traders speculated U.S. crude stocks rose last week.

    “(Department of Energy) data should dictate oil price movements in the short term, however we expect focus over the course of the week to remain on U.S. economic data and quarterly earnings results,” said Nimit Khamar at Sucden Research in London.

    At 1238 GMT, and ahead of its expiry Wednesday, the front-month February Brent contract on London’s ICE futures exchange was down $1.15 at $89.83 a barrel.

    The front-month February light, sweet, crude contract on the New York Mercantile Exchange was trading $1.39 lower at $90.51 a barrel.

    The ICE’s gasoil contract for February delivery was down $10 at $788.50 a metric ton, while Nymex gasoline for February delivery was down 359 points at 227.33 cents a gallon.

    In its Monthly Oil Market Report out Wednesday, the International Energy Agency left its 2008 world oil demand outlook unchanged at 87.8 million barrels a day, but trimmed its previous demand growth forecast for 2008 by 130,000 barrels a day to 1.98 million barrels a day. Figures for total 2007 world oil demand were revised higher.

    The agency also cautioned its outlook could be adjusted lower “if forthcoming assessments from the IMF and OECD point to a weaker-than-expected outlook for the U.S. economy, which may be only partially offset by strong GDP growth in the Middle East and China.”

    Market attention was largely focussed on the U.S. Department of Energy statistics, due out 1530 GMT Wednesday, with many traders expecting crude stocks to build. Eight straight weeks of declines have left U.S. crude stockpiles at their lowest levels since October 2004.

    The latest Dow Jones survey of 14 analysts suggests crude oil stocks are likely to have fallen in the week to Jan. 11, although an earlier Dow Jones survey of 10 analysts yielded an average estimate for a build of 700,000 barrels.

    Crude oil inventories are seen down 300,000 barrels, according to the mean of the latest survey. If proved correct, the drop could lend some support to crude prices.

    “All eyes today will be on the DoE stocks which are expected to show builds,” said Andy Riddell at ODL Securities in London. “But surprise reductions in stocks may be the trigger we need to give the market back some strength.”

    Gasoline inventories are seen growing by 2.4 million barrels, meanwhile, and distillate inventories, which include heating oil and diesel fuel, are seen growing by 1 million barrels.

    After U.S. President George Bush Tuesday urged the Organization of Petroleum Exporting Countries to raise output, traders and analysts were also turning their attention to OPEC’s next meeting, due to be held in Vienna on Feb.1.

    But economic conditions and seasonal demand patterns are likely obstacles to OPEC raising output, some suggested, despite Nymex crude oil prices having recently broken through $100 a barrel.

    “The gloomier outlook in the U.S. economy combined with the tail end of winter demand isn’t a prospect where they want to be increasing supply too soon and too quickly,” said Harry Tchilinguirian, senior analyst at BNP Paribas in London.

    —By Nick Heath; Dow Jones Newswires

  3. 3
    jy Says:

    Z-Nice analysis of MMR. Chairman Moffett is a fairly optimistic guy (you have to be playing the deep shelf) MMR’s press releases need to be read carefully to understand their real meaning. Also, I believe that MMR participates to a reduced interest in these discoveries w/PXP until a certain production volume is reached (100 BCF?). Agrre w/Z that options would be a high risk way to participate in MMR

  4. 4
    zman Says:

    Thanks jy, saw they had a carry hear but didn’t track it down.

  5. 5
    jy Says:

    Re MMR:
    The “BlackBeard” well by MMR, XOM(operator), NFX et al spud 2-10-05 and was plugged on 9-7-06. TD of 30,067′. Original cost est. for well was $101MM. Actual cost= $185MM!!
    There is 9 5/8″ casing set in the well to 26,000’+ but the surface equipment could not stand the 28,000# pressures encountered at TD. If MMR can figure out how to handle the pressures, they already have 5 miles of the hole drilled.

  6. 6
    zman Says:

    jy, yeah, its a long shot and maybe the most expensive re-entry in history. One could trade those Treasure Island warrants once you get wind of a spud date. Maybe the intervening 4 years (best guess to spud from P&A of XOM well bore) will present some new tech that can handle the heat and pressure. It’s early and I don’t think have any partners lined up yet.

  7. 7
    jy Says:

    Correction: MMR was NOT in the original Blackbeard well. They have a position now by virtue of the NFX purchase.

  8. 8
    zman Says:

    Right, this was part of last summer’s $1.1B asset acq from NFX.

    Those treasure island warrnats are TISDZ … kind of like putting your paycheck on the spinner at the Casino.

  9. 9
    zman Says:

    FSLR below $200.

    rig stocks actually showing a little green but I won’t spend a dime more in front of this crude number.

  10. 10
    Sambone Says:

    9:31 am EST

    Nymex Crude Down Ahead Of Inventory Data

    By Gregory Meyer
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures traded lower Wednesday as traders ignored new forecasts of steady world oil demand to focus on mounting economic worries in the U.S.

    Light, sweet crude for February delivery was recently down 43 cents, or 0.5%, at $91.47 a barrel on the New York Mercantile Exchange after falling as low as $90.32 a barrel overnight. February Brent crude on the ICE futures exchange, which expires Wednesday, fell 49 cents to $90.49 a barrel.

    In its monthly oil market report, the International Energy Agency maintained its forecast that world oil demand in 2008 will total 87.82 million barrels a day. But the energy watchdog for Organization for Economic Cooperation and Development nations cautioned revisions may be coming if assessments from the International Monetary Fund and the OECD “point to a weaker-than-expected outlook for the U.S. economy.”

    The agency also lowered its projection for this year’s oil demand growth by 130,000 barrels a day, to 1.98 million barrels a day.

    Wednesday’s move lower follows a $2.30-a-barrel drop in oil futures Tuesday that was spurred by weak retail sales figures and mounting worries about the direction of the economy in the U.S., the world’s largest energy consumer.

    “Economic concerns have moved to the forefront of trader attention,” said Jim Ritterbusch, president of Galena, Ill.-based oil trading advisory firm Ritterbusch and Associates.

    In Wednesday’s session, traders are expected to focus on weekly U.S. oil inventory stockpile data due out at 10:30 a.m. EST.

    The data, covering the week ended Jan. 11, are expected to show crude oil inventories falling by about 300,000 barrels, according to the mean of 14 analysts polled by Dow Jones Newswires.

    Gasoline inventories are seen growing by 2.4 million barrels, while stockpiles of distillates, which include heating oil and diesel fuel, are seen growing by 1 million barrels.

    Refinery use is seen falling by 0.7 percentage point to 90.6% of operable capacity.

    Oil prices remain nearly $40 a barrel higher than they were a year ago, spurring U.S. President George W. Bush to raise the issue with Saudi Arabia’s King Abdullah this week.

    On Wednesday, the secretary general of the Organization of Petroleum Exporting Countries told Agence France-Presse that factors other than an oil shortage were to blame for high prices, reiterating a message often heard from OPEC officials.

    “Let me be clear, the high prices which we are witnessing are not because of any shortage of crude oil in the market,” Secretary General Abdullah al-Badri said in a statement emailed to AFP.

    OPEC is scheduled to discuss output quotas at a Feb. 1 meeting in Vienna.

    Front-month February reformulated gasoline blendstock, or RBOB, was down 2.08 cents, or 0.9% to $2.2884 a gallon. February heating oil fell 1.14 cents, or 0.5%, to $2.5358 a gallon.

    —By Gregory Meyer, Dow Jones Newswires

  11. 11
    TTupp Says:

    tso running its Hawaii refinery at 72% due to poor crack spreads….

  12. 12
    zman Says:

    like I said in the post, you can’t blame them

  13. 13
    freeflow Says:

    I was going to buy APC below 65 but I may be able to get it below 60 today…

  14. 14
    zman Says:

    Ouch

  15. 15
    scoop006 Says:

    Cramer expects further rotation out of commodity names in the short term and sold 300 XTO shares leaving 2000 shares in his portfolio

  16. 16
    zman Says:

    Dow Jones expects a small draw on crude and builds in products.

    Reuters, Platts, Bloom all see builds in crude and products.

  17. 17
    TTupp Says:

    im going to pay MEND to “take care” or Mark Haines. the guy and epperson should get married- they’re both soooo anoying and useless when it comes to financial reporting. the guys been there since ’89! and has no finance background what so ever. god.

    bored b4 the numbers. going to add to the jan vlo puts if we get a huge build, or info bearish for the refiners.

  18. 18
    zman Says:

    crude up by 4.3 million barrels
    rbob up 2.2
    dist up 1.1

  19. 19
    zman Says:

    big surge in imports, paralleling last year’s imports

    refiner utilization nose dived to 87.1%

  20. 20
    zman Says:

    Feb crude tapped $90 and bounced a quarter.

  21. 21
    kaman Says:

    T- re:#17….really, where’s a good terrorist when you need one?

  22. 22
    zman Says:

    only one thing bullish for crude in this report, Cushing stocks dropped for the first time in many weeks falling 17.7 to 16.5 mm bls.

  23. 23
    TTupp Says:

    is this refiner bullish in your eyes Z?

  24. 24
    zman Says:

    Not even sub $90 oil can buoy this stock markets.

  25. 25
    zman Says:

    T: – no, gasoline stocks still high, dmeand locks to have slipped a bit. If they can keep imports out of the U.S. and get the % util on down they can turn it but I think we are early on going long. Man, anything even remotely energy getting burned at the stake, including my Jan calls. I’ll wait for a little bounce as this is non-sense.

  26. 26
    Sambone Says:

    If the energy stocks continue this way, they should take out their August lows.

  27. 27
    Sambone Says:

    The crowd is exiting. Once they are gone, I’m back in.

  28. 28
    TTupp Says:

    i meant bearish

  29. 29
    zman Says:

    then yes

  30. 30
    zman Says:

    ugly, at least FSLR is down $23 now and SUN has given up on yesterday’s support levels.

  31. 31
    zman Says:

    yet another baby and bathwater day. CHK down 3.5% and only 8% of their production is oil.

  32. 32
    zman Says:

    DRYS below $50.

  33. 33
    kaman Says:

    The 50% haircuts are ubiquitous. This whole setup is perfect for a Fed chair who’d like to hose the shorts with a surprise rate cut Friday morning.

  34. 34
    freeflow Says:

    I’ll tell you what – 2 months and a $19,000 loss is enough to make me want to bail on the market and put my money under my mattress.

  35. 35
    Sambone Says:

    Dow – 1st support is 11,940, second support is 11,274. S&P – 1st support is 1364, second support is 1291.

  36. 36
    TTupp Says:

    what was my target for fslr Z? funny i didn’t put my money where my moth was on that one…

  37. 37
    scoop006 Says:

    Z- Congrats on your last 3 FSLR trades. I did not play but am still holding the original trade of Jan $160P. When do you expect to exit?

  38. 38
    zman Says:

    Soon, those were toast until today.

  39. 39
    TTupp Says:

    waiting for vlo to let go of its bowels…… and i can push through this lot of options when i want later in the day w/o pushing down the IV. looks ridiculously liquid though…

  40. 40
    Denise Says:

    Good morning
    Still long and very wrong-but I have a high pain threshold-
    Judging by the fact aapl,goog, rimm, bidu,…. are being thrown out-I figure the bounce has to be near and big
    Hope springs eternal-darkest before dawn…

  41. 41
    Sambone Says:

    Uncle Phil

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

  42. 42
    sane Says:

    They even managed to put 1.6M in the SPR with that build.

    Still waiting for API

  43. 43
    TTupp Says:

    freeflow- you should just go with the freeflow and trade from the short-side during times like this. i used to be scared to trade puts/ shor sell, but if you work on it it can be really fast & big money money.

    NEVER listen to the newsletters to closely or any program on cnbc unless it is concurrent with the trend (ie right now short) no matter how good the story is, or how “defensive” the stock is.

    a falling tide sinks all boats no mater what the qualifier is.

  44. 44
    Popeye Says:

    Wow, Phil thinks crude would be at $200 were it not for speculators. Is he for real?

  45. 45
    zman Says:

    Big cap E&P trying to put in a bottom:

    APC,APA,EOG,DVN (all down 3-6% today on a 2.5% move lower for oil and flat ng). Sector rotation.

  46. 46
    zman Says:

    Re 44: that’s just crazy talk.

  47. 47
    ram Says:

    Looks like all JAN call options are dead.

  48. 48
    ram Says:

    RE #34 – I might bail too.

  49. 49
    TTupp Says:

    vlo! go bannana!

  50. 50
    zman Says:

    SWN, APA, and HK jan calls damaged but not dead…will punt on a reversal if we get one.

  51. 51
    Sambone Says:

    11:14 am EST

    Nymex Crude Falls Below $90 On Big Inventory Build

    By MATT CHAMBERS
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures slumped to a fresh one-month low Wednesday after the Department of Energy said U.S. crude oil stockpiles rose for the first week in nine.

    Light, sweet crude for February delivery on the New York Mercantile Exchange was recently down $2.46, or 2.7%, at $89.44 a barrel after falling as low as $89.26 a barrel, the lowest intraday price for a front-month contract since Dec. 18. Brent crude on the ICE futures exchange fell $2.18 to $89.44 a barrel.

    Crude oil stockpiles rose by 4.3 million barrels to 287.1 million barrels last week, the DOE’s Energy Information Administration said in its weekly report. That compared with expectations of a 300,000-barrel draw in a Dow Jones Newswires survey of 14 analysts. Gasoline stockpiles rose by 2.2 million barrels to 215.3 million barrels, close to expectations for a 2.4 million barrel gain. Distillate stockpiles, which include heating oil and diesel fuel, rose 1.1 million barrels to 129.8 million barrels, also in line with analysts’ forecasts of a 1 million-barrel gain.

    Refinery use slumped 4.2 percentage points to 87.1% of capacity, a much bigger decline than analysts’ forecast for a 0.7 percentage point decline.

    “Inventories rose across the board, which confirms the bearish expectations for this report,” said Tim Evans, an analyst at Citigroup in New York.

    Prices began to slide before the inventory report, partly on some speculation of a build, and partly on a continuing focus on U.S. economic worries and concerns about the effect a recession will have on oil demand. Prices have now fallen for eight of the 10 sessions since Jan. 2, when prices first touched $100 a barrel. Crude reached an intraday record $100.09 on Jan. 3, before finishing lower for that session.

    Despite the big rise in crude oil inventories, the big drop in refinery use could signal further tightness to come in refined product use.

    Front-month February reformulated gasoline blendstock, or RBOB, fell 6.49 cents, or 2.8%, to $2.2443 a gallon. February heating oil fell 6.96 cents, or 2.7%, to $2.4776 a gallon.

    —By Matt Chambers, Dow Jones Newswires

  52. 52
    freeflow Says:

    Strategy to think about: Hold long until rate cut – then sell into rally and go short until we breach 12,000…

    I wonder if we’ll get a rate cut before we go below 12,000?

  53. 53
    TTupp Says:

    lots of mention of drybulk rate declines on cnbc. should be contrarian bottom indicator. still short

  54. 54
    TTupp Says:

    if i was short fslr i would be taking profits only after the $150 gap is filled. wish i was here, congrats Z. the puts were too expensive for me, but have definately payed off…

  55. 55
    TTupp Says:

    its the same break-away gap that is holding up drys right now (fslr). god these storys are similar.

  56. 56
    Sambone Says:

    Well, I guess the crowd has decided that the worst is over in the financials. Even KB Homes (KBH) is up.

  57. 57
    zman Says:

    energy is creeping slowly higher, well off lows. Don’t have much faith in the broad market holding anything green.

  58. 58
    Brian08 Says:

    Crude managing to hold $90…Too early to go long via USO??

    I guess in this market its not a good idea to go long anything…

  59. 59
    zman Says:

    B – I think they may make a stab at $86-87 next week unless the weather chills out more or the economy suddenly seems a bit rosier.

  60. 60
    zman Says:

    One thing bullish for crude, if there was a hope that OPEC would boost production it went out the window on the adequate supplies theory.

  61. 61
    Nicky Says:

    Afternoon all. Feeble rally in broader markets. One more leg down? 12200 – 12300 by Friday morning and they cut rates? Sparks huge rally towards 13k and that will be a great short for lower lows.
    Downside doesn’t look done to me.
    Energy – thinking $96 ish by Friday on WTI and then they cut rates and we go back to 92?

  62. 62
    zman Says:

    Nicky – bounce to $96?

  63. 63
    Nicky Says:

    oops that should have said 86! where did that $10 go????

  64. 64
    Nicky Says:

    sorry Z – I meant we fall to 86 and then bounce to 92.

  65. 65
    zman Says:

    N – No worries, I was pretty sure it was a typo.

  66. 66
    zman Says:

    Any one spy the gas number for tomorrow?

  67. 67
    Sambone Says:

    Hmmm, VLO is back to where it was last January when crude was in the 50 range.

  68. 68
    Brian08 Says:

    Whoever said it eariler was right…Never seen drybulks getting so much coverage on CNBC…This might be a bottom…

  69. 69
    Nicky Says:

    Z – the only thing I can see is that Alaron are predicting a draw of 69 bcf.

  70. 70
    zman Says:

    Thanks…sounds about right given the warmth last week.

  71. 71
    Nicky Says:

    I feel we are close to a bounce Brian – just need some sort of capitulation now.

  72. 72
    zman Says:

    T – I think I’ll hold the remaining two FSLR put series for Nicky’s capitulation. Charts fill gaps.

  73. 73
    Brian08 Says:

    Nicky a question about that…For example, DRYS has gone from $120ish to below $50…That just seems like capitulation to me…But it still keeps falling…Are you talking about something in the low 40s as capitulation…I suck at reading charts so I’m probably wrong there…

  74. 74
    zman Says:

    B – I think she is looking for it for the broad market…as bad as today and yesterday have looked, I think we need a day of stupidly down moves before we can shake this pattern.

  75. 75
    zman Says:

    DJIA dipping back into redrum land, could be an even uglier afternoon.

  76. 76
    zman Says:

    Sambone – re the refiners, yes we are definitely getting a little oversold here. I have not seen a refining ETF but I used to build my own index here and could update. Anyone know of an independent refining ETF or tracker index?

  77. 77
    Brian08 Says:

    Z Re #74…You mean we haven’t seen that yet??? LOL…Guess not in the broad market…I got my DIA 125 puts this morning…Want to root for ’em, but every time I do that I lose my butt in everything else I own…

  78. 78
    zman Says:

    KOL and MOO ETFs down 6%…who needs energy anyway?

  79. 79
    Nicky Says:

    Yes Brian Z is right – its a day where everyone throws everything out and we see some real fear. Look for a gap down…
    I saw it last night as Japan and Hong Kong closed – they were literally in freefall. But I suspect they both need to see a lower low too – I expect to see it either before the open or just after and then the gap bought up. I had dismissed the idea of the Fed cutting at this late date but I think that we will see it and it will be the catalyst for the turn round. They will HAVE to step in if the market looks like it is crashing.
    Cycles are call for a turn around the 18th – that can be plus or minus a day….
    As far as DRYS goes – wow what a fall! But yes you may be right on the level – there could be some great short term trades. It will be a question of having the nerve to step in when everything is tanking.

  80. 80
    Nicky Says:

    Beige Book at 2pm may give us some more action.

  81. 81
    freeflow Says:

    I think someone may have realized that APC does not need to be below 60

  82. 82
    Sambone Says:

    N – You think DRYS chart looks bad, check out BEAV. I’m starting to work on this puppy. Billions of back orders.

  83. 83
    Nicky Says:

    Any thoughts on the levels Sam that we may bottom for this move?

  84. 84
    Brian08 Says:

    Thanks for the knowledge Nicky…I have the stones to do it, but my timing usually sucks…Did it on BAC about $4 ago and I thought I was smart as hell for getting my 6+% yield…

    Yeah I’m gonna be outta my puts by Fed time, I agree with what you are saying…Let it rise and then short the hell outta it…

  85. 85
    Brian08 Says:

    Thanks for the knowledge Nicky…I have the stones to do it, but my timing usually sucks…Did it on BAC about $4 ago and I thought I was smart as hell for getting my 6+% yield…

    Yeah I’m gonna be outta my puts by Fed time, I agree with what you are saying…Let it rise and then short the hell outta it…

  86. 86
    Nicky Says:

    If my preferred count is right then the short that sets up in the 13k region should easily take us to 11500 on the Dow. There is a head and shoulders target forming there.

  87. 87
    zman Says:

    headline: beige book sees slow modest growth.

  88. 88
    zman Says:

    WASHINGTON (MarketWatch) – The U.S. economy grew at a modest pace in most regions of the nation in late November and December, the Federal Reserve reported Wednesday. In its Beige Book report on the economy, the Fed noted that labor markets remain tight in most areas despite the sharp rise in the unemployment rate to 5% reported by the Labor Department in December. “Economic activity increased modestly during the survey period of mid-November through December, but at a slower pace compared with the previous survey,” the Beige Book reported. Of 12 Fed banking districts, five reported slow or slowing activity, five reported modestly or slightly increasing activity, and two said conditions were mixed.

  89. 89
    zman Says:

    crude staging a small rally last 30 minutes.

  90. 90
    TTupp Says:

    so Nicky do you see a sell off into the close?

  91. 91
    Nicky Says:

    T-Tupp – we would have to take out yesterdays highs for this to look more bullish.

  92. 92
    scoop006 Says:

    Z What are your thoughts about tomorrow’s gas #’s.Looking at XTO for a trade

  93. 93
    zman Says:

    Scoop,

    I think tomorrow’s number is a bit of a non-event as everyone looks forward to the big weather this week in next week’s report. I like XTO ok as far as that trade but SWN has taken a big hit and maybe interesting as well, especially if the number comes in a little large.

  94. 94
    scoop006 Says:

    Z Which number Build or Draw

  95. 95
    zman Says:

    S – definitely expect a draw, just not a very big one for this time of year. HHD’s dipped to 140 last week after a string at or a bit over 200.

  96. 96
    freeflow Says:

    I’m seeing a lot of action in the RIG calls we picked up yesterday.

  97. 97
    Sambone Says:

    3:26 pm EST

    Nymex Crude Falls Below $91 On Big Inventory Build

    By MATT CHAMBERS
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures fell to a fresh four-week low Wednesday as growing U.S. crude oil and refined products stockpiles combined with economic concerns to drag prices below $91 a barrel.

    U.S. crude oil inventories broke a string of eight straight drawdowns last week, according to Department of Energy data, building unexpectedly as imports increased and refinery use slumped. Adding to the price pressure, gasoline and distillate stockpiles rose in line with expectations, despite a much larger-than-expected fall in refining.

    Light, sweet crude for February delivery on the New York Mercantile Exchange fell $1.06, or 1.2%, to $90.84 a barrel, the lowest closing price for a front-month contract since Dec. 18. Prices fell as low as $89.26 in intraday trading before rallying back in the last hour of trading. Brent crude on the ICE futures exchange fell $1.29 to $89.69 a barrel. Brent settlement prices weren’t yet available.

    “The big build in crude is a sign that problems we’ve had with imports in recent weeks could be starting to correct themselves,” said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago. “Overall, it’s bearish for oil prices.”

    Fog in the Gulf of Mexico has crimped oil imports and contributed to big falls stockpiles in recent weeks. Inventories also drew down as refineries reduced inventories to minimize tax in some states.

    Prices began to slide before the inventory report Wednesday, partly on some speculation of a build, and partly on a continuing focus on U.S. economic worries and concerns about the effect a recession will have on oil demand. Prices have now fallen for eight of the 10 sessions since Jan. 2, when prices first touched $100 a barrel. Crude reached an intraday record $100.09 on Jan. 3, before finishing lower for that session.

    “It feels like the market might have undergone a sentiment shift” and could react more to price-negative developments than those which would likely push prices higher, said Kyle Cooper, director of research at IAF Energy Advisors in Houston.

    Crude oil stockpiles rose by 4.3 million barrels to 287.1 million barrels last week, the DOE’s Energy Information Administration said in its weekly report. That compared with expectations of a 300,000-barrel draw in a Dow Jones Newswires survey of 14 analysts.

    Gasoline stockpiles rose by 2.2 million barrels to 215.3 million barrels, close to expectations for a 2.4 million barrel gain. Distillate stockpiles, which include heating oil and diesel fuel, rose 1.1 million barrels to 129.8 million barrels, also in line with analysts’ forecasts of a 1 million-barrel gain.

    Refinery use slumped 4.2 percentage points to 87.1% of capacity, a much bigger decline than analysts’ forecast for a 0.7 percentage point decline.

    Some analysts said they were surprised the market didn’t react more favorably to the big fall in refinery use, which could indicate coming tightness in refined product markets, while others said it could be another indication of slowing demand.

    “It could be seen as a bearish scenario if they’re running at near 87% and product stockpiles are still building,” Cooper said.

    Front-month February reformulated gasoline blendstock, or RBOB, fell 3.09 cents, or 1.3%, to $2.2783 a gallon. February heating oil fell 2.88 cents, or 1.1%, to $2.5184 a gallon.

    —By Matt Chambers, Dow Jones Newswires

  98. 98
    zman Says:

    FF – yeah, I’ve been seeing sporadic chunks of call buying this afternoon in several strikes. The stocks look like people are starting to bottom fish. And well they should as this group is highly insulated against and near and medium term economic troubles.

  99. 99
    scoop006 Says:

    FF 3X the volume on the Feb. RIG $125 puts at the same premium

  100. 100
    zman Says:

    Tomorrow’s post likely to be barebones, just the facts ma’am, sick as a dog of the Dow.

  101. 101
    zman Says:

    oops, did not look at those. still, people should be bottom fishing these here.

    coals just got destroyed today
    obviously solar and dry bulks as well.

    rally fading into the close

  102. 102
    freeflow Says:

    I dont know why – it’s just so hard for me to stop being bullish. Maybe I read too much Philstockworld lately. Maybe I should really put my money under my mattress…

  103. 103
    zman Says:

    APA off $5? Man they hate energy today…not seeing anything like a commensurate drop in the commodities.

  104. 104
    Sambone Says:

    They don’t likum the energy patch today, eh?

  105. 105
    zman Says:

    SWN down 6%, just lost all my “house money” trade there as I had sold the first half for a double.

    APA down 5%

    PBR down 7%

    FSLR down $24+ (11%)

  106. 106
    zman Says:

    very large volumes today … maybe not for the broad market but for energy stocks this looks pretty capitulatory.

  107. 107
    freeflow Says:

    I’m hoping for a fed induced bounce by the end of this week.

  108. 108
    freeflow Says:

    Time for a very large tini

  109. 109
    kaman Says:

    …and the broad market might be called a capitulatorium. I think that sounds about right.

  110. 110
    Wyoming Says:

    Z,

    Barnett Rigs (1,000 HP) are running ~$18k/day. Have not moved much in price.

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