13
Feb

Wednesday – EIA Oil Report Preview + Dry Bulk Update + More Earnings

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Commodity Watch

  • Crude Oil closed down $0.81 at $92.78 yesterday after traders discounted Hugo Chavez' "we will make you ride bicycles" threat. This morning Chavez is taking his threat up a notch and crude is trading flattish. Nobody with a Napoleon complex likes to be told by the world that their threats are empty.
  • Hugo Yanks The Tiger's Tail Watch: Chavez Stops Selling Oil To Exxon. No one seems to be clear on just how much oil this is but if it lasts for any length time it could be a boon for Gulf Coast refiners with heavy crude processing capacity (VLO and COP) although it's unlikely that they could absorb all of the excess crude. Therefore surplus of one type of crude in a region causes the heavy / light differential to widen and it gets even better for these two refiners. That's if this drags out and if Chavez doesn't send that crude to points east and west instead of north. I wonder if he plans on sending any oil to the Chalmette, Louisiana refinery, a 50/50 JV between PDVSA and XOM. Will the workers take up arms against each other?
  • IEA Trims Global Oil Demand Forecast. The International Energy Agency trimmed its forecast for 2008 global oil consumption by 200,000 bopd to 87.6 mm bopd, which still equates to annual growth of 1.9%. They did this in response to the IMF's curbing of 2008 global GDP expectations. IEA noted that tanker demand in the Atlantic is slowing.
  • OPEC Watch: The preceding bullet all but rubber stamps a smallish production cut from the Cartel at its March 5 meeting. Kind of ironic since the IEA has been one of the most strident voices calling for increased OPEC production but will now no doubt be cited by OPEC as a reason to cut.
  • EIA Inventory Preview Table (with expected change taken from the Dow Jones Survey) 

expected-021208.jpg

ZComment:  Those are pretty seasonally normal numbers. I don't expect another giant build in crude unless we get another big slide in refiner utilization which is not expected 84.3%. The most important numbers in the report aside from the Big 3 and the util% one are gasoline demand which is riding below 9 mm barrels and imports which has been running north of 10 million barrels. The refiners really need the imports to stay up and the that gas number to at least flatline and not trend lower before I start to warm to them. 

  • Natural Gas closed down $0.09 at $8.44 yesterday. I'm betting that prices start to soften here soon and took an opening position in UNG puts (see below). This morning gas was trading off a dime early but had closed that gap to yesterday's close to within a couple of pennies by post time. To me, the following graph looks a little extended especially given the lack of real wintry weather given last year's cold comps and also because the low demand shoulder season is just around the corner and traders generally start discounting that soon. If we are rolling over here you could point to this high as a lower high than the one seen in October and a quick sell off back to test the low $7 may ensue in the near term. Longer term (this year) I think gas trends in the $7 to $9 per mmbtu range. 

nat-gas-021208.jpg

Dry Bulk Thoughts: The Rebound is Starting: This was one of my big picture items for 2008 listed in the January 2 Post, in fact, it was the first first bullet point under the first theme. Click here to check out all those big picture thoughts.

Earnings For The Big Bulkers Begin This Week. (DRYS) and (QMAR) on Thursday, (DSX) on Friday.

dry-bulk-multiple-021208.jpg

Key Points of the above table: These data are compared to 1/10/08 which is when I started to warm back up to the group after its year end beheading.

1) After a rather heterogeneous rebound in the group, current size leader and spot market levered leader (DRYS) remains the cheapest game in town on current year earnings.  

2) Earnings estimate have slowed to a crawl and in some cases reversed a bit.  

Earnings and Other Stuff We Care About Today

(FSLR) reported a big beat of $0.77 vs $0.54 expected for its fourth quarter driven by a large top line surprise ($200 million vs $180 mm expected). Cost per watt dropped to $1.12 per watt, down 12% from year ago levels and down from $1.19 at last report due to economies of scale. The stock is called up 22% or $37 before the open and will no doubt re-ignite the group.  I want to gauge the initial reaction and inevitable early morning sell back and will likely play one of the competing high margin plays from the table below, most likely (WFR). 

solar-multiple-021208a.jpg

(CLB) reports after the bell and I'm not in yet but may take a small piece by the close.  

 

Holdings Watch: more February strike house cleaning.

CALLS: 

  • (NFX) Added more March $55 Calls for $1.05. I decided to double down during the conference call after the stock went lower on the open. Seemed like a good idea as although the year press release contained few new data points, the conference call itself contained the promise
  • (APC) Out Feb APC $55 Calls for $4.40, up 57% since entry back on 1/24. This was entered for earnings and the 2008 outlook, both of which were good as expected and both of which failed to immediately impress. With a little bit of patience we got out Ok. 
  • (HAL) Out Feb HAL $32.50 Calls for $2.75, up 41% since entry on 1/25.

PUTS:

  • (UNG) Entered March $40 (UNG - the natural gas ETC) Puts for $1.25 with natural gas flat on the day at about $8.50. It's a bet against the sustainability of the recent rally in natural gas prices which has been a functioning of short covering inspired by persistent waves of Arctic Air. I'm just betting on a quick pullback. What follows is my response to queries about

Just a little insurance …gas has had a big run in the last couple of weeks. This is for a quick move down in gas. The stocks should remain relatively unscathed through a 50 cent drop in gas as investors don’t worry so much about that as about the stock market as a whole, especially as the Strip remains elevated. Also, the stocks are highly hedged at much better prices so fundamentally they should not fall in lock step with gas prices.

Odds & Ends

Analyst Watch: (DO) upped to neutral at JP Morgan, (ESV) upped to neutral at Credit Suisse.

 

102 Responses to “Wednesday – EIA Oil Report Preview + Dry Bulk Update + More Earnings”

  1. 1
    kaman Says:

    Morning Z-
    Seem to think there’ll be some catalyst movement today in minerals (coal/ iron ore) and drybulks…cheers-K

  2. 2
    Sambone Says:

    Personal note – Flu shot doesn’t work this year. Be careful because it’s widespread in the south.

    9:00 am EST

    Nymex Crude Steady Ahead Of Inventory Data

    Dow Jones Newswires
    From Market Talk:
    [Dow Jones] Crude is steady ahead of data expected to show US oil crude inventories grew by 2.7 million bbls last week. Venezuela’s decision to halt oil exports to ExxonMobil affects only about 2.7 million bbls a month, says analyst Phil Flynn at Alaron Trading. “A relatively small amount of oil that can be easily be made up elsewhere. It’s not like we are in short supply of heavy crude and Exxon should be able to find all they want,” he says. Meanwhile, the International Energy Agency lowered its oil demand growth projection for 2008. Nymex Mar crude -20c at $92.58/bbl. (greg.meyer@dowjones.com)

    From earlier:Crude Steady As Market Mulls Venezuela, Oil Data
    LONDON — Crude oil futures hovered near $93 a barrel in London Wednesday, supported by Venezuela’s decision to halt oil exports to Exxon Mobil, but restrained by anticipation of a continued build in U.S. crude stocks last week.

    “As long as tensions between the U.S. and Venezuela remain in the focus of market players, the positive news on the fundamentals situation do not carry enough weight to push oil prices down,” said Eugen Weinberg, analyst at Commerzbank in Frankfurt.

    At 1230 GMT, the front-month March Brent contract on London’s ICE futures exchange was up 44 cents at $93.30 a barrel.

    The front-month March light, sweet, crude contract on the New York Mercantile Exchange was trading nine cents higher at $92.87 a barrel.

    The ICE’s gasoil contract for March delivery was up $2.50 at $831.25 a metric ton, while Nymex gasoline for March delivery was down 36 points at 236.44 cents a gallon.

    Venezuela Tuesday escalated its row with Exxon Mobil over the oil major’s decision to seek compensation in world courts for assets nationalized by Caracas last year. State-owned Petroleos de Venezuela declared it has “paralyzed” oil sales to the energy giant.

    While oil prices garnered support from Venezuela’s decision, analysts appeared to adopt a sanguine approach to developments, with the volumes concerned considered small, and the action unlikely to affect global supply levels.

    “The volume of direct sales was only about 3 million barrels a month and the industry is well trained to circumvent such blacklisting,” said analyst Olivier Jakob of Petromatrix in Switzerland. “Hence it will have little disruptive impact.”

    While Venezuela’s actions continued to rank alongside recent Nigerian export restrictions in dominating oil market supply fears, demand concerns centered on latest figures from the International Energy Agency Wednesday, while traders were also waiting for further consumption signals from weekly U.S. Department of Energy inventory data, due at 1530 GMT.

    Lowered International Monetary Fund forecasts for global economic activity in 2008 prompted the International Energy Agency to revise lower its forecast for 2008 world oil demand growth Wednesday.

    In its Monthly Oil Market report, the IEA predicted 2008 world oil demand will grow 1.7 million barrels a day from last year, down from 1.98 million barrels a day forecast in January.

    Price reaction to the report’s outlook was muted, with its findings largely adhering to market expectations and somewhat overshadowed by anticipation of U.S. DoE data due out later.

    “I think to some extent what the IEA is saying (cutting its demand estimate) was widely expected,” said Simon Wardell, analyst at Global Insight in London, after the IEA issued warnings in last month’s report that a downward revision to demand growth predictions was possible.

    According to the average of a Dow Jones survey of 16 analysts, U.S. crude oil inventories are expected to have risen by 2.7 million barrels in the week ending Feb. 8. Gasoline inventories are predicted to have grown by 1.9 million barrels, while stocks of distillates, which include heating oil and diesel fuel, are expected to have fallen by 1.2 million barrels.

    Refinery utilization is seen unchanged at 84.3% of capacity.

    Confirmation of bearish inventory expectations is likely to put downward pressure on prices, analysts suggested, adding to concerns a U.S. economic slowdown will dampen demand for crude and products.

    “When we get signs of demand slowing, we’d expect (prices) to come off,” said Helen Henton, an analyst at Standard Chartered in London. “The demand issue is going to weigh on it eventually.”

    —By Nick Heath, Dow Jones Newswires

  3. 3
    kaman Says:

    …thats upside movement.

  4. 4
    kaman Says:

    Ditto on Sambone…spouse was hospitalized for couple of days with flu and pneumonia last week….nasty strain this year.

  5. 5
    Sambone Says:

    K – Yea, I’ve been down for almost three weeks. Here in the south you catch it quick (24 hours), go down for at least a week, get somewhat better, then have a relapse. Wicked. I’m tired of being sick.

  6. 6
    apbd Says:

    Article on Dryships in the latest issue of Forbes (Feb 25th). Mostly about CEO George Economou and self dealings and incestuous dealings. Not flattering.
    George comes first and shareholders are an afterthought.
    apbd

  7. 7
    zman Says:

    Hear you guys on the sickness. Been sick myself since New Year’s Eve. Ugly stuff, just can’t shake. Double does of Mucinex seems to help. Hope the wife’s ok K.

    APBD – old complaints re DRYS owner, nothing new there.

  8. 8
    kaman Says:

    All’s well now, thanks.

  9. 9
    zman Says:

    ZTRADE:

    HAL March $37.50 calls for $0.45.

  10. 10
    zman Says:

    Sam – thanks for that last news story, PF was helpful with a number…I guess he can use numbers if they make his case, lol.

  11. 11
    Sambone Says:

    9:31 am EST

    Nymex Crude Drifts Lower; Stockpile Jump Seen

    BY GREGORY MEYER
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures drifted lower Wednesday as the market awaited figures expected to show U.S. petroleum inventories are expanding.

    Light, sweet crude for March delivery was recently down 49 cents, or 0.5%, at $92.29 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange was trading at $92.70 a barrel, off 16 cents.

    Venezuela’s decision to halt oil shipments to ExxonMobil Corp. (XOM), the latest salvo in a fight with the oil major over nationalized assets, prompted some buying overnight. But analysts said the amount of crude affected isn’t large enough to disrupt the market.

    In December, the last month for which crude import data is available, Exxon imported 2.5 million barrels of crude from Venezuela, according to the Energy Information Administration, excluding crude supplied to a Louisiana refinery jointly owned by Exxon and Venezuelan state-owned oil company Petroleos de Venezuela SA. That equals about 81,000 barrels a day.

    “A relatively small amount of oil that can be easily be made up elsewhere,” said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago. “It’s not like we are in short supply of heavy crude and Exxon should be able to find all they want.”

    Attention now shifts to U.S oil stockpile data due at 10:30 a.m. EST. The EIA is expected to report the nation’s crude inventories rose by 2.7 million barrels, gasoline inventories rose by 1.9 million barrels and distillate inventories fell by 1.2 million barrels in the week ended Feb. 8, according to a Dow Jones Newswires survey of analysts. The rate of refinery use is seen as unchanged at 84.3%.

    A big jump in crude oil stocks could indicate slowing demand as the economy cools in the world’s top energy consuming nation, analysts said.

    On a global scale, the International Energy Agency on Wednesday cut its 2008 world oil demand growth forecast by nearly one-half percentage point on account of slowing world economy activity. The Paris-based energy watchdog agency for the world’s richest industrialized countries now sees world oil demand growing this year by 1.7 million barrels a day from last year, down from 1.98 million barrels a day forecast in January, to average 87.6 million barrels a day in total consumption.

    “Everyone had been expecting the IEA to come down,” said Rick Mueller, director of the oil practice at Energy Security Analysis Inc. in Wakefield, Mass. The IEA’s demand growth forecast has long been higher than other major energy analysts’.

    “That being said,” Mueller added, “certainly this will be bearish for the market. It’s sort of the last bull in the market throwing in the towel and saying, “Yes, 2008 is going to be a weaker year.” ”

    Front-month March reformulated gasoline blendstock, or RBOB, fell 1.83 cents, or 0.8% to $2.3497 a gallon. March heating oil rose 4 points, or 0.02%, to $2.5915 a gallon.

    —By Gregory Meyer, Dow Jones Newswires

  12. 12
    Dman Says:

    Z – any particular angle on the HAL just now?

  13. 13
    zman Says:

    Dman – Re HAL: just rolling forward after closing out the Febs yesterday. Think oil service gets a run in here, SLB starting to catch some upgrades. That and HAL never got any credit for a great quarter and a strong outlook.

  14. 14
    Popeye Says:

    Not the reaction I was expecting.

  15. 15
    zman Says:

    crude up 1.1 mm barrels
    gaso up 1.7
    dist down only 0.1

    refiner jumped back up to 85.1%

    crude traded off before the #s to down $0.60 flat with that now

  16. 16
    zman Says:

    Popeye – could be a headfake. That utilization number coming back up is interesting.

    Crude imports were 9.7 mm bopd; they just can’t keep it that high (>10) week after week after week.

  17. 17
    Popeye Says:

    What does Clemens testimony have to do with the market? At least I don’t have to hear or see Dennis Kneale.

  18. 18
    Popeye Says:

    Sorry for the rant, I’m actually in a good mood today.

  19. 19
    zman Says:

    ZTRADE:

    Entering APA March 110 Calls for $3.50.

  20. 20
    doc Says:

    Z–CHK Selling balence of my $37.50s. Got some off at $4.20 limit.

  21. 21
    doc Says:

    Z all gone at $4.20

  22. 22
    zman Says:

    Nice Doc! Very Nice. I’m very close to punting, it went 4.30 bid and my only goal was to beat you, lol. Just kidding. The March’s of the same strike are doing very well as they are also benefiting from the inflating volatility.

  23. 23
    zman Says:

    Next we gotta NFX up. They are doing very well in the Rockies and the company is no sort of one trick pony with the Woodford play but it is exciting area number one. Its going to be a very interesting year for them, which is why I own the common and play the options. In the Woodford area, they’ll learn a lot more about the potential of 3 more horizons. They could end up producing a total of 4 horizons per well with stack laterals … pretty exciting stuff and I think the better the results here the more likely they get gobbled up.

    Wow, go APA, go oil!

  24. 24
    zman Says:

    Popeye – rants are always welcome. How do you think this site got started, lol? It looks like people agreed with you that the initial reaction to the oil numbers was the wrong one. Oil looks like it wants to head higher.

    Nicky you around?

    DNR a good smaller cap surrogate for an oily play right here.

  25. 25
    zman Says:

    UNG up a bit with entire gas strip off a nickel. That won’t last.

  26. 26
    TTupp Says:

    is the apa a quickie? it appears to be through the bb on the upper

  27. 27
    zman Says:

    http://www.kgsr.com in case you ever what I listen to during the day when CNBC is busy talking about baseball and steroids.

  28. 28
    Sambone Says:

    10:41 am EST

    Nymex Crude Drops As Oil Stockpiles Mount

    BY GREGORY MEYER
    Of DOW JONES NEWSWIRES

    From MARKET TALK:
    [Dow Jones] Nymex crude remains lower after US data show crude stockpiles grew by 1.1 million bbls last week, a lower gain than analysts expected. Gasoline stocks rose by 1.7 million bbls, close to expectations, while distillate stocks fell 100,000 bbls, not as much as analysts had forecast. Refinery use increased an unexpected 0.8 percentage point. Nymex Mar crude -57c at $92.21/bbl. (greg.meyer@dowjones.com)

    NEW YORK — Crude oil futures drifted lower Wednesday as the market awaited figures expected to show U.S. petroleum inventories are expanding.

    Light, sweet crude for March delivery was recently down 49 cents, or 0.5%, at $92.29 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange was trading at $92.70 a barrel, off 16 cents.

    Venezuela’s decision to halt oil shipments to ExxonMobil Corp. (XOM), the latest salvo in a fight with the oil major over nationalized assets, prompted some buying overnight. But analysts said the amount of crude affected isn’t large enough to disrupt the market.

    In December, the last month for which crude import data is available, Exxon imported 2.5 million barrels of crude from Venezuela, according to the Energy Information Administration, excluding crude supplied to a Louisiana refinery jointly owned by Exxon and Venezuelan state-owned oil company Petroleos de Venezuela SA. That equals about 81,000 barrels a day.

    “A relatively small amount of oil that can be easily be made up elsewhere,” said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago. “It’s not like we are in short supply of heavy crude and Exxon should be able to find all they want.”

    Attention now shifts to U.S oil stockpile data due at 10:30 a.m. EST. The EIA is expected to report the nation’s crude inventories rose by 2.7 million barrels, gasoline inventories rose by 1.9 million barrels and distillate inventories fell by 1.2 million barrels in the week ended Feb. 8, according to a Dow Jones Newswires survey of analysts. The rate of refinery use is seen as unchanged at 84.3%.

    A big jump in crude oil stocks could indicate slowing demand as the economy cools in the world’s top energy consuming nation, analysts said.

    On a global scale, the International Energy Agency on Wednesday cut its 2008 world oil demand growth forecast by nearly one-half percentage point on account of slowing world economy activity. The Paris-based energy watchdog agency for the world’s richest industrialized countries now sees world oil demand growing this year by 1.7 million barrels a day from last year, down from 1.98 million barrels a day forecast in January, to average 87.6 million barrels a day in total consumption.

    “Everyone had been expecting the IEA to come down,” said Rick Mueller, director of the oil practice at Energy Security Analysis Inc. in Wakefield, Mass. The IEA’s demand growth forecast has long been higher than other major energy analysts’.

    “That being said,” Mueller added, “certainly this will be bearish for the market. It’s sort of the last bull in the market throwing in the towel and saying, “Yes, 2008 is going to be a weaker year.” ”

    Front-month March reformulated gasoline blendstock, or RBOB, fell 1.83 cents, or 0.8% to $2.3497 a gallon. March heating oil rose 4 points, or 0.02%, to $2.5915 a gallon.

    —By Gregory Meyer, Dow Jones Newswires

  29. 29
    TTupp Says:

    i would have taken the trade but had to get in right at the report. darn it

  30. 30
    zman Says:

    T – not super quickie as I took Marches but in “this” market I’ve been getting a little faster to pull the trigger. SU not run yet, similar linkage to oil. DNR, smaller but very oil. Can move well for a little guy.

  31. 31
    TTupp Says:

    drys looks to have formed a nice and reliable inverted H&S’s pattern. good call on the pre-Chinese new year call

  32. 32
    zman Says:

    T – thanks, I’m just glad I went to lunch with guys smarter than me. I try to do that every day or so ;->

  33. 33
    zman Says:

    Sam – it looks like Greg posted a story with estimates of the inventory report after the report came out. Ah, the mainstream media, lol.

  34. 34
    zman Says:

    FSLR up 25% now…unreal. Market cap of $16 billion on quarterly sales of $200 mm. This year they might get to revenue of $1 B. That’s revenue. Maybe $2 in EPS so that’s a NTM PE of 115x. Now, it is growing fast but part of the excitement is predicated on the continued improvements in manufacturing efficiency which necessarily must decline so…. I’m listening to the replay of the conference call now.

  35. 35
    zman Says:

    RE XOM Feb Calls – I’m going to give them one more day I think but will set a stop around $0.80, current bid is $1.05 with the stock up $0.95 @ $85.34.

  36. 36
    zman Says:

    Sane: did you see API yet?

  37. 37
    zman Says:

    Drybulk rates up again for today.

    Capesize up another $4,400 to $119,000 per day.

    Panamax up $2,200 to $54,000.

  38. 38
    doc Says:

    Bought CHK calls March $42.50 @ 1.95
    ” Chk calls Jan 09 $45. @ 3.70

  39. 39
    Dman Says:

    Z – are you looking to hang on to the March CHKs here?

  40. 40
    sane Says:

    Haven’t seen API yet

  41. 41
    zman Says:

    D – earnings on Feb 20th – I’m going to let them run into it and may remove pre-call (and go to something higher and longer). Will put a stock in at around $4 to keep them above a double (I really hate round-tripping doubles).

  42. 42
    Sambone Says:

    For everybody on the overall markets.

    With everybody sweating the market, it’s always important to remember what Ben Graham said about “Mr. Market”;

    The concept of Mr. Market goes something like this: imagine you are partners in a private business with a man named Mr. Market. Each day, he comes to your office or home and offers to buy your interest in the company or sell you his [the choice is yours]. The catch is, Mr. Market is an emotional wreck. At times, he suffers from excessive highs and at others, suicidal lows. When he is on one of his manic highs, his offering price for the business is high as well, because everything in his world at the time is cheery. His outlook for the company is wonderful, so he is only willing to sell you his stake in the company at a premium. At other times, his mood goes south and all he sees is a dismal future for the company. In fact, he is so concerned, he is willing to sell you his part of the company for far less than it is worth. All the while, the underlying value of the company may not have changed – just Mr. Market’s mood.
    The best part of this entire arrangement: you are free to ignore him if you don’t like his price. The next day, he’ll show up at your door with a new one. For your interest, the more manic-depressive he is, the more opportunity you will have to take advantage of him [don’t worry, he doesn’t have feelings or mind being taken advantage of.] As long as you have a strong conviction of what the company is really worth, you will be able to look at Mr. Market’s offers and reject or accept them… the choice is yours.
    This is exactly how the intelligent investor should look at the stock market – each security that is traded is merely a part of a business. Each morning, when you open up the newspaper or turn on CNBC, you can find Mr. Market’s prices. It is your choice whether or not to act on them and buy or sell. If you find a company that he is offering for less than it is worth, take advantage of him and load up on it. Surely enough, as long as the company is fundamentally sound, one day he will come back under the sway of a manic high and offer to buy the same company from you for a much higher price.
    By thinking of stock prices in this way – as mere quotes from an emotionally unstable business partner – you are free from the emotional attachment most investors feel toward rising and falling stock prices. Before long, when you are looking to buy stock you will welcome falling prices. The only time you want to invite high stock prices is when you are eager to sell your securities for some reason. Thankfully, in most cases, you are free to wait out Mr. Market’s emotional roller coaster until he offers a price that you consider equal to or higher than intrinsic value. This is perhaps your greatest advantage in your investments.

  43. 43
    doc Says:

    Z CHK My bet is that the Feb 22 report will be super and “wall street” Will wake up & even Cramer, who hated it, might BUY.

  44. 44
    scoop006 Says:

    Z- Re#34 Think FSLR pulls back on a general market selloff, or is it capable of a continued move north

  45. 45
    doc Says:

    Sam #42 Thanks for the post. sometimes we forget.

  46. 46
    zman Says:

    Doc,

    Cramer has no understanding here. He can’t b/c he doesn’t have the attention span to get into the E&P story. Part or most of this move is Marcellus Shale hype driven, the other is the waking up of the Street. Finding costs are what the Street want to see fall here and you probably won’t get a big improvement this year in that metric. I’ve been waiting for the Street to wake up to these guys for a very long time. Hope you’re rigth but think it will be a more gradual process as Aubrey has “paid full price” to be in the Barnett which has been a great move for him given the gas strip but it has been met with skepticism.

    Scoop – still listening to the replay of FSLR’s CC in the background – Wall Street love in. At some point you’ve got to think there will be some profit taking.

  47. 47
    zman Says:

    Drybulks starting to move on up a little. Look at some more March DSX calls.

  48. 48
    zman Says:

    Maybe Warren Buffet should be Fed president, lol.

  49. 49
    zman Says:

    Oil moving on up now. Natural gas staying down about $0.06. This is pretty much making for a good day as the stocks are ignoring the gas so far including CHK, SWN and other extremely gas levered names. UNG still flattish which is a little odd but will likely not last as I expect gas to continue to roll over.

    Has anyone seen consensus for the gas number tomorrow?

  50. 50
    zman Says:

    ZTRADE: Added a small batch of March DSX $35 calls for 0.75. Still holding the March 25 Calls. 4Q results will be released bmo Friday.

  51. 51
    Nicky Says:

    Morning all. Oil looking dangerous here. There is a clear head and shoulders pattern which could complete anywhere between 96 and 96.

  52. 52
    Nicky Says:

    Sorry that should have said 96 and 98.

  53. 53
    zman Says:

    Morning Nicky – agreed…you’ve got admit OPEC is playing their hand just about perfect. Now they’ve got the IEA making their point for them for the March 5 meeting. Priceless.

  54. 54
    Nicky Says:

    Same pattern for distillates and the target there is 265 – 26600.

    Rbob the target is 246 – 25000. Looks like a stretch for gasoline though.

  55. 55
    Sambone Says:

    Gosh, will this make it “All OK”?

    US Rice: To Appoint Special Envoy For Energy Issues

    ASSOCIATED PRESS

    WASHINGTON — U.S. Secretary of State Condoleezza Rice said Wednesday she will appoint a special envoy for energy issues to deal with the use of oil and gas for political means, particularly in Central Asia.

    Her comments to a congressional committee come amid threats from Venezuela to cut off oil exports to the U.S. as well as several incidents in which Russia has or threatened to cut off gas supplies to some of its neighbors, most recently Ukraine.

    “It is a really important part of diplomacy, in fact, I think I would go so far as to say that some of the politics of energy is warping diplomacy in certain parts of the world,” Rice told the Senate Foreign Relations Committee.

    “I do intend to appoint, and we are looking for, a special energy coordinator who could especially spend time on the Central Asian and Caspian region,” she said. This person would also focus on the increasing instability in world energy markets.

    Rice spoke in response to a question from Sen. Richard Lugar, R-Ind., who asked her about progress made on establishing such a post that was called for in legislation approved last year.

    “Russian foreign policy is now largely based on maximizing the political leverage and financial earnings of its energy supplies and dominating the transport of energy in Eurasia,” Lugar said. “Moscow continues to use energy to extort its neighbors.”

    Russian and Ukrainian leaders agreed Tuesday to settle a dispute over Ukraine’s gas debt, avoiding a threatened cutoff in supplies that had rattled consumers in the European Union.

    Meanwhile, Venezuela’s state-run oil company Petroleos de Venezuela SA, or PdVSA, has halted sales of crude to ExxonMobil Corp. (XOM), which is challenging the nationalization of its oil ventures in the country with a court bid to freeze billions of dollars in Venezuelan assets.

    In response, populist Venezuelan leader Hugo Chavez has threatened to cut off all oil supplies to the U.S.

  56. 56
    Dman Says:

    Sam: Problem Solved!!!

    🙂

  57. 57
    zman Says:

    Sam – what the hell is Sam Bodman’s job description then? I’ll take the job unpaid for the benefits. It will be completely ineffectual anyway. We’re going to tell Russia to be nice to the Ukraine, to not establish a gas-OPEC, that OPEC should produce more oil…completely falls on deaf ears. I’d show them how they make more money if they listen to me while getting some of the U.S. aims accomplished. Bodman’s strategy has just been to beg. That works for cute kids asking for candy and that’s about all. You’ve got to tell people what’s in it for them.

  58. 58
    zman Says:

    HAL finally starting to move

    APA chasing down $110, maybe tomorrow?

    EOG got to $100 (without me but they were nice profits…very fun stock to trade)

    COP moving up again. I’m going to start trading this one a little more …getting pretty comfortable with the swings and like buying the “gassy but cheap Major”

    DRYS accelerating into earnings. Don’t know if it reports atc or bmo but the call is tomorrow.

    That QMAR is drawing up but at a much slower pace than the acquirer EXM. QMAR reports tomorrow too and then we get DSX on Friday. DSX chart looking like it wants to run.

  59. 59
    zman Says:

    DRYS cresting $81 … looks like we’re into a small bit of resistance and then clear to up mid $80s/$90.

  60. 60
    zman Says:

    T – conference call is in the morning.

  61. 61
    zman Says:

    Even NFX is going positive now. Looks they finally might have exhausted a large sell who’s been dumping shares at yesterday’s close all morning.

  62. 62
    zman Says:

    Holy Cow. ALY. Should have listened to myself and not the analyst who downgraded it. ugggg.

  63. 63
    Sambone Says:

    #57 – Z, Sad but “Begging” is all the US has left.

  64. 64
    zman Says:

    Sam – no way, there has to be another option. Bribes, maybe.

    OII breaking out.

  65. 65
    xweto Says:

    Re: DSX Mar 35 calls bot at 35 – now bid 80, ask 90 but show no volume so far today … I must have a bad feed?

  66. 66
    Sambone Says:

    Z – I know, send Cheney

  67. 67
    xweto Says:

    oop correct bot to .75

  68. 68
    kaman Says:

    DRYS tomorrow at 4P EST. 4.07 EPS estimated

  69. 69
    zman Says:

    X – those were the DSXCG, I show 278 contracts today – I only got a part fill but I figure I’d report it. Didn’t pr my QMAR so well the other day when same thing happened and then when I talk about it I get emails from guys who don’t sit on the comment part of the site asking “what QMAR I am talking about?”

  70. 70
    zman Says:

    Sam – no, that’s old school thinking, I’m talking bribes. Send weapons, we make great weapons.

  71. 71
    Sambone Says:

    Z – Your right, should never doubt ya, weapons. Uncle Duke in Doonesbury.

  72. 72
    Sambone Says:

    Uncle Phil

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

  73. 73
    zman Says:

    send lawyers, guns, and money.

  74. 74
    zman Says:

    T – how do you mean the APA chart is weird? How about that CHK chart!

  75. 75
    scoop006 Says:

    Z Any plans to buy additional DRYS today

  76. 76
    yona Says:

    bloomberg nat gas survey: -118

  77. 77
    zman Says:

    Deepwater finally running strong.

    Scoop – I took more DSX which will move with it and the premiums aren’t so rich. I may sell my deep in the money calls tomorrow pre close just to be safe, especially if it runs big again, in which case I may take a little profits to buy some further OOTM calls.

    Thanks very much Yona!

  78. 78
    zman Says:

    NG regaining yesterday’s losses as crude jumps a buck here.

  79. 79
    sane Says:

    API

    Crude up 1.3
    Gasoline up 600K
    Distillates down 500K

  80. 80
    zman Says:

    Thanks Sane…pretty much works out.

  81. 81
    QUARRYMAN Says:

    Hey Z.

    I missed the initial NFX action of the past few days.

    What would you buy right now?

    Mar 50s at 2.75?

  82. 82
    zman Says:

    Q – Lucky you. I’m waiting another day but will likely go with those if I add more.

  83. 83
    zman Says:

    Q – on NFX, think the stock is getting a luke warm reception to the finding costs which were a bit high but that should have been expected as they break into the new play. Today, its off as CAP Re (big fund with lots of energy) filed today show they had no holdings of NFX at 12/31.

  84. 84
    Sambone Says:

    Exxon, Venezuela Dispute Casts Uncertainty Over Citgo — Lawyer

    By JESSICA RESNICK-AULT
    OF DOW JONES NEWSWIRES

    HOUSTON — Citgo Petroleum Corp. could be impacted by Exxon Mobil Corp.’s (XOM) ongoing litigation against its parent company, Petroleos de Venezuela (PVZ.YY), according to a top Houston attorney.

    Houston-based Citgo, which operates three U.S. oil refineries, in Texas, Louisiana and Illinois, risks having its assets attached to litigation against Venezuela, said David Asmus, head of the energy practice for Baker Botts, LLP. The firm is among the principal law firms that represent Exxon but is not representing the Irving, Texas oil giant in its case against Venezuela’s state-owned oil company.

    Long-standing oil ties have preserved the U.S.-Venezuelan relationship in recent years, even as broader diplomatic relations have faltered. That alliance was challenged anew after the Chavez government nationalized four heavy oil projects in the oil-rich Orinoco river basin last year, prompting Exxon Mobil and ConocoPhillips (COP) to leave the country and seek compensation via international arbitration.

    Upping the stakes, Exxon said last week it has obtained court orders to freeze more than $12 billion in worldwide assets of PdVSA, as it prepares to dispute the nationalization. In response, Chavez threatened Sunday to cut off oil sales to the U.S. and on Tuesday PdVSA said it had halted all direct oil sales to Exxon.

    The freeze on PdVSA’s assets doesn’t directly affect its day-to-day operations, but potentially limits how many of them it can sell. If ExxonMobil steps up its litigation efforts, it may complicate PdVSA’s dealings with oil traders, who may be reluctant to take possession of assets, such as crude-oil cargoes, that another company has laid claim to.

    Asmus, citing his firm’s relationship with Exxon Mobil, declined to comment on its case against Venezuela.

    But in limiting his remarks to a potential sale of Citgo, he said Venezuela, which has publicly mulled selling Citgo in the past, would find it difficult to do so now. “At this point it would be hard to do that,” Asmus said in an interview. A buyer would take on the risk that Venezuela’s shares in the company would be attached to litigation, he said.

    A Citgo spokeswoman declined to comment on the litigation between Venezuela and ExxonMobil. People familiar with the company’s three refineries say they continued to operate normally.

    According to court filings, Steptoe & Johnson is the only firm representing Exxon in this case. Lawyers with the firm have declined to comment. Exxon has confirmed the court filings but declined to comment further on the legal proceedings.

    Eye On US Assets
    Legal experts not involved in the case however, say Exxon’s action, while global in reach, is primarily aimed at Venezuela’s prime U.S. assets. Exxon’s case, these people say, is strengthened by the fact that it co-owns a refinery in Chalmette, La, with PdVSA.

    In the short term, billions of dollars are at stake as courts in New York and London are set to consider whether to make permanent the rulings that froze cash and assets belonging to Venezuela’s national oil company. In addition, energy companies and producers are closely watching Exxon’s standoff with Venezuela, a forerunner among governments that are strengthening their grip over crude-oil and natural gas resources. The next legal step in the dispute will be a hearing in a New York court Wednesday afternoon.

    In addition to the three Citgo refineries and Chalmette, PdVSA co-owns a crude oil processing unit with ConocoPhillips in Sweeney, Texas. Its jointly-owned assets could also be subject to attachment, Asmus said.

    Venezuela’s nationalization efforts differ from other regions, said Asmus, citing previous activities in Chad, Yemen and Algeria.

    “It’s not clear that Mr. Chavez cares, or if he does care, understands, the implications of what he’s doing,” he said. “I think what Chavez has decided is that he will take more and more and more.”

    —By Jessica Resnick-Ault, Dow Jones Newswires

  85. 85
    zman Says:

    Natural gas gave up all of that oil associated rally and more. Down a dime at the close at lod.

  86. 86
    zman Says:

    So all the sub-prime stuff no longer matters now I guess. wow, that was easy

  87. 87
    zman Says:

    go COP go

  88. 88
    Denise Says:

    Good afternoon-Doug took his profits in his short dug trade this am. Just catching up-another lovely day

  89. 89
    Sambone Says:

    Yep, All is well in the world. Retail sales are up compared to what the street expected. Buffet to the rescue. Goldilocks. What, me worry? Mr. Market. No prob!

  90. 90
    Dman Says:

    Z – anything getting a little overheated for your taste?

  91. 91
    zman Says:

    How about FSLR up $52 today?

  92. 92
    Denise Says:

    Sambone-I’ll take what Mr Market gives
    I agree a bear market rally-but they are nice-and I am adding back some xlf(which I assume you are short)

  93. 93
    Sambone Says:

    3:22 pm EST

    Nymex Crude Inches Higher After Stockpile Report

    By Gregory Meyer
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures inched higher to close above $93 a barrel Wednesday after new figures showed U.S. oil inventories had grown less than anticipated and supply concerns loomed.

    Light, sweet crude for March delivery rose 49 cents, or 0.5%, to settle at $93.27 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange gained 46 cents to close at $93.32 a barrel.

    Prices at first sagged after the Energy Information Administration reported U.S. crude stockpiles last week grew for the fifth week straight.

    “It gave us a bit of support here,” said Mike Zarembski, senior commodities analyst at brokerage optionsXpress Inc. in Chicago. “The 1.1 million-barrel increase was about half of what was expected.”

    The data were mixed, however. Four-week average demand for gasoline and heating oil fell from levels a year ago, while gasoline stockpiles were at their fullest since February 1999.

    “We don’t see any bright spots here,” Citigroup energy analyst Tim Evans said in a note. “It’s a consistently bearish data set for the second week in a row.”

    Questions about supply from Venezuela also underlined trading after state-owned oil company Petroleos de Venezuela SA said it would halt oil shipments to ExxonMobil Corp. (XOM) amid a legal dispute over nationalized assets.

    While Exxon imports a relatively small amount of Venezuelan crude to the U.S. — about 86,000 barrels a day, according to November EIA data — the move highlighted ongoing risks to oil supply. Oil has rallied more than $6 a barrel in the last week as Exxon’s standoff escalated with Venezuela and new violence and technical problems plagued production in Nigeria, countries that are the fourth and fifth largest sources of U.S. crude.

    “This is telling us we’re still very vulnerable to any type of supply disruption,” said Jim Murphy, assistant vice president at futures brokerage R.J. O’Brien in Chicago.

    Analysts say headwinds buffeting the world economy could weigh on oil prices in days ahead. The International Energy Agency on Wednesday cut its 2008 world oil demand growth forecast by nearly one-half percentage point on account of weaker growth forecasts.

    The Paris-based energy watchdog agency for the world’s richest industrialized countries now sees world oil demand growing this year by 1.7 million barrels a day from last year, down from 1.98 million barrels a day forecast in January, to average 87.6 million barrels a day in total consumption.

    “Everyone had been expecting the IEA to come down,” said Rick Mueller, director of the oil practice at Energy Security Analysis Inc. in Wakefield, Mass.

    “That being said,” Mueller added, “certainly this will be bearish for the market. It’s sort of the last bull in the market throwing in the towel and saying, “Yes, 2008 is going to be a weaker year.'”

    Front-month March reformulated gasoline blendstock, or RBOB, settled 2.19 cents, or 0.9%, higher at $2.3899 a gallon. March heating oil settled 2.45 cents, or 1%, higher at $2.6156 a gallon.

    —By Gregory Meyer, Dow Jones Newswires

  94. 94
    Sambone Says:

    D – Yep, long and strong SKF. The shoe has not dropped on the Financials yet. Their day is coming. I see the dark clouds on the horizon. Just biding my time. I’m willing to take the ups and downs.

  95. 95
    TTupp Says:

    z re 91, guarentee that gap will get filled within 10 trading days, but i would bet more like 5

  96. 96
    Sambone Says:

    T – Remember “All gaps must be filled”.

  97. 97
    zman Says:

    wish BTU had done this yesterday…on the other hand, another day like today and we’ll be talking big save. XOM working towards same.

    QMAR cresting $25 – those $25 March calls are just not participating worth a damn… had $0.15 (15%) on the bid yesterday about a buck lower on the common which makes no sense.

    T – agreed re FSLR gap.

  98. 98
    zman Says:

    see you guys after while

  99. 99
    zman Says:

    XTO files 20 mm share secondary (a little under 5% of the outstanding).

  100. 100
    QUARRYMAN Says:

    My first luck of 2008 was buying a call on FSLR three days ago. IT was up $22 first thing, so I sold it for 150% gain. It ran up another 30.

    ALSO: Vulcan Materials Earnings tomorrow.

    Don’t know how they’re going to go, but the price is low.

  101. 101
    Dman Says:

    According to DJ (I can’t see it elsewhere):

    CLB earnings: $1.45

    (vs. $1.35 estimate)

  102. 102
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