27
Mar

Thursday – Gas Preview and Oil Review

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Sort of Unwelcome News Of The Day Watch: Chesapeake announced a 20 million share deal last night with proceeds to pay off outstanding amounts on their revolver. The book is being run by Lehman, B of A, and Deutsche Bank and they should have plenty of selling points given the recent developments here. That's a bigger deal, 10% of current outstanding shares, than I was thinking they might do and may be seen as somewhat disappointing by the rest of the Street (aside from those in the syndicate) as everyone just got accustomed to the idea that (CHK) was done tapping the public markets at least through 2009. I also think the rush to get this done, despite the fact that another VPP of significant size could be sold in the near future, is odd given the depressed valuation of the shares. They manage for the long term good of the company, not the short term trading of the stock. I'll see how it opens and look at my two positions there for potential additions/bail outs. 

Start To Lighten Up A Bit On Aprils. I know its a bit early but I think crude has run back up a bit quickly here and this time the group took notice. I think oil and natural gas could soften for reasons laid out further down the post. We've had a heck of a little run since expiry (yea, 3 whole days) but if this current market environment has taught us anything its that profit taking is nothing to be ashamed of. 

Holdings Watch: The Holdings Wiki (list of tickers currently held) and Holdings Page (performance) are up to date.

CALLS:

  • (HK): Half out April HK $20 calls (HKDD) for average $0.97, up 94% from the pre and post analyst meeting (3/12) entries.  Time to play with house money. Still holding the April $17.50s which I may roll out of if it fails to breach and close above $20. It has had a good run and I'll own May or longer calls on sector weakness. We should get results from two Taylor Sand horizontal wells at their Elm Grove field in the very near future. I published my raw notes from their Analyst meeting on the report tab last night. 
  • (HAL): Out Half HAL April $37.50 Calls (HALDT) for $2.10, up 110%.

PUTS: No Trades. 

Commodity Watch: This interview of (APC) CEO Jim Hackett by Jim Cramer is well worth watching.

Natural Gas: April gas closed up $0.15 to 9.57 yesterday as the potential for an unseasonably large withdrawal and rally in crude drove prices higher. This morning gas is trading off about a dime in this last day of trading for the April contract which is a bit odd but may be being driven by a slight warming in the forecast. If we do see a steeper than expected withdrawal today, which there's a good chance of, I think the upside impact on gas prices will be fleeting.

  • My Storage Estimate: 50 Bcf. This goes up against 11 Bcf pulled from storage in the year ago week. 
  • Weather: The CPC  recorded 142 gas-weighted heating degree days last, down slightly from the 151 of the prior week (which yielded a withdrawal of 85 Bcf from storage).  This is actually right in line with what's consider "normal" for this time of year and while the correlation between degree days and storage isn't strictly linear we'll need to see degree days fall more before we stop seeing withdrawals. 
  • Imports: inched up 0.4 Bcfgpd week to week, all of the increase coming from Canada. Imports are still running 1.5 Bcfgpd light to last year's levels.
  • Street Consensus Estimate: range of 35 to 45 Bcf.

Crude Oil: closed yesterday up $.468 at $105.90 as the dollar hit fresh lows against the Euro and more bullish than expected EIA inventory report (read on) sent crude running. It appears that traders are reading a lot into crude inventory levels which on a chart appear to be poised to start going down. I really think this stagnation of the crude inventory levels is three-quarters imports related and will correct itself rather sharply with next week’s report and I will be looking at locking in more profits between now and then.

  • 1 of 2 Main Export Pipelines Sabotaged in Basra, Iraq. A fire at the Zubair-1 pipeline, the largest feed to the country's main oil export terminal in Basra, has been extinguished and officials are saying repairs should take about three days. According to Upstream, Iraq exported about 1.54 mm bopd (about 2/3rds of total Iraq exports) via its terminals at Basra in February. This morning May oil is off slightly after breaching $107 earlier.
  • Cantarrel Output Falls To Multi-Year Low. Mexico's biggest field continues to decline, falling to 1.192 mm bopd, down from a peak of 2 mm bopd in 2004.  This is down 24% from February 2007 levels and you've got to wonder whether Pemex is going to need to revise its 15% decline assumption here. This also meant that Pemex as a whole came up short of their 3 mm bopd production target for a fifth consecutive month. Note to the Mexican Congress: If you really want to forestall the shift from exporter to imports of oil in the next five to ten years you have but to ask and U.S. E&P companies will flood into the region.

Z's EIA Inventory Report Summary:

exp-vs-act-032108.jpg

ZComment: Bullish report. Or at least support of stronger not weaker prices for oil, gasoline and distillates. Crude was flat with a build expected and both products saw much bigger than expected draws on inventories.

CRUDE OIL: Stocks Flat Vs Expected Build (we've been at this level for three weeks now)

Refinery Demand Weakens. Like I've said before, can you blame the refiners for extending the maintenance season given current margins? I think not and there is plenty of gasoline and distillate in storage. Utilization has dropped to 82.2%, and you have to go back to this week in 1991 to find a number that low. So the refiners are making a concerted effort to right their collective ship. If this stays this low for any length of time (like through next week's report of this week's demand) we could see crude begin to soften.

util-vs-inputs-032108.jpg

Imports Tumbled ... This Should Have Been No Surprise. For the last couple of days I've been writing about rough seas in Gulf of Mexico that shuttered a majority of Mexico's crude export capacity for the back half of the week resulted in a 570,000 bopd reduction in week to week imports. Imports are very unlikely to remain this low next week and another reason to expect crude to soften next week.

crude-imports-032108.jpg

Crude Stocks Flatline For The Week. Again, I expect inventories to head higher in the near term when imports return to more normal levels.

crude-stocks-032108.jpg

GASOLINE: Stocks Down 4x The Expected Draw But We Remain Well Stocked

Production Slips With Utilization. TEspite the decline in production, you'll note that we are still near record production levels for this time of year and that production for the given utilization level is high. Hmmm. Could it be the blending components? Why yes it could. And people wonder why gasoline costs so much at the pump yet the refiners are under pressure.

gasoline-production-032108.jpg

Imports trended back towards the norm for this time of year. Not much to be gained from looking at a graph here except to see that there remains no capacity outside of the U.S. to send "excess" gasoline to the U.S. That's not bad news for the refiners but I will continue to avoid the group. 

Demand

gasoline-demand-032108.jpg

 

 

Odds & Ends

Analyst Watch: (HAL), (BJS), (NBR), (PTEN), boosted to outperform at RBC...people thinking along the same lines as in my post yesterday in the wake of the (CHK) and (APC) activity level boosts, RBC also taking up targets on (UDRL) and (GW). (VLO) raised to buy at Deutshce Bank after the company says it will three refineries and buy back more shares, FBR slashed its price target on ailing ethanol producer (PEIX) from $5 to $3. 

 

115 Responses to “Thursday – Gas Preview and Oil Review”

  1. 1
    Sambone Says:

    8:33 am EST

    Crude Higher On Iraqi Pipeline Blast

    By Nick Heath
    Of DOW JONES NEWSWIRES

    LONDON — Crude oil futures climbed over $1 in London trade Thursday as traders reacted to news of an explosion on a southern Iraq oil pipeline that is expected to crimp the country’s oil exports.

    Prices had been trading lower ahead of the news from the Iraqi oil hub of Basra, with traders continuing to follow moves in the U.S. dollar as the main driver of crude oil prices. But any further weakness in the dollar, combined with developments in Iraq could add considerable upside pressure to oil prices Thursday, analysts said.

    “The Basra headline came out as the dollar is coming under some intraday pressure,” says Oliver Jakob of Petromatrix. “Basra will add fire to fire if the dollar continues to be pressured.”

    At 1230 GMT, the front-month May Brent contract on London’s ICE futures exchange was up 73 cents at $104.73 a barrel.

    The front-month May light, sweet, crude contract on the New York Mercantile Exchange was trading 74 cents higher at $106.64 a barrel.

    The ICE’s gasoil contract for April delivery was up $13.50 at $960.75 a metric ton, while Nymex gasoline for April delivery was down 95 points at 273.34 cents a gallon.

    The bombing of the key Zubair-1 crude pipeline — the largest pipeline feeding Iraq’s main oil export terminal in Basra — will likely affect exports “heavily,” an official from the South Oil Company said Thursday. Repairs to the facility were expected to take 72 hours, he said.

    Shipping sources suggest that the rate of oil exports from southern oil terminals has slowed from 1.56 million barrels a day to 1.2 million barrels a day as a result of the flare up of unrest in the area.

    Heavy fighting between Iraqi government forces and local militia in Basra — which produces more than 80% of Iraq’s total output of 2.4 million barrels a day — have also disrupted production and exports of crude oil, the official said.

    “We see events in Iraq as having taken a dangerous turn, with the stability of the southern oil system now starting to become a potential concern,” said analysts at Barclays Capital.

    “For oil production and export infrastructure, as well as the personnel required, to operate as normal during any extended period of intensified abnormality in the Basra area seems an unlikely outcome.”

    Despite the intial surge higher on news from Iraq, traders suggested that the developments would still vie with the dollar in determining price direction and levels Thursday.

    Oil prices fell back from their intra-day highs achieved on the back of the Basra pipeline explosion, with the greenback clawing back some value against most major currencies Thursday.

    “The main tenet that took us up here is the dollar,” said Adrian Bingham-Walker, trader at CMC Markets in London. “It’s more important than the Iraq development.”

    With gloomy economic sentiment feeding expectations of further U.S. interest rate cuts, investor appetite for crude oil futures is likely to continue, said Mike Wittner, global head of oil market research for Societe Generale in London.

    “There’s no reason for financial investor inflows into oil to dry up, no reason at all. The logic is quite straightforward: U.S. economic weakness equals lower interest rates equals a weak dollar equals demand for hedging equals (buying) oil. I think that story has a long way to go.”

    —By Nick Heath; Dow Jones Newswires

  2. 2
    Sambone Says:

    Fundamentals, Policies Point To Higher Oil

    By DAVID BIRD
    A DOW JONES NEWSWIRES COLUMN

    NEW YORK — Astronomical spring has arrived in the Northern Hemisphere and astronomical oil prices may not be far behind.

    A slap of continued winter temperatures in the Northeast U.S. heating oil market, refiner-imposed shifts in inventories and Bush administration attitudes are aligning to push up prices.

    Vice President Dick Cheney emerged from talks in Saudi Arabia in recent days to praise the world’s largest oil exporter for carrying through on plans to boost oil production capacity and saying “there aren’t any short-term solutions” to getting oil prices lower.

    Cheney said the Saudis “kept their word” by making good on an April 2005 commitment to spend about $90 billion to boost oil output capacity to 12.5 million barrels a day by the end of 2009 from 10.5 million barrels a day.

    What Cheney failed to note was that when the Saudis came to the Bush ranch in Crawford, Texas, back then, they were pumping 9.5 million barrels a day. For the past two years, output has been below that level — by as much as 1 million barrels a day in several months — as the price of crude oil has doubled from $53 a barrel.

    Cheney’s approach was in sharp contrast to President George W. Bush’s direct and unsuccessful lobbying with the Saudi king two months ago. The president called for the Saudis to exert sway over the Organization of Petroleum Exporting Countries for an output rise, but the plea fell on deaf ears. The Saudis did say they were pumping above their OPEC-agreed level, at 9.2 million barrels a day, which could push up inventories and have a potentially calming impact on prices this summer.

    Saudi-U.S. relations are much deeper than oil and are interwoven in the joint hopes for a lasting Middle East peace. But the result of the latest oil talks appears to be another signal for prices to go higher.

    SPR Continues To Grow
    The Bush administration continues to funnel crude oil out of the market into the emergency Strategic Petroleum Reserve, amid a rising clamor in Congress and from trade groups.

    The American Trucking Association said soaring diesel prices, at record levels above $4 a gallon recently, are likely to add $22 billion to the industry’s fuel bill this year, pushing it to a record $135 billion.

    ATA urged that the SPR be tapped to cool prices, but the Energy Department said the near-700-million-barrel stockpile is a defense against supply disruptions and the small volumes being shifted into the reserve aren’t having a material impact on prices.

    Price support for diesel from weather-related heating oil gains may soon run its course as the National Oceanic and Atmospheric Administration on Wednesday said in its short-term forecast that above-normal temperatures will prevail April 1-9 in most of the Northeast U.S., the world’s largest heating oil market.

    Earlier, the outlook was for below-normal temperatures to linger in a continued cold start to spring in much of the region. But scorching global demand for distillate fuels is likely to keep prices firm and retail diesel above retail gasoline this summer, according to U.S. government forecasters.

    Nymex May delivery crude oil rose 5%, or $4.68 a barrel, to $105.90 on Wednesday, the most since March 18, on bullish oil data from the federal Energy Information Administration.

    April heating oil jumped 4%, or 11.9 cents a gallon to $3.0438, while gasoline futures settled at a record high of $2.7429 a gallon, up 2.4%, or 6.27 cents.

    Resurgent prices, after intraday dips below $99 in the previous three sessions, come as refiners are aggressively acting to cut into a bloated gasoline stockpile.

    The rally speaks more to a hope for a brighter future, rather than encouragement about the state of the market on March 21, the date of the latest data snapshot from EIA.

    Crude Runs At Two-Year Lows
    Refiners slashed crude oil runs by 2%, or 292,000 barrels a day, in the latest week, to a two-year low of 14.135 million barrels a day. Runs were 5.5% below a year ago and have fallen by nearly 5%, or 733,000 barrels a day in the past two weeks.

    A combination of planned and unplanned maintenance and cutbacks related to poor gasoline margins, caused by record high crude oil prices in recent weeks, have trimmed operations.

    Valero Energy Corp. (VLO), the U.S.” largest refiner, said Wednesday it cut gasoline output at some refineries to combat the oversupply in the market. Chief Executive Bill Klesse said Valero gasoline-producing units are currently running at 73% of capacity, or about 255,000 barrels a day below capacity.

    Gasoline stocks fell 3.3 million barrels in the latest week, much more than expected, EIA data showed, sparking the rally. Still, gasoline fundamentals are far from encouraging. The level of gasoline stocks relative to demand is at a nine-year high, EIA data show. Gasoline demand in the latest four weeks is down 0.3% from a year ago, the biggest gap in four-week data since Oct. 12, 2007. The drop in refinery runs pushed gasoline output down to a two-year low.

    Still, gasoline stocks, at 229.2 million barrels, are 23.1 million barrels above a year ago — an extra 2.5 days — at current demand levels.

    EIA projects gasoline demand in the key April-September driving season will be flat compared with 2007 and the rise in summer demand from the first-quarter level is projected to be 350,000 barrels a day, the smallest since 1990.

    With lower refinery runs, crude oil imports fell 6%, or 570,000 barrels a day, in the week to 8.898 million barrels a day, the lowest level in just over a year.

    Crude stocks gained a scant 88,000 barrels, well below some expectations for a rise of as much as 3.2 million barrels. While the slight gain sparked a rally, stocks are sufficient to meet 22 days of current demand, nearly 6% above the five-year average for the week.

    “Last week’s knock-back in oil prices looks to have been something of a one-day wonder,” Paul Horsnell, analyst at Barclays Capital in London, said in a research note. “The main strength remains with crude, with no seasonal stock build despite low runs, due to severe import compression.”

    (David Bird is senior energy correspondent for Dow Jones Newswires)

    —By David Bird, Dow Jones Newswires

  3. 3
    zman Says:

    from Reef

    z- Shell drilling a deep joint venture well with ECA with a vertical Haynesville shale section at 13,500′. How about Shell as an aquisition candidate to by HK?

  4. 4
    zman Says:

    Reef – hard to get my head around a Major caring about the U.S. onshore but if the play is as big as the CHK induced mania surrounding it then maybe. Wouldn’t Shell rather just take out CHK, I mean that’s the cheap one and it’s reserves would actually matter to them. Hard to get by regulators probably though. I’d think HK gets gobbled by someone like APC who has notably not gone after the big resource plays yet (although I think they are bulking up on a few plays quietly)

  5. 5
    zman Says:

    The change to the weather mentioned at the end of #2 is what’s spooking NG (down $0.16) and oil (down $0.50)

  6. 6
    reefguy Says:

    Macquarie calling for a 35 BCF pull. I think that is way light(how about a 55)

  7. 7
    zman Says:

    I’m with you, consensus looks light so maybe gas gets a quick pop when the number comes out “heavy”. Then I start thing puts because the shoulder’s going to see some big injections when it finally gets here.

    Maybe ECA re HK.

  8. 8
    reefguy Says:

    Absolutely ECA\HK

  9. 9
    isleworth Says:

    EL PASO CEO buys 50,000 shares at about $15.80

  10. 10
    reefguy Says:

    El Paso has Haynesville share exposure

  11. 11
    zman Says:

    reef – Got any idea how non core Barnett lease price compares to this time last year? Ballpark. Have you seen what Haynesville acres are going for?

    Isle – I don’t watch those guys at all, is that uncommon? They still have a big E&P sub (last I heard) but they fall outside my usual comfort level. Will have a quick look.

  12. 12
    zman Says:

    and EP is presenting at Credit Suisse today. No webcast but the slides are available on their site.

  13. 13
    reefguy Says:

    Core barnett- 10-18k. Haynesville maybe 1k

  14. 14
    zman Says:

    Thanks Reef. 1K today, 2K next week. Sounds like Aubrey is anxious to write a check and get his 500,000 acres. Bet he’s taken HK off his Christmas card list.

  15. 15
    reefguy Says:

    Marcellus was 150 in November, now 1500.
    I have some fringe Hy leases my Amarillo partner wants me to sell CHK at 10K/acre

  16. 16
    reefguy Says:

    CHK- going on sale today

  17. 17
    Dman Says:

    z – CHK opened only about 0.6 % down & I managed to nip out of my 3 call positions at a slight profit. I really was expecting a bigger hit given the 10% offering. Even now it’s only 0.7% down. Does this make sense to you??

    Was everyone expecting this? Now I’m worried I’ll have to pay up to get back in!!

  18. 18
    zman Says:

    Re 15. Nice. Can you keep a small interest with guys like that to play along?

    Great idea re contest. Will work something up on that.

    Dman – re CHK. It was holding the stock back the last couple of days. Analysts knew about it. I thought chances were mitigated on the size due to another VPP in the wings (last one monetized 2% of reserves for $1 B). I would have preferred they do a PIPE here (private issuance of public equity) but that may be tough in this market on a $950 mm deal. Still, the book runners seem to be doing a good job of placing shares or it would be down quite a bit more than it is.

  19. 19
    Dman Says:

    CHK now only .4% down. Looks like big money was awaiting this news to buy…or they are bringing in shorts…or ..??

    Maybe it’s just that, like you say Z, it’s still cheap.

  20. 20
    Dman Says:

    Z – re #18. OK so that’s why the analysts were so eerily quiet the last few days…

  21. 21
    zman Says:

    D – yea, I dropped the ball there, but I really thought any deal would have been a bit smaller. thankfully, not to much of a hit (yet)

  22. 22
    zman Says:

    Re CHK: I am likely to take longer dated calls (add to my Mays or look even longer) after the gas number or if it gets hit in the next day or so. This deal in no way makes me want to say “damn Chesapeake, those dealing bastards, how dare they try to get a leg up in yet another monster play”

  23. 23
    zman Says:

    wow Oil of a sudden up $0.80, closing again on $107.

    APA continues to impress, new all time high.

    HK hit 19.99 and retreated. Glad to see it move earlier, really like to see a $20+ close here today or I add longer calls and start losing some Aprils.

  24. 24
    zman Says:

    CNBC saying gas # 42 to 44, in line with 5 yr average.

    Saying NYMEX to raise margin requirements on Nat gas positions after the close. I was speaking with a friend last night and he said that the commodities trading firms are all raising margin requirements as the big swings of late have led to large margin calls and inability of investors to pay up. Cotton for example saw a tripling of margin meaning that a position you could have leveraged 20 to 1 now can only be done about 6 to 1. This is going to take some speculative money out of the commodities.

  25. 25
    Sambone Says:

    Hmmm, off subject, but looks like LEH may be the next Bear Stearns. I’ve been watching it lately and it appears the street is telling us something.

  26. 26
    zman Says:

    CHK reaction off $0.10 to $0.20 – now that is a well placed secondary.

  27. 27
    zman Says:

    Just an FYI, I sold that half position in the HK April $20s yesterday for avg 0.97 with the stock 10 to 15 cents lower than at present…the bid is 0.85 here. Time will beat these up quickly if forward mo is not maintained.

  28. 28
    zman Says:

    Sam – Leh taking the broad market lower you think?

  29. 29
    zman Says:

    36 bcf

  30. 30
    zman Says:

    gas rebounding small on the number…numbers get a little sloppy this time of year. I’m looking at UNG puts now.

  31. 31
    zman Says:

    ZTRADE:

    Entered a new position in the UNG April $45 Puts For $1.50. Between a small than expected end of season withdrawal, a warmer revision to the forecast, and NYMEX raising margin requirements for natural gas tonight I think its time for gas to begin softening.

  32. 32
    kyleandy Says:

    sambone re #25 hope u right am short it

  33. 33
    Popeye Says:

    I can’t believe how HK is holding up so far this am.

  34. 34
    scoop006 Says:

    Z-Re#31 Nice trade, as I remember you selling these last week for $3.30.

    FWIW, I know we tend to make sarcastic comments about Cramer, but he just donated $472K to charity representing the annual profits fron his trust.

  35. 35
    zman Says:

    Popeye – agreed, a little hard to believe. Could be people increasingly speculating they are gone. Which leads me too …

    ZCONTEST: Free month here for the guy/gal who gets picks the company that Buys HK (when if that happens). First come first serve (no ties), one pick per person, I’ll keep the spread on it. Good luck.

  36. 36
    zman Says:

    Scoop, thanks, time to do it again!

    Cramer is smarter and probably a better guy than he gets credit for.

  37. 37
    Dman Says:

    Z – any odds on HK coming out with a secondary? I know the last one was only a few months ago but just thought I’d ask.

    Well, actually I’m getting paranoid about secondaries, even if (being rational for a moment) I admit the last one did HK no harm at all.

  38. 38
    zman Says:

    HK through $20.

  39. 39
    scoop006 Says:

    RE # 35 I submit ECA

  40. 40
    zman Says:

    Dman – I doubt it but its possible. With the proceeds from the last deal plus the Gulf Coast sale + high commodity prices, they should be set unless: 1) they decide to ramp the seismic budget significantly (this wouldn’t cause the need by itself) 2) they ramp up Fayetteville rig count (don’t think they do this), or they go after a larger number of horizontal wells in Louisiana (possible, we shall see).

  41. 41
    zman Says:

    got ya Scoop, in the future I won’t respond to all of these but trust me, I’ll mark you guys down.

  42. 42
    zman Says:

    Holdings Wiki tab updated for the UNGPS trade. For those new to the site, the Holdings Wiki tab (at upper left) is a list of option tickers I current hold. The idea is to give you the tickers in as near a real time as possible (along with the ZTRADEs and ZBLASTs) in a format where you can drag and drop or copy and paste them into your trading window.

  43. 43
    Dman Says:

    HAL now off somewhat from its HOD of 39.82 (= very close to the top BB). Sure looks like it wants to hit $40 today.

  44. 44
    Jason Says:

    RE # 35 I submit CHK – Maybe Aubrey’s faking everyone out.

  45. 45
    reefguy Says:

    #35-Shell

  46. 46
    zman Says:

    HK 20.20 – nice.

    Tricky Jason.

    tempted to exclude Reef but ok, Shell.

  47. 47
    Popeye Says:

    I wonder what CHK is going to do with the PP money? Hummmmm

  48. 48
    reefguy Says:

    eia- 36?

  49. 49
    zman Says:

    Popeye. They said all of it goes towards the revolved. Then run that back up part way buying acreage and ramping drilling.

    Reef – yea it was, I was surprised too.

  50. 50
    zman Says:

    … and I’m surprised no bigger reaction in the futures (virtually none so far) but it is expiration for NG and that’s often weird. I took some UNG puts as per thoughts in the post and #31 above.

  51. 51
    Dman Says:

    According to the phenomenon known as “the wisdom of crowds”…

    http://en.wikipedia.org/wiki/Wisdom_of_crowds

    … if we can get enough guesses on the HK contest, the majority pick will predict the outcome. We might need a few thousand guesses for the statistics to work though.

    Since I haven’t got a clue, I can’t even bump the statistics up by one.

  52. 52
    zman Says:

    Monthly chart of HK looks pretty nice now. Bids not really benefiting from today’s move. I could have sold both the 20s and 17.50s for these prices at yesterday’s peak which was 20 cents low. I’ll be rolling to May soon.

  53. 53
    sane Says:

    #35 XOM

  54. 54
    sane Says:

    Dark Horse, I remember them taliking N. American gas a couple months back.

  55. 55
    zman Says:

    ZTRADE: Out Half HK April $17.50 (HKDW) Calls for $2.75, up 244% since entry on 3/20. Preparing to take some May Calls here.

    gotya Sane

  56. 56
    zman Says:

    oil up a buck at $107. gotta love the move here in APA. – Those $120s looked like a scud after I bought them last week.

  57. 57
    isleworth Says:

    Z – do you follow refiner WNR? Trading at 5.4 PE on expected 08 EPS. Chart is scary but company looking exceedingly cheap. Thoughts?

  58. 58
    zman Says:

    Isle – WNR bought Giant Industries (GI) last summer. The stock ran hard and reached forward PE over 20x. I’m not a fan. They bricked the last couple of quarters hard and while there is a bottom fish opportunity in the group, I think their exposure to things like asphalt is too high and will be a drag on them. Guidance to the Street seems poor so those numbers that make your multiple may be way off as well. Much prefer FTO amongst the tiny refiner set.

  59. 59
    isleworth Says:

    Tks for your thoughts Z.

  60. 60
    zman Says:

    Isle – I shorted them too early. Like I said, maybe a bottom fish but as soon as I buy it I figure its a 0, lol.

  61. 61
    zman Says:

    by the way, I came out of those HK 17.50s on the mid instantly on a 30 cent spread in a small name thats usually not possible. Seems like lots of new interest there.

  62. 62
    Dman Says:

    Contest suggestion: how *much* is HK gonna go out for & how long can an aquirer afford to wait??!!

  63. 63
    zman Says:

    group rallying on oil which is dragging nat gas up. notably, on a negative note for the refiners, the gasoline rally is seeing now follow through, rbob is over 1% with oil up 1.3%.

    HK at 20.31

    D – now that would be a real crap shoot. I think they are gone sometime this year for around $30 myself and I think its a big cap E&P that gets them.

  64. 64
    uop Says:

    Z:
    APPL is for Appell Pete up 70 $, what is this one ?

  65. 65
    zman Says:

    ZTRADE: Entering June HK $22.50 calls for $1.15.

  66. 66
    ram Says:

    I wonder if the move up in HK is going to have these spurts because of short covering?

  67. 67
    zman Says:

    Morning Ram – probably so. Got a guess re #35 above?

  68. 68
    ram Says:

    APC

  69. 69
    texana Says:

    eog

  70. 70
    uop Says:

    Z:

    oil exploration and OIH is skyhigh,
    might buy OIH 175/180 puts

  71. 71
    uop Says:

    Z:

    should oil fall from this insane high, which refiners would do well if any??

  72. 72
    zman Says:

    Uop – good luck with that OIH trade. I think they could go higher.

    Re oil and refiners. Hard to say, everybody trying to figure out where Basra is on a map at this point. Lots of hype. I just don’t like the refiners here…lot of pain. Gasoline off today for example. Still a huge amount of gasoline in storage. If I had to own a big one it would be VLO for the long term but I’m still considering putting them right now.

  73. 73
    uop Says:

    Z;

    solar stuff running again,
    how do you look at these,
    which ones are best, there seems to be raw material issue , ???

  74. 74
    zman Says:

    FSLR is the big dog on the names you can play, BP is big but not a way to play solar there. These are mo-mo stocks and you are too correct on the raw mats issue, especially for FSLR, they’ve lowered per unit costs by continually expanding production but from what I have read there is a problem with the supply of Tellurium. I made a little $ here and then lost a little more $ in the space later. Taught me to be careful, like the Drybulks which are running and often traded by the same folks which should tell you its market comfortability and not so sector specific. On the supply side, it looks like module production outstrips demand in the next year or so, which could lead to a glut similar to chips in the 90s. I’ve got a stack of reading to do on solars for a fund manager who keeps calling about it and honestly, I’ve just been looking the other way. With oil looking like it can hold the 90s or even 100s, this summer will likely see the alternative energy plays run up so I probably need to get unlazy on it soon.

  75. 75
    zman Says:

    Next time the deepwater names, especially RIG tank would someone please remind me to buy leaps? ty.

    Uop – got a guess re #35?

  76. 76
    uop Says:

    Z:
    txs for solar comments,

    at what point or time do your transactions of the day appear in your ZEB Holdings list ?

  77. 77
    zman Says:

    they appear in the wiki holdings as soon as I do them if I remember. They get on the holdings page at the end of the day but I am sometimes remiss in posting that on a daily basis.

  78. 78
    zman Says:

    NG flat on the day as it feels the pull of oil.

  79. 79
    Sambone Says:

    #35 COP

  80. 80
    Sambone Says:

    12:27 pm EST

    Rangebound Nymex Crude Up $1.37 At $107.27/Bbl

    DOW JONES NEWSWIRES

    [Dow Jones]–Nymex crude oil futures rallied $1.37 a barrel to $107.27 late Thu morning after failing to test the session low near $105 a barrel. “We pulled back and held again” said Tom Bentz of BNP Paribas. “The bull market’s not done yet.” Crude rallied early on news that pipeline fires in southern Iraq have cut export flows by about 360,000 b/d. Heating oil remained strong amid bullish US oil inventory data, continued cold weather and a tight global market. Apr heating oil +5.42c at $3.0980/gallon.

  81. 81
    scoop006 Says:

    Cramer purchased 2,500 shares of EL PASO -EL today

  82. 82
    zman Says:

    oil up 1.80 at 107.70 with an hour to go. So much for the “commodities are dead” argument, lol.

    NG up 0.06 and climbing with oil

    Thanks Scoop , interesting.

  83. 83
    scoop006 Says:

    #81 CORRECTION Symbol is EP not EL

  84. 84
    zman Says:

    S&P says CHK secondary to have no impact on ratings.

  85. 85
    uop Says:

    EP:
    did Cramer buy before the spike and caused the spike ?

  86. 86
    Dman Says:

    Z – re #75. Compared to RIG, OII is still in the tank. No LEAPS on it, but if I wasn’t already in it, I’d start scaling into DITM October calls. It’s at the upper (daily) BB just now, so not an ideal entry, but it has just recently sliced through a medium-term downtrend.

    Of course it would be helpful to know which innings we’re at in the current energy move. Wish I knew.

  87. 87
    zman Says:

    Uop – don’t know when he bought it. Isle and Reef were talking about it at the open as the CEO bought shares.

    Dman – OII I like long term, think they will do fine but there is a scale related earnings growth deceleration there and the stock trades at a fwd pe near 20. Part of their story is slowing (no more hurricane repairs) while the ROV segment goes gangbusters.

    RIG growing very strongly and trading much cheaper. But both should do well long term.

    Where we are in the energy cycle is mid innings in my opinion. Not surprised at all to see oil through $150 2 years out.

  88. 88
    scoop006 Says:

    uop#85 Cramer paid $16.19

  89. 89
    Dman Says:

    Z – can you explain “scale related” re. OII in # 87 ?

  90. 90
    zman Says:

    D – as they get bigger its harder to achieve the same % growth.

  91. 91
    uop Says:

    scoop006:
    so Cramer paid near the high,
    how is it that you know what he paid ?

  92. 92
    scoop006 Says:

    I subscribe to his service and he sends out an alert for his trades

  93. 93
    Sambone Says:

    3:03 pm EST

    Nymex Crude Up $2, Tops $108/Bbl; First Time Since March 19

    DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures prices surged to fresh session highs above $108 a barrel in late trading Thursday, gaining strength from soaring heating oil futures.

    Crude had earlier topped $107 a barrel on news of pipeline sabotage in Iraq that disrupted exports of Basrah crude oil, but it eased from those highs. Crude last topped $108/bbl on March 19.

    In the last hours of trading, heating oil futures continued their recent surge, with the April contract jumping nearly 4% to its highest level since March 17. The contract expired Monday and trading reflects the strong global market for distillate fuel and the lingering cold weather in the Northeast U.S., traders said.

    Eric Wittenauer at AG Edwards said he believes May crude soon will test its recent contract high of $110.35 a barrel. “We’re seeing a follow through on the continued strong trend,” he said.

    May crude was up $1.95 at $107.85/bbl at 1405 EDT, while April heating oil was 10.82 cents higher at $3.1520 a gallon. April RBOB gasoline was down 2.34c at $2.7195/gallon.

    —By David Bird, Dow Jones Newswires

  94. 94
    Sambone Says:

    Uncle Phil, he’s short heating oil. Booyah!

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

  95. 95
    zman Says:

    oil, gas, market weakening into the last hour.

    CHK at LOD

    IOC at 6 week low, earnings Monday morning.

    Sam – he’s probably right on that HO short although its hard to fathom being willing to short that, but not NG and not gasoline.

  96. 96
    zman Says:

    HK pretty impressive amidst all the energy weakness.

  97. 97
    reefguy Says:

    hk- 90 days to buyout announcement

  98. 98
    zman Says:

    For the Xth week in a row, beginning of week for the broad market strong, then fade, then holy crap.

  99. 99
    scoop006 Says:

    APA,OCT$130&$145Calls 1000+contracts today

  100. 100
    apbd Says:

    You heard it here.
    HK is bought out by J.P. Morgan with the help of the Fed. Original offer is upped 5X.
    apbd

  101. 101
    zman Says:

    A … you’re a funny guy!

  102. 102
    reefguy Says:

    hk bought out by Carlos Slim

  103. 103
    reefguy Says:

    ioc- bought at 7-11 with 64 oz Big Gulp

  104. 104
    zman Says:

    group tanking with the market. Probably should have taken a little more off the table today.

  105. 105
    Sambone Says:

    Hmmmm, those rascal short sellers are at it again. LEH announces that it has plenty of liquidity and that it is the short sellers who are spreading false rumors for personal gain. LEH down 10% today. Sounds a little like BSC, doesn’t it.

  106. 106
    zman Says:

    cnbc talking nat gas

  107. 107
    T-Tupp Says:

    3:43 eastern standard time:

    Canada has purchased 51% of the united states of America– citing the low dollar as a “no-brainer” the catalyzed this deal.

    financed the ECB and the BOE, canada will finalize this deal in te first week of q2.

  108. 108
    T-Tupp Says:

    ahahah had ya for a min.. 😉

  109. 109
    Dman Says:

    Z – RIG down 0.7%. Is it in the tank yet?

  110. 110
    zman Says:

    I was thinking more of one of those down $7 or $8 days where everyone has decided they’ll never drive again or heat there homes. Or in the mid $120s

  111. 111
    Sambone Says:

    Tini time, Ok gang off tommorow, so talk at ya on Monday. Go Heels!

  112. 112
    Dman Says:

    Z – I *was* just kidding 🙂

  113. 113
    zman Says:

    D – I know but I thought I’d clarify anyway, 😉 . Dman, also prod me next time I write in the post I think I’ll lighten up and then I don’t, not really anyway.

    See ya Sam, good luck with the lacross.

    Afternoon T

    woops, beer thirty has arrived.

  114. 114
    T-Tupp Says:

    piced up OTM oih puts at 3

  115. 115
    T-Tupp Says:

    picked up i mean. hit the tini’s at 3 also (seriously)– CANT SPELL

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