14
May

Wednesday – EIA Inventory Preview Plus NG Goes Ballistic As I-Hub Stays Offline

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Inflation came in at 0.1% in April, tamer than expectations of 0.2 to 0.3% for the core CPI, once again proving the government's economic data is not to be trusted. Even the non-core energy component of the CPI was flat in April versus a rally in March.  The Labor Department explained it thusly: The unchanged reading for energy reflected a big 4.8 percent jump in natural gas prices, offset by a 2 percent decline in gasoline costs. The reported drop in gasoline prices reflected the government's accounting process, which discounts expected seasonal price changes.

 gasoline-price-051408.jpg

Equity market futures rallied on the release despite the largest increase in Food prices in 18 years but since food and energy don't count to anyone but living breathing consumers the market is not to be concerned. On to the post.

In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Stocks We Care About Today
  4. Odds & Ends

Holdings Watch: The ZEB Performance tab at upper left is updated

  • (PBR) - added May $70 calls in a high risk traded after numbers were released but before the conference call - Added (PMJEN) for an average cost of $0.63, last trade $0.15 and this one will likely be punted today.
  • (PBR) - exited the May $65 calls (PMJEM) for $2.70, up 80% since mid April entry. I continue to hold the $67.50 June calls here.
  • (HAL) - exited the remaining May $45 calls (HALEI) for $3.20, up 106% since entry on 4/18. I continue to hold the July $50 calls and I plan to add more of June or longer dated calls here on future pullbacks.
  • (CLR) - exited half of my June $50 calls (CLRFJ) for $5.20, up 197% since entry on 4/21. This is no reflection on my sentiment towards the company but rather that they are one of the more expensive names I hold and have had a good run; on a pull back I will buy this piece back again but for now, in this crude inflated market I'm content to play with house money.

Commodity Watch:

  • Crude Oil traded up $1.57 to  close at $125.80 yesterday as Iran's president said the country was examining a plan to reduce oil production. Stories have been circulating for a couple of weeks now that Iran is leasing tankers to hold heavy crude in storage as it can find no additional buyers. This morning crude is trading off slightly before today's inventory report.
  • Imprudent Ideas Watch: The Senate voted yesterday to stop filling the Strategic Petroleum Reserve when oil prices are over $75. They also threatened to block an armed deal to Saudi Arabia to try and force the Saudi's to produce more oil. Blocking the refill of the SPR at high oil prices will have little to no impact on the common man's wallet but it sounds good. Toying with Saudi Arabia is a more serious affair. The first step in solving a problem is knowing what the problem is in the first place. The answer to higher gasoline prices is not more oil and especially not the kind of oil OPEC has in its 2 mm bopd of current spare supply buffer (which is heavier than the light sweet stuff most refineries like to process). The  answer lies in more refining capacity and better fuel efficiency both problems that take longer to solve than the remaining time until the next presidential election.
  • Nigeria Watch: Shell repaired two of four recently sabotaged pipelines. Although they did not say how much production was restored prior estimates of 164,000 bopd have been espoused so maybe half that amount. The IEA says 500,000 bopd remain shut in by "militancy" which sounds about right after the Exxon volumes were restored in the wake of the last oil workers strike.
  • IEA Says April Global Crude Output Dipped. IEA estimates crude production fell by 400,000 bopd to 86.8 mm bopd in April with both OPEC and non-OPEC supply falling.
  • Don't Get Mad At High Gasoline Prices, Get Even. Even as in hedged that is. (UGA), the new gasoline ETF, is rising almost with every uptick at the pump. So far the ETF tracks the front month unleaded contract better than the USO does oil. The options here as of yet are thin but the common could make you smile every time you fill up.  Just food for thought.

EIA Inventory Expectations (from the Dow Jones survey)

exp-050908.jpg

ZComment: It's the most important EIA storage report in history. At least that's what it feels like each and every week in this rarefied air up above $120. Actually the last two builds in crude itself have been much bigger than expected. And crude rallied on both events. Ok, ok... so it wasn't really the build in crude that traders focused on but the lack of build in distillates. Normally this time of year, the minor changes in distillates take a back burner to the goings on in the gasoline market. But we have plenty of gasoline at present (not that you can tell at the pump) and increasing demand for diesel has captured trader's interest. A further rally today will require either a fall off in crude imports or a decline in distillate stocks. 

 

 

  • Natural Gas eased up $0.12 to close at $11.42 yesterday. This morning gas is trading up $0.25 to $0.30 due to the following: 
  • Independence Hub Down For Another 3 to 4 Weeks. Independence hub restart is now set for the first half of June, not mid May as previously scheduled. Gas producers and gas prices to go bonkers tomorrow. That's 1 Bcfgpd or about 2% of U.S. production down for 30 more days and a short squeeze on gas is almost assured. Earlier yesterday, Enterprise Products (EPD), who operates the takeaway line from the I-Hub, was reportedly on track to complete repairs on the line from the facility on time (mid May). In fact, mid way through yesterday they said this:

"The last update we provided was on April 28th, which said mid-May. We will certainly communicate if there are any changes," said Enterprise spokesman Rick Rainey. Zcomment: What we have here is a failure to communicate.

Stocks We Care About Today Watch 

I-HuB Delayed Restart: APC Has Already Reaffirmed Guidance With The Market. Anadarko said it still expects full-year production at 207 million to 212 million barrels of oil equivalent (567 to 582,000 BOEpd). "Assuming production can be resumed at Independence Hub in the first half of June, we still expect to be within the range of our full-year production guidance," Jim Hackett, Anadarko chairman and chief executive, said in a statement. In my book, this is one of those events companies are soon given a "get out of jail free" pass for and if the stock dips its probably a buying opportunity. This also gives them a pass on missing 2Q production numbers.

World's Largest Windfarm Takes Wing. The Greater Gabbard Offshore wind farm project will utilize 140 Siemen's built wind turbines off the U.K. coast. (FLR) is designing the project and installing the turbines over the next three years for $1.8 billion. Flour beat numbers and raised guidance and the stock jumped on that news. They are reaping the benefits of a wave of new oil and gas projects as well as alternative energy projects like this one and I will be looking to gain some exposure to infrastructure through a long position here shortly.

 

Odds & Ends

Analyst Watch: (ESLR) upped to buy at Jefco, (NXY) upped to buy at Lehman.

To read a great piece from Shell on possible energy scenarios for the next 50 years click here


 

108 Responses to “Wednesday – EIA Inventory Preview Plus NG Goes Ballistic As I-Hub Stays Offline”

  1. 1
    Sambone Says:

    8:41 am EST

    Crude Falls Ahead Of US Inventory Data

    By Nick Heath
    Of DOW JONES NEWSWIRES

    LONDON — Crude oil futures traded lower in London Wednesday ahead of weekly inventory data from the U.S. Department of Energy, which were expected to reveal increases in crude oil and distillate stocks.

    Officials said Wednesday that Iran wouldn’t be reducing its oil output levels, which helped to cool prices ahead of the U.S. inventory snapshot, a day after crude oil hit records highs in part on reports that Tehran could cut production.

    At 1234 GMT, the front-month June Brent contract on London’s ICE futures exchange was down $0.89 at $123.21 a barrel.

    The front-month June light, sweet, crude contract on the New York Mercantile Exchange was trading 20 cents lower at $125.60 a barrel.

    The ICE’s gasoil contract for June delivery was up $4.00 at $1,270.5 a metric ton, while Nymex gasoline for June delivery was down 83 points at 319.17 cents a gallon.

    Analysts are expecting U.S. crude oil stocks to have risen for a fourth straight week, up by 1.8 million barrels in the seven days ending May 9, while stocks of distillates — whose soaring prices have contributed in turn to record crude oil prices — are expected to have increased by just over half a million barrels, according to the average of a Dow Jones Newswires survey of 14 analysts.

    “Products were the main driver to the rebound yesterday with the heating oil (in the U.S.) wiping out all of the previous days losses and gasoil in Europe making fresh all-time highs on further supply fears,” said Andy Riddell, energy broker at ODL Securities in London. “These factors make today’s inventory figures particularly relevant and all eyes will initially be on those distillate numbers.”

    U.S. gasoline stocks are expected to have fallen by 100,000 barrels, while refinery utilization is predicted to have risen by 0.7 percentage point to 85.7% of capacity, the analysts’ survey suggests.

    After reports that Iran would cut oil production next month jolted prices higher Tuesday, prices fell back Wednesday on comments from officials that OPEC’s second-largest producer will not reduce its output.

    The country’s departing OPEC governor, Hossein Kazempour Ardebili told Dow Jones Newswires that decreasing production isn’t an option.

    However, he confirmed that Iran is storing about 25 million barrels of heavy crude oil in tankers in the Persian Gulf due to a shortage of buyers.

    The stored crude is “the main proof that the market is oversupplied” and that prices are disconnected from fundamentals, he said.

    Signs of a sluggish physical market in some regions are starting to apply downward pressures on crude prices, traders and analysts said Wednesday.

    “I think there are two different dynamics in the crude oil market,” said Olivier Jakob, managing director of Swiss consultancy Petromatrix. “We’re making record highs after record highs on the (futures) price — but physical economics are not really showing any signs of distress. The structure of the market is seeing some fundamentals creeping in.”

    North Sea and Mediterranean oil traders reported that a glut of crude oil is currently weighing on physical prices, and in turn on the ICE Brent contract which is referenced in spot crude prices in Europe.

    “Futures are catching up,” a London-based trader said.

    Trading of crude oil futures linked to hedging of Nymex light, sweet crude June call options positions is likely to wield a strong influence over the futures price ahead of options expiry Thursday, and was likely slowing Wednesday’s fall in Nymex crude prices relative to those in ICE Brent futures, analysts said.

    However, the passing of the “options squeeze” could remove a source of upwards pressure on Nymex crude futures, they said.

    Sellers of call options often buy futures as a hedge against their options’ positions.

    “Options expiry may mark the high tide in this wave,” said Jim Rintoul of TheOilTrader.com. “Once the options have gone, unless something fundamental happens, I can’t see any other reason for us to be here.”

    —By Nick Heath; Dow Jones Newswires

  2. 2
    zman Says:

    Big rally in the gas names on the I-Hub delayed restart news. I’m not chasing unless we get safe looking numbers at 10:30 est from the EIA.

    CHK through $59 like a shot, going for $60

    COP about to test highs from yesterday but again, we probably need help there from the EIA, same goes for PBR

  3. 3
    zman Says:

    It’s funny, I get emails from people saying how can you buy into those energy charts at these levels but the truth is, the stocks are only slightly more expensive than they were a year based on the fact that estimate have run up faster than stock and commodity prices. Also, I say look around, solar, coal and other alt energy boats are rising as fast or faster than the oil and gas stocks that I typically haunt.

  4. 4
    ram Says:

    Re #3: That’s why we are here.

  5. 5
    isleworth Says:

    FYI:

    USO showing negative technical divergence. Stochastics not making new highs, heading down while USO price has been going up.

  6. 6
    isleworth Says:

    Same negative divergence for RSI – relative strength index

  7. 7
    zman Says:

    Morning Ram, oil looking a little spooky here.

    APBD et al. – know that I’m watching COPER like a hawk, I’m down 20% to my average cost now and really do not wish to scud this one.

  8. 8
    zman Says:

    Thanks Isle, USO trades a little hinky in the last week before front month Nymex expiration. Do you see a similar fade in RSI at about this time of the month each month?

  9. 9
    Sambone Says:

    You know Oil was at $61 a barrel a year ago. What has changed?

  10. 10
    isleworth Says:

    No, not seeing same fade every month. I am noticing exact same pattern in CL M8 futures contract

  11. 11
    el_vogel Says:

    I know this is a vague, semi-loaded question, but is now a good time to start going back to cash in some of our oil e&p plays?

  12. 12
    ram Says:

    ZMAN – Were you looking at adding to PQ JULY 25’s? PQ is having problems breaking 22.5.

  13. 13
    zman Says:

    Sam – the simplest answer is that: 1) more people got more access to cars around the globe, 2) supply problems are becoming increasingly evident in Russia and Mexico, and 3) the market is realizing that a barrel is not a barrel is not a barrel which means the global supply of crude has become heavier and more sour over the last several years. That’s the very overly short answer. Put another way, the U.S. consumes 25% of the world’s energy every day and the rest of the world has decided it wants its fair share and while this new demand can be met, it needs to be met at a higher price. I’m not defending $125 right this second but it will be even higher in the next 6 to 12 months as the “recovery” takes hold.

  14. 14
    zman Says:

    Ram – not in front of inventories.

    El-V – I’ve been doing that, yes.

    Thanks Isle.

    If we do get some rally rally numbers in 30 minutes I may add back that half position of CLR as its down about double the group today.

  15. 15
    Popeye Says:

    DRYS@101

  16. 16
    zman Says:

    Hear ya P, I flubbed that move. Ditto the coals which never pulled back more than a couple of days. BTU now > 70. Don’t even bring up the solars, ug.

    On a less self-pitying side, X looks like it might be trying another breakout and the service names continue to please.

  17. 17
    zman Says:

    Thinking about taking a little CLR and MMR post EIA #s.

  18. 18
    zman Says:

    crude up 0.2 mm barrels
    gasoline down 1.7
    dist up 1.4

  19. 19
    zman Says:

    big rise in utilization to 86.6%

    imports still high but off last week’s really high levels which accounts for the short fall on numbers.

    distillates have been driving crude higher but the drop in gasoline is a little odd and if the bulls want they can point to it and say “ah hah!”

    gasoline demand ticked up seasonally.

  20. 20
    zman Says:

    gasoline demand was off 0.6% from last year, last week it was off 0.3% from last year.

    big deal, we just can’t drive less.

    oil hasn’t settled into a post data pattern yet but it is well off the morning lows down $0.60 now.

  21. 21
    md Says:

    WOW chg. overall was UP 5700

  22. 22
    sane Says:

    Re 20

    It’s the frog in the pot + credit cards + the oh it spikes like this every year, it’ll come down after Memorial Day.

  23. 23
    zman Says:

    Hey, would somebody with VooDoo skills take a look at that X chart for me, considering adding.

  24. 24
    sane Says:

    API

    Crude UP 660K
    Gasoline DOWN 1.5
    Distillates DOWN 2.4

  25. 25
    bill Says:

    vlo off the floor..maybe a move up

    june 45 are about 4.40

  26. 26
    zman Says:

    ZTRADE: MMR August $40 Calls taken for $1.95. This is a bet on their high profile Blackbeard well on the Gulf of Mexico shelf.

  27. 27
    zman Says:

    Sane – agreed re 22. Now the car dealers are “giving gas away for $3 bucks” hmmmm.

    Bill – I see it, still mulling but I could add them or FTO at any time (long dates with smaller near term) and feel ok about it.

  28. 28
    ellwodo Says:

    XCO looking good. I got out of my May 22.5s in the green, starting to harbor similar hopes for my May 25s.

  29. 29
    zman Says:

    Sane – re API, their distillates number sounds more like it.

    Wiki page updated

    Elwo – now I see why you were so concerned, I had no Mays, only June 25s

  30. 30
    ellwodo Says:

    XCO – I’m in the June 25s aso, I just couldnt resist the Mays.

  31. 31
    zman Says:

    Elwo = Gunslinger.

    Oil in rally mode, if it goes green look out above.

    Anyone with thoughts on the X chart I’m all ears but I will buy more next little dip.

  32. 32
    Sambone Says:

    11:06 am EST

    Nymex Crude Sustains Loss On Distillates Stocks

    By Gregory Meyer
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures sustained losses Wednesday after weekly data showed U.S. distillate fuel stockpiles grew far more than expected.

    Light, sweet crude for June delivery was recently down $1.62, or 1.3%, at $124.18 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange was $2.15 lower at $121.95 a barrel.

    The Energy Information Administration reported U.S. crude stockpiles in the week ended May 9 grew by about 200,000 barrels, about a tenth of the 1.8 million barrel gain analysts had expected.

    Data on oil products diverged, however. Stocks of distillates, which include heating oil and diesel, rose by 1.4 million barrels, more than double the amount expected. Gasoline inventories declined by 1.7 million barrels, far more than the expected 100,000-barrel decline.

    Strength in heating oil futures has led the oil market higher in recent days amid strong demand for distillates in Europe and Asia. On Wednesday, heating oil futures had fallen more steeply than crude.

    The statistics were “kind of bullish crude, kind of bearish for distillates,” said said Addison Armstrong, an analyst at brokerage Tradition Energy in Stamford, Conn. “I don’t think the stats are really enough to push these markets one way or another.”

    Tim Evans, an analyst at Citi Futures Perspective in New York, said that “overall, this is a mixed set of data.”

    Nymex crude futures have climbed in seven of the last eight sessions, touching a record intraday high of $126.98 a barrel Tuesday on a spike in heating oil and concerns about Iranian output. News reports at first indicated that Iran, the No. 2 producer among the Organization of Petroleum Exporting Countries, would decrease oil production next month, but Iran’s oil minister later dismissed the report.

    Adding pressure to oil prices, Iran’s departing OPEC governor, Hossein Kazempour Ardebili, told Dow Jones Newswires the country is storing about 25 million barrels of heavy crude oil in tankers in the Persian Gulf as no buyers are stepping up to the plate.

    “We are using about 10-12 vessels to store the crude,” Ardebili said from Tehran.

    Front-month June reformulated gasoline blendstock, or RBOB, was down 1.79 cents, or 0.6% to $3.1821 a gallon. June heating oil fell 5.43 cents, or 1.5%, to $3.6446 a gallon.

    —By Gregory Meyer, Dow Jones Newswires

  33. 33
    zman Says:

    ZTRADE: HAL June $50 Calls for 1.30.

  34. 34
    Nicky Says:

    Morning all.

    WTI appears to be playing out as an ending diagonal. If so upside target is maybe around 128.50. The move down this morning is relatively deep and a move below yesterdays low at 123.10 would indicate i was done and we are in ii down. A move above 126.10 would indicate we are in the final leg up.

    Nat gas – if it is playing out as an ending diagonal too then it could be done at this mornings highs. If it is an ED then it has to conclude beneath 11.829. If that is taken out then I think we could still see somewhere between about 11.950 and 12.050.

  35. 35
    zman Says:

    Morning Nicky – thanks for the commodity TA. Any thoughts re S&P?

    On oil, Cushing stocks continue to build. This is something bulls made a lot of noise about 3 or 4 months ago when it declined sharply.

  36. 36
    kyleandy Says:

    is there a link to real time crude and natural gas quotes? thks

  37. 37
    zman Says:

    Q-man – any thoughts on VMC now, looks to be recovering. Wondering if they are seeing renewed pricing power in wake of China quake. Morbid curiosity on my part I guess but 3 mm homes and many concrete buildings are going to be rebuilt.

  38. 38
    Nicky Says:

    Z – could see a short term pullback, say to 12900 Dow and 1400 spx area before further upside.

  39. 39
    zman Says:

    Ky – Nicky had a link to some live oil charts the other day, will have a look around.

    RE PQ – I’m going to roll my remaining May calls here in a minute.

  40. 40
    Nicky Says:

    A bigger correction could see us back to 12800 or lower on the Dow but I still think higher before all is said and done.

  41. 41
    zman Says:

    Here’s one for oil. It showed to the penny the front month NYMEX contract when I pulled up the page. Still looking for an NG one.

    http://www.livecharts.co.uk/MarketCharts/crude.php

  42. 42
    Nicky Says:

    Live crude chart:
    http://www.livecharts.co.uk/MarketCharts/crude.php

  43. 43
    zman Says:

    Here’s one for NG that says it is live but it looks a little delayed by my screen.

    http://www.firstenercastfinancial.com/market-pricing.php#

  44. 44
    zman Says:

    NBR hitting $40.

    ZTRADE: Out remaining PQ May $20 calls for $1.85, up 76% since entry on 4/7. I still hold two sets of July calls and am likely to add more longer dated exposure here soon on further weakness in the shares.

  45. 45
    reefguy Says:

    Elk 4 dst from wires: 7.6 MMCFPD 82 BCPD 510# FTP 1″ck from 200′ of openhole in Antelope immediately below casing. Plan on drill and testing another 600′ and TD.
    I am unimpressed with rate at this point. I will await cc
    tomorrow morning.

  46. 46
    zman Says:

    HAL looks to be in break out mode, it would still be cheap to SLB at $60, let alone at $50 or its current $48.80. Approx the same growth rate through 09.

  47. 47
    zman Says:

    Reef – agreed, that’s less than half Elk 1 and not what you want when you’re trying to argue that there are T’s and T’s under your lease.

  48. 48
    zman Says:

    For those of you not familiar with IOC here’s a presentation they did on their first big well in Papua New Guinea:

    http://mail.interoil.com/presentation/2006-10-20_ELK1_WELL_PRELIMINARY_TESTING_PRESENTATION.pdf

    I’ve also got a couple of pieces about them on the reports tab at upper left.

  49. 49
    zman Says:

    Received several pieces last 2 days saying RIG drop post quarter was overdone, which is causing this rally in the shares today. I may take a little more DO and some RIG soon but probably not today. With the quarter’s out of the way, people are refocusing on just how good the long term stories are here and near term pricing is improving beyond long term due to current rig constraints relative to demand.

  50. 50
    ram Says:

    Any thoughts on ATW?

  51. 51
    zman Says:

    Ram – I think they may bounce a bit, not a bad thought. The last analyst piece just sent to me said the jack-up weakness angle in RIG was overplayed by the Street. I did not listen to ATW’s call or pay that close of attention to their numbers in the Q but they have been pretty restrained since announcing last week. It’s probably a good bet that another day of recovery in RIG/DO sees them start to move as well. Could be a nice quick trade.

  52. 52
    ram Says:

    I’m trying to split the bid on the PQ JUL 25’s and the knucklehead wont bite.

  53. 53
    kyleandy Says:

    z, nicky – thks
    reef – re IOC so i take it you’re holding on till tomorrow but not adding??

  54. 54
    zman Says:

    Ram – hear ya on that, PQ options are thin, if it fills that gap I may just take the offer.

  55. 55
    Alhambra Says:

    Hey Z did your guy ever get back to you regarding WEL (Boots & Coots)? Seeing good action on them again.
    After listening to their conference call last week, their emergency response segment did very well this past quarter; primarily due to activity in Africa, specifically Nigeria.

  56. 56
    zman Says:

    A – sort of, he had nothing to add except to continue to question management’s acumen and sent me a piece showing RBC had bumped its pt from $2 to $2.65 with a 1 cent increase in 08 and 09 estimates. Did not get a sense from the bullet points I received as to why it deserved such multiple expansion.

  57. 57
    ram Says:

    ZMAN – If you get a chance, look at DE recent earnings and their near term warning of next quarters due to high steel prices. The 7 year cycle of construction equipment contraction has not really taken place because of exports. Also, China and India are still consuming raw material at a fast pace. The X trade seems to be a good call.

  58. 58
    scoop006 Says:

    Z- just received massage from my GS broker saying they feel crack spreads are dropping and buy VLO, No opinion on TSO.
    To believe or not to believe, THAT is the question.

  59. 59
    Alhambra Says:

    ok, thank you!

  60. 60
    zman Says:

    Ram – ok

    Scoop – they must mean cracks are rising, buy VLO, right?

    A – wish I had more but my guy there has been busy on other projects of late and I think he gave up on them a few months back. Good luck and I’ll take a look into it myself over the weekend.

    Anybody else notice that the group greens up when crude backs off today and vice versa, back to trading with the broader market which likes the idea of crude topping here.

  61. 61
    Garyinhou Says:

    “just received massage from my GS broker saying they feel crack spreads”

    Scoop, you accidentally brought tears to my eyes…

  62. 62
    scoop006 Says:

    Z correct buy VLO

  63. 63
    zman Says:

    ZCOMMONTRADE: Bought WH for $8. Earnings tomorrow. This is that Chinese tubular company I spoke about in the Tubular piece on May 8th.

  64. 64
    zman Says:

    Scoop – did that piece on refining say anything about the Majors? They are putting on a nice move today.

  65. 65
    scoop006 Says:

    NO specific to VLO

  66. 66
    Popeye Says:

    Gary, I’m sending you a bill for a new keyboard.

  67. 67
    zman Says:

    Ok thanks, I still like FTO equally as well to VLO … and with that said all I hold in the space is some worthless TSO 30 calls.

  68. 68
    zman Says:

    I dare you to go on trading goddesses site, up right link and talk about crack spreads. She’s pretty savvy but wow will she have fun with that.

  69. 69
    zman Says:

    Wow, nice response to the common trade on the WH!

  70. 70
    ellwodo Says:

    WH – Z, you are either moving the market or have a good sense of timing. I’m in WH now, but at 8.3

  71. 71
    zman Says:

    Elwo – timing on that I think …here’s to them not botching the numbers tonight.

  72. 72
    ellwodo Says:

    Z – I’ll let you listen to the WH call tomorrow for us. I’m going to be at the XCO shareholder meeting since it’s in my town (Dallas)and I want to see mgt in person.

  73. 73
    xweto Says:

    Z: re Jun HKFE’s, good double now, do you have a time or price target

  74. 74
    VTZ Says:

    Z – I’m not sure if this is someting you could answer or not, but I’m looking moreso just for your opinion.

    At these gas and oil prices, how much hedging do you think companies are currently doing? I’m talking about mostly the ones that traditionally hedge xx% of their portfolio. Would they be looking to increase that % here or do you think they would be waiting.

  75. 75
    VTZ Says:

    I’m thinking about people who might want to lock in a capital budget.

  76. 76
    zman Says:

    X – I may take half of that off the table soon as we are little short of further catalysts up here if nobody is going to talk about rates in the Haynesville and we are ways off from the next quarter and probably from the next ops update. I want some ongoing exposure for the day that CHK confesses that it has some truly big wells but I’m a little large there now for me.

    VTZ – just from listening to a bunch of cc’s I’d say people are a little more hedged than they normally would be. EOG is the one notable exception in that they stopped adding hedges a couple of months ago. CHK is a big chunk of the commercial contracts shown by the CFTC and they are up a few percent over what I’d normally expect for this year and may 10% above what I’d have thought for 2009. I personally don’t see how you don’t at least add some costless collars on natural gas up here for Capex protection.

  77. 77
    zman Says:

    V – sorry I don’t have a list of the incremental hedge additions announced over 1Q. A data grunt is in the budget around here for 2009.

  78. 78
    xweto Says:

    If HK is on standby and CHK is the leader of the pack how about swapping out of HK calls into CHK … BTW, might this be the time to buy CHK stock?

  79. 79
    VTZ Says:

    Heh, don’t worry and/or apologize, I was just curious about your thoughts.

  80. 80
    ram Says:

    If you wern’t large in CHK …..

  81. 81
    zman Says:

    If I were not large CHK already yep.

    Just in the interest of full disclosure I had the wife buy FTO today swapping out a multi years long position in LUV; had her hold off on the CHK for a bit.

  82. 82
    zman Says:

    I am apparently a dope for not punting those near month NFX this am. What a swing.

    On the HK, I probably punt half on the next spike and then wait for a good sized dip before adding it again. I do want to keep exposure there just in case someone bigger starts talking. They have a lot going for them but for now the Haynesville play/hype is in the drivers seat.

  83. 83
    ram Says:

    No, if you weren’t in CHK large, you would “possibly” issue a ZTRADE of ……

  84. 84
    Sambone Says:

    Off subject – I’m buying “CYB” today for my currency hedges. This is Wisdom Trees Chinese Yaun ETF.

    http://www.wisdomtree.com/about/pdf/WisdomTree-PR-WT-Dreyfus-Launch-Currency-484.pdf

  85. 85
    zman Says:

    …maybe the chk shares

    Sam – what’s reasoning on that?

  86. 86
    uop Says:

    zman:
    does FTO have oild, ng, refinery ?

    what is attractive /

  87. 87
    zman Says:

    FTO is one of the smallest but best run of the independent refining group. Two plants, one in Wyoming, one in Kansas. They have stayed profitable through this slump in the in margins by running more heavy crude through their system and basically shouted on the call about how much better 2Q will be. Of course, it will still be down from 2Q07 like everyone else but they could be ready to turn the corner after the bludgeoning the group has taken. As per Scoops comments above, if Goldman is getting positive on the refiners than we may be close to a bottom. Many analysts have tried to call a sector bottom on the way down to no avail but GS can probably make one happen, lol.

  88. 88
    zman Says:

    CVX supply vessel hijacked by MEND. They’re demanding a ransom for the crew and I guess turning down the Obama/Carter effort to get them to the peace table.

  89. 89
    Sambone Says:

    #85 Z – When B52 Ben started lowering rates in Sept of last year, I bght FXF (Swiss Frank). Take alook at the chart. Now I believe LONG – LONG term that the Yaun will be the world’s currency reserve. The British Pound Sterling was the Reserve, then the US$. Jim Rogers tells us that this is the place to put your $’s. I am selling my FXF, and moving into CYB for my US$ hedges. At some point they will depeg, which they have started to do slowly. Now, I’m not putting all my money there just my currency hedges.

  90. 90
    zman Says:

    Nicky, any changes to your broad market thoughts, we seem to be weakening a bit towards your 12,900.

    Thanks Sam … so Yuan, not Euro will be the future currency for oil — long, long time form now, eh?

  91. 91
    Wyoming Says:

    Z,

    Head procurement guy has not seen tight pipe supply in over 30 years. One of the concerns is some hoarding happening, think Oil Embargo of the 70’s.

  92. 92
    zman Says:

    Wyoming – he sees it now though, right?

  93. 93
    ram Says:

    Quite the swing in alot of energy co’s today.

  94. 94
    Sambone Says:

    #90 – That’s my bet, so yes.

  95. 95
    tater Says:

    Tried to do a little research based on the discussion about steel prices from a couple days ago.

    http://www.dobmagazine.nickles.com/

    Does anybody versed in drilling or field services see any other tools/machinery where steel could be replaced by an alternative?

  96. 96
    Wyoming Says:

    Yes, as I described last week when we were making orders for the increase in rig count.

  97. 97
    zman Says:

    Wyo – good, just making sure I understood you right as I heard that from every company I listened to a 1Q call on. Pipe getting hard to get and/or pricey

  98. 98
    uop Says:

    zman:

    txs,
    bought oct30 calls,\

    yesterday I said that SU ha srun up aa lot, now coming down, should have shorted it.

  99. 99
    zman Says:

    Ram – yeah, market pulled back off highs and the mixed group of energy names sold off…for the sake of my few remaining May calls it would be nice if the Dow would hold Nicky’s levels from earlier.

  100. 100
    BossmanG Says:

    HAL getting hit…buy more?

  101. 101
    zman Says:

    Already did, holding what I have for now. Really rapid reversal here with the broad market taking away good sized gains in the all of the energy groups today.

  102. 102
    Sambone Says:

    Tini time

  103. 103
    sane Says:

    Re steel pipe:

    Was talking to my father who works for ArcelorMittal. He said a lot of pipe fab lines in the U.S. were closed down in the 90’s d/t low demand. Said most of Mittal’s pipe fabs for energy related ops are located in Eastern Europe close to FSU and the Middle East.
    He said steel demand was rabid right now, and a lot of the mills are swaying production towards high margin basics hot roll and plate, vs. low margin specialty products.

  104. 104
    jy Says:

    Per an SEC form 4, Michael Finch, a director of PQ (PetroQuest) sold 10,000 shares of stock this past Friday and Monday for $22.25 to $22.60. This is the 2nd insider transaction reported today from PQ. Finch was the CFO at Stone Energy (SGY) until about 2000. He is a savvy guy.

  105. 105
    reefguy Says:

    53- holding through tomorrow…

  106. 106
    zman Says:

    Jy – how can you be savvy and work for Stone? Just kidding and I covered them after he left. 10,000 shares could be a pool or a boat or college. It could also be , “holy crap, my stock’s above $20 and I get more options next month!” My point is insiders buy for only one reason but sell for many. I saw it early and if that’s the reason for the little dip and it is little so far then I’m happy to hold it. He can’t possibly thing his stock is expensive even up here.

    Reef – seriously, good with IOC. Hopefully they create some excitement with their call but unless the numbers bear out …

    Sane – as always, thanks for the feedback.

    Still nothing I see out of WH and I’m guessing based on time zones that there will be nothing for quite awhile despite the single post market trade at 8.50

    Just got an email from Tater which I encourage him to post in its entirety since it made coffee come out of my nose and it makes a lot of sense re the technicals on X. I like to be right. I like to be right at lower price again even more. And I hate to be late and have the stock fall due to voodoo … its a good read.

  107. 107
    reefguy Says:

    IOC- reviewed Elk 4 technical slideshow. Seismic looks highly interpretive. Proposed Antelope 1 looks risky. IMHO edge of what is being called “reef” could be fault plane reflection. Difficult to make one line interpretation, they need 3-d, but in the jungle I question logistics.

  108. 108
    reefguy Says:

    ioc- page 12 of technical report. Seismic line makes me ask: Why did you drill Elk 1 first? If top of Limestone in Elk 1 is on overlying thrust, how likely is it that the gas contacts are going to be the same across that thrust boundary and into Elk 4 and the proposed Antelope 1? The interpretation seems mighty complex given three wellbores and maybe a dozen two d seismic lines across a big area.
    It brings me back to: You need 3-D, you need more wells, you need a lot more money. You need a partner with some real technical expertise and not just deep pockets. The complex geology may be one reason Shell gave up 20 years ago–prior to 3-D and $14 offloaded LNG. Investment thought- I am going to park a portion of my common position into long term hold and wait. For now I am waiting to see the shorts get tightened. I am not adding or selling.

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