04
Jun

Wednesday – Oil Easing (Again)

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In Today's Post:

  1. Holdings Watch - busy day
  2. Commodity Watch with EIA Inventory Preview
  3. Stocks We Care About Today
  4. Odds & Ends

Holdings Watch:

  • (NBR) - Sold the June $40 calls for $3.10, up 125% to the average cost of two entries (4/22 and 5/9).
  • (NBR) - Sold the June $42.50 calls for $1.40, up 17%. I continue to hold July calls.
  • (CHK) - Sold the second half of my June $52.50 call position for $4.60, up 119%. This one was bought after their latest debt deal yielded a seemingly irrational and yet somewhat predictable decline in the shares. So this one worked as expected. I continue to hold July $60 calls.
  • (XCO) - Sold the June $25 calls for $2.55, up 55%. I will likely reposition long prior to earnings.
  • (CLR) -  Sold the remaining slice of June $55 calls for $10.60, up 324% since entry mid May.

 

Commodity Watch:

  • Crude Oil: traded lower for most of the session in extremely volatile trading following comments by the Fed chairman that rallied the dollar. July NYMEX crude fell $3.45 to $124.31. This morning crude is trading from flat to $1.00.

EIA Inventory Expectations (from the Dow Jones Survey)

exp-053008.jpg

ZComment: There's a good chance imports rebound driving a much bigger than expected build in crude stocks. Last week the giant draw on crude inventories was disregarded due to its imports influenced natural and oil prices sank so maybe the reverse will be true today but I'm not counting on it (have a hefty cash position and (DUG) calls. Gasoline demand will again be key and if the wedge between last year's demand levels and this year's continues to widen we may see cracks in the  recent upward pricing trend in wholesale gasoline. I have become more comfortable with a recovery in the refining sector but if we start to see weakness in gasoline and especially distillate demand I will continue to hesitate to get back into that group. Either way, I'm waiting on the numbers before acting. 

 

  • Natural Gas: rally, rally, rally. Heat and the south and the east drove prices up yet again yesterday. The July contract closed up $0.25 to $12.22.    This morning gas is trading off slightly on the following:
  • Independence Hub Repairs Complete. Expect the facility to ramp back up to full capacity in first half of June, adding 1 Bcfgpd to supply.
  • Tropics Watch: A low is forming in the Bay of Tehuantepec (south of Mexico in the Pacific) which has the potential to become Tropical Storm Boris.

Stocks We Care About Today

Cubic Energy (QBIK) - I wrote this piece last night. This is an interesting little Haynesville play, priced like an option itself and my little book report on it takes a look at potential valuation and makes some caveats about risk in this type of name which I can't stress enough. These guys speak at the RedChip Small-Cap Investor Conference on June 5.

(APA) Took A Hit Over a Fire At Its Australia Operations Yesterday. Just watching the name for now but if we see an over-reaction there in the next few days (once the extent of the damage is known) I'll be thinking about long positions.  

Odds & Ends

Analyst Watch: Goldman Sachs raises (NBR) from hold to Buy (what took them so long?), Jesup picked up (ESV) with a $107.50 price target.

Housekeeping Watch: I will be in Honduras for the last week of June (23-27). The site will be available for comments but there will be no posts from me as I will be at a pretty remote location. I am in the process of going to cash and stocks from my typical option heavy position in advance of this trip as I do every year. I may keep some of my longest dated calls but options are not like stocks and the idea of holding a volatile, wasting asset (the true definition of an option) in my portfolio is a distraction that I don't care to have while away.    

 

115 Responses to “Wednesday – Oil Easing (Again)”

  1. 1
    Sambone Says:

    7:45 am EST

    Crude Extends Losses, Demand, DOE Data In Focus

    By Lananh Nguyen
    Of DOW JONES NEWSWIRES

    LONDON — Crude oil futures fell to three-week lows during London trade Wednesday as demand fears gripped market sentiment.

    “We think the extent of demand destruction — a factor that has been long ignored — is now casting a more pronounced bearish shadow over the markets,” said Rob Laughlin at MF Global in London.

    The market was extending its Tuesday selloff, but prices were likely to stabilize ahead of the U.S. Department of Energy’s weekly inventory report, due at 1435 GMT, participants said.

    At 1126 GMT, the front-month July Brent contract on London’s ICE futures exchange was down 96 cents at $123.62 a barrel.

    The front-month July contract on the New York Mercantile Exchange was trading 68 cents lower at $123.62 a barrel.

    The ICE’s gasoil contract for June delivery was down $16.50 at $1165.50 a metric ton, while Nymex gasoline for July delivery was up six points at 335.31 cents a gallon.

    “It seems finally people are seeing the demand erosion that we have had for a long time now,” said a crude oil trader based in London. “We are already seeing a shake out…(but prices are) unlikely to completely meltdown.”

    The pace of demand destruction is much faster than is reflected in available data, which is typically retrospective, said Laughlin at MF Global.

    India and Malaysia Wednesday trimmed subsidies on oil products in an effort to ease the burden of ever-costlier subsidies on government budgets. The measures, which will raise retail petrol prices, could cool rampant demand in developing nations where consumers have so far been shielded by the astronomical rise in oil prices.

    India hiked retail prices of gasoline and diesel, and cut import taxes on fuel products to help state-run fuel retailers lower mounting losses. Malaysia will also raise gasoline prices 40% from Thursday, the government said.

    “The market focus is currently more on the inflows of demand destruction news,” said Olivier Jakob of Petromatrix. “India is the latest country to be added to the list of emerging countries reducing oil subsidies, GM (GM) like Ford (F) is shutting down production capacity (and) airline associations are ringing alarm bells.”

    Meanwhile, participants were looking ahead to the U.S. supply report later Wednesday. Analysts surveyed by Dow Jones Newswires expect crude oil stocks to rise by 600,000 barrels, gasoline inventories to build by 300,000 barrels and distillate stocks to rise by 1.4 million barrels.

    Current losses for crude oil could cascade into a sharper decline as prices search for the bottom end of their trading range, Laughlin said.

    “We have yet to see a “capitulation” sell-off in heavy volume,” he said. “This could conceivably still happen,” especially if the DOE data are bearish.

    Technical charts were also pointing south, according to Andy Riddell, energy broker at ODL Securities.

    “This (price) breakdown can only be viewed as technically bearish in the short term,” he said. Crude oil prices had crossed below their 9- and 14-day moving averages, and more sell orders could be triggered if prices further toward the 40-day moving average, Riddell said.

    Despite the current move lower, crude prices are still underpinned by fundamentals, said Andrey Kryuchenkov at Sucden research.

    “In the long run, oil prices are still well supported by robust demand from emerging market economies and tight spare capacity on the supply side,” Kyruchenkov said. “The current correction in crude prices is healthy, but it may not be prolonged.”

    —By Lananh Nguyen, Dow Jones Newswires

  2. 2
    zman Says:

    Morning Sam. Any thoughts on the tropics? Platts is showing a much larger build expected, just over 2 mm bopd.

    WLL – Initiated at outperform at Raymond James.

    PXD price target at Citi raised to $100 from $69.

  3. 3
    reefguy Says:

    z- energy looking uglt pre-open

  4. 4
    zman Says:

    Reef – yep, fear and loathing over the storage number. I plan on punting my DUG calls after the number.

    TTI – completion fluids company out with 4 yr contract to PBR, interesting.

  5. 5
    ram Says:

    What time est do the numbers come out?

  6. 6
    zman Says:

    Morning Ram, 10:30.

  7. 7
    Sambone Says:

    Tropics – Nothing of interest at this time. Even into the weekend looks kinda slow.

  8. 8
    zman Says:

    Anybody read last night’s piece?

    Thanks Sam. I saw a wave mid-Atlantic and something in the Pacific but little of note. Saw a comment that Atlantic waters are uncommonly warm and that La Nina is fading.

  9. 9
    VTZ Says:

    I read it quick this morning.

    Was a good piece.

  10. 10
    zman Says:

    ZTRADE: Bought a 1/5th position in QBIK at $2.99. Risky Haynesville minnow. See last night’s post for reasoning.

  11. 11
    reefguy Says:

    dumping GMXR July 45 at the morning bid of $9.60, in at $3 last friday open

  12. 12
    zman Says:

    Thanks V – just made sure people saw it. I did not give that one away as I often do on individual stocks. I am NOT swinging for the fence here as the name could fall $0.50 in a blink and people would say “so what?” in the big scheme of things.

  13. 13
    reefguy Says:

    z- is a one fifth position one finger in a fist full?

  14. 14
    zman Says:

    Reef – nice trade!!! and yes.

  15. 15
    zman Says:

    with the caveats that I may not get to a fistful and I can afford to have one finger ripped off without too much concern.

  16. 16
    Bob Says:

    Z- Didn’t EIA change the release time to 10:35 EDT?

  17. 17
    zman Says:

    Bob – not that I know of will check.

  18. 18
    zman Says:

    Bob’s right, 10:35, what was the reasoning on that?

  19. 19
    zman Says:

    Gas moved back to 10:35 too. Maybe it is the extra time required for the EIA employees to commute or ride bicycles to work.

    NBR reacting nicely to the Goldman upgrade. I think GS was just waiting for a down day to up the stock, you can’t tell me they just got convinced on the fundamental picture here. Love to see the comment with the upgrade if anyone has it.

  20. 20
    italyinvestor Says:

    Zman -My first, novice post here. Any prizes? I read the piece three times. Thanks for putting it together. I like shales now, especially Utica, and am always looking for overlooked small companies. In the past, I have held some BB/OTC stocks and waited for them get themselves going and then move to the mainstream exchanges. I treat them as leaps. I’ve got entry positions in ASPN and CXPO now and hope they eventually list, get noticed and bump up in price.

  21. 21
    Bob Says:

    Z- EIA reasoning due to early release last http://www.eia.doe.gov/neic/press/press300.html

  22. 22
    zman Says:

    Italy – thanks for joining the party on a pretty slow early summer day. I started working up a piece on ASPN a while back but never finished it. Don’t know Crimson. Will have a relook at both. Sorry no prizes but there is a few quarter in it for you if you pick the acquiror of HK, I will dig up the current list of names and attach to the bottom of today’s post in a few minutes.

    Bob – thanks. That makes very little sense to me but hey, it’s the EIA.

  23. 23
    zman Says:

    Nice to see a rebound in HAL / SLB. Both fairly cheap and I think SLB once properly supported by the broad market will go $110 in the next month or so. HAL is still up in the air over the EXpro acquisition, kind of in damned if you do and damned if you don’t territory. They need to say something in regards to a higher bid before June 9, the date of the Expro shareholder meeting, as management has told shareholders at this point to vote for the competing GS based offer.

  24. 24
    zman Says:

    Should we get some wildly bullish set of numbers out of the EIA for crude, I will look at adding:

    a NBR September position and maybe a June call position for a very quick trade,

    SLB $110 July calls,

    covering my DUG calls which are down b/c they are so XOM weighted,

    CLR and or WLL near the money calls.

    Should be get a set of numbers that look good for the refiners I may add some smallish positions in VLO and FTO.

  25. 25
    rseidman Says:

    Any explanation for the PBR drop?

  26. 26
    Brian Smith Says:

    Z – here’s a question from a neophyte on horizontal drilling. How does one avoid running a drill horizontally under the lease of a company with an adjoining lease? Seems like it would be hard to catch someone sucking out the gas under your lease.

  27. 27
    zman Says:

    RS re PBR – I would assume its a combination of oil and a weak Ibovespa but their market may be keying off PBR’s move so chicken, egg or egg, chicken? I don’t see anything negative, just more contracts flowing out to service co’s on a daily basis. TTI got a good sized one this morning, could be a broker call there but I did not see one, could be the chart got a little weak and their is fear that this oily name could tumble if oil does on today’s demand numbers.

  28. 28
    zman Says:

    Brian – the short answer is you buy the mineral rights for where your drill bit is going to be, regardless of where you start. Reef and Wyo and several others here can add more depth but the sucking out of gas under others leases is not cool. On the surface, I did see CNBC reporting an increased incidence of oil theft from oil well storage tanks. I had a buddy in Tx who constantly complained about thieves in the night and that was when oil was $30/barrel.

  29. 29
    zman Says:

    FTO thinking about filling the gap on its chart, I’d bet on upwards and onwards once it falls below $30.20.

  30. 30
    reefguy Says:

    In Texas, the Railroad Commission requires a directional survey to be submited before a P-1 allow sale of producyion to commence. Minimum lease line rules help prevent accidental crossing and keep offset drainage to a minimum

  31. 31
    zman Says:

    Crude: down 4.8 mm bls
    Gasoline: up 2.9
    Distillate: up 2.3

    Utilization: 89.7 – this is part of the reason for the big draw on crude.

    Imports did rebound to 9.8 mm bopd.

    Very mixed bag of a report, positive crude, negative products, bad for refiners at least on the surface.

  32. 32
    zman Says:

    DUG should go positive on this one.

  33. 33
    sane Says:

    EIA showing gasoline demand at 9.1???

  34. 34
    zman Says:

    Gasoline demand fell to 9.1 mm bpd from 9.37 mm bpd in the prior week. This is down almost 4% from year ago levels at a time when demand should be ramping. Not good for refiners either.

  35. 35
    zman Says:

    NG going positive on the dist/resid numbers which is odd since they were down. Or maybe it is just noise.

  36. 36
    zman Says:

    Sane – CNBC saying API numbers showed the big build I was looking for and that’s what is tripping crude.

  37. 37
    sane Says:

    API

    Crude UP 2.2M
    Gasoline UP 2.2M
    Distillates Up 4.5M

  38. 38
    sane Says:

    I would see the gasoline demand as a red flag espically d/t it being Memorial Day Week. Usually demand pops.

  39. 39
    zman Says:

    Thanks Sane, those numbers make a lot more sense to me as imports jumped while inputs to refineries only inched up, doesn’t make any sense that you get another big draw this week. I’d say traders are giving the API much more credence this week as oil is off $1.25 and testing $123.

  40. 40
    reefguy Says:

    Blackbeard Drilling Report(Offshore Oil Scouts) Recovered logging tool. Only partial downhole log recorded, poor quality(High temps?). Currently circulating in hole with logging tool(I think drillpipe conveyed)

  41. 41
    zman Says:

    Sane – America stayed at home or at least closer to it.

    Holding my DUG calls for a little while longer although the weighting to XOM is keeping it from rallying at present.

  42. 42
    zman Says:

    Reef – any ETA on them saying something? I’d love to see a DST before I leave town.

  43. 43
    zman Says:

    SU looks to be rolling over.

  44. 44
    reefguy Says:

    z- I do not think a DST is an option at this depth and with 6000′ of openhole. They will run logs and then announce that they are running a liner from 26,000 to 32,000. The plan is to drill out to 33,000(and maybe beyond)

  45. 45
    Fred Says:

    Z – Cracks are moving up so a least one plus for refiners.

  46. 46
    zman Says:

    Fred – cracks have been moving up for weeks. Today gasoline down 2.7%, HO down 2%, oil down 1.3% makes for lower cracks, maybe not a trend but if gasoline really softens they may have seen their summer peak on that crack chart I publish every Tuesday.

    Reef – I figured as much given heat, pressure but I said, I’d like to see it, lol. How about some info on the kicks they have seen so far?

  47. 47
    reefguy Says:

    z-BB radio silence. I think enough to justify liner, but no porosity logs to prove quality…

  48. 48
    zman Says:

    Reef – well, even if we have to wait on a line and a deepening, I would think my Augusts would give me enough time.

    Natural gas still flat despite the $2 drop in oil.

  49. 49
    reefguy Says:

    z-thats why i bought common. Rumor is a wellhead needs to be fabricated. I bet Exxon has one. Fabrication is not quick, maybe a year??

  50. 50
    zman Says:

    It would be a fairly high spec setup no doubt. Maybe some log data this summer then.

  51. 51
    VTZ Says:

    Bloomberg reporting that Gartmen told CNBC that hes short oil and long NG.

    I love how this second hand news of what one person said gets pawned off as news.

  52. 52
    md Says:

    MEND and ahMEDeNijad will not be outdone

  53. 53
    Denise Says:

    Good Morning,
    Quick update this am on Mr K’s
    market readings
    He has gone to a 8-2 (pretty bullish short term)

  54. 54
    zman Says:

    V – it is amazing what passes for “news” these days. With all the “top” calling going on it is less likely that crude will actually tumble.

    MD – haha, very true.

    CLR taking out new highs.

    Service names getting a little respect.

  55. 55
    zman Says:

    Hey Denise, thought you were on vacation. That is pretty bullish for him, is he still long DUG?

  56. 56
    Nicky Says:

    Morning all.

    I am leanng in favor of a top of some significance being in in oil due to distillates break below 3.5608. Oil’s comparable level is at 120.75. Short term we may see some sort of corrective bounce with resistance at 123.68,124.70 and 126.50 but thereafter if the bearish count is on track the market should turn down hard.
    Dennis Gartman has been all over CNBC the last 24 hours saying he would be very nervous being long commodities without some sort of hedge in place as he is expecting the CFTC to ‘overeact’ due to public and ‘election’ pressure and we could see a serious move to the downside. When asked for a percentage drop in oil he said we could be at 100 very fast.

  57. 57
    scoop006 Says:

    Z Re yesterday’s post #41 = CLR In @$3. out today @$4.70 Another profitable ZMAN Trade.

  58. 58
    tomdavis12 Says:

    CHK Aubrey buying more stock. What a monster.

  59. 59
    Denise Says:

    I am but an addict needs her fix occasionaly
    I am not sure-he lightened up if you remember-I surmise he still holds some-
    Actually off energy -he is been going long financials. Which is the only long call I have heard from anyone in some time! hmmmm……

  60. 60
    zman Says:

    Nice trade Scoop!

    On a separate note, I think when CHK actually does start to talk about its drilling results in the Haynesville Shale, they will be talking about wells drilled around the QBIK acreage in the northern part of that map in last night’s post. In the past the stock has reacted favorably to comments on the play. Could be interesting. QBIK volume today is 2.5x average…so far. I will continue to work up that story and may republish it as a free post in coming days for the nice folks at SeekingAlpha.

  61. 61
    Nicky Says:

    Bernanke speaking at Harvard at 2.45 est today.

  62. 62
    zman Says:

    It used to be that when Bush talked the market dropped. Now its Ben. Maybe they should all go on vacation and let the free market work instead of trying to spin and manipulate it.

  63. 63
    zman Says:

    Tom – Aubrey used to have a personal interest in every well CHK drilled so you can imagine that kicks off quite a bit of cash flow and what better thing to do than to buy up more of your company in $30 million share chunks! He apparently has a similar deal now but not sure it is on every well.

  64. 64
    ellwodo Says:

    QBIK – Z, thanks for an excellent analysis. Because of the location of its acreage I had been lookng at it, but I didn’t know how to estimate its buyout potential to see if the upside was worth the risk. After seeing your analysis I took a position in it this morning. I see the risks from a F/S perspective: audited by a small firm, for an audit fee of $21,000 last year, and F/S that are replete with related party transactions. On the other hand, a $3 “option” with no expiration is worth a little risk.

  65. 65
    zman Says:

    Elwo – to be sure there are a number of risks in a little name like this and I don’t know management other than having read their bios. But your last sentence I could not have stated better if I tried.

  66. 66
    zman Says:

    Nat gas up $0.17, shrugging off oil and the restart of I-Hub.

  67. 67
    tomdavis12 Says:

    Z Tom @ SD is also part of every well and I would expect him to also continue to buy SD like Aubrey is buying CHK.

  68. 68
    zman Says:

    Tom – absolutely re SD, Tudor Pickering came with a strong buy recommendation a few minutes ago on the tape but it must have been either a last night or early morning upgrade, so far no reaction with the stock off a touch here. I like SD quite a bit but for “value meets growth” there is little to compare to CHK.

  69. 69
    zman Says:

    ZTRADE: added to July $60 CHK calls for $1.55.

  70. 70
    bill Says:

    QBIK UP .25 AND 8.5 %Is this the Z factor

  71. 71
    zman Says:

    Bill – I hope not.

  72. 72
    bill Says:

    when will chk talk?

    How about any other players?

  73. 73
    Sambone Says:

    11:18 am EST

    Crude Drops On Oil Product Inventory Build

    By BRIAN BASKIN
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures fell to the lowest level since mid-May on data showing a larger-than-expected build in oil product inventories over the crucial Memorial Day weekend.

    Light, sweet crude for July delivery traded $1.76, or 1.4%, lower at $122.55 a barrel on the New York Mercantile Exchange. Futures set a new intraday low of $122.36 a barrel, a price last seen May 15. Brent crude on the ICE futures exchange traded $2.23 lower at $122.35 a barrel.

    While oil inventories dropped by 4.8 million barrels, compared with an average analyst expectation of a 600,000 barrel build, it was the surprisingly large build in product inventories that had the greatest effect on oil prices. Product futures tied to gasoline and distillates plunged as the EIA data showed a 2.9 million barrel build in gasoline stocks and a 2.3 million barrel build in distillate inventories, compared with expectations of a 300,000 barrel and 1.4 million barrel increase, respectively.

    Front-month July reformulated gasoline blendstock, or RBOB, recently traded down 9.91 cents, or 3%, at $3.2534 a gallon, after spending most of the morning in positive territory. July heating oil traded 8.12 cents, or 2.2%, lower at $3.5584 a gallon.

    The data played into concerns about falling U.S. demand for gasoline. The EIA reported that gasoline demand in the four weeks ending May 30 is off 1.4% from a year earlier, and other surveys have shown an even larger drop. Several weeks of similar data have begun to exert downward pressure on oil prices, which are off about 9% from the intraday record high of $135.09 on May 22. Many now see that price as a peak.

    “The fact of the matter is there’s enough oil around right now,” said Peter Donovan, vice president at Vantage Trading in New York. “Should the July contract be trading at $130 or $140 or $150? Probably not.”

    Both the steep decline in oil inventories and the rise in product stocks could be traced to a 1.8% increase in refinery utilization. This could indicate that production is growing despite slack demand, wrote Tim Evans, an analyst with Citigroup.

    “The higher refinery operating rate suggests additional output is on the way,” he wrote.

    —By Brian Baskin, Dow Jones Newswires

  74. 74
    bill Says:

    QBIK someone is bidding 50,000 at 3.20

  75. 75
    zman Says:

    Early August on their 2Q conference call. I would expect the stock to move up into that date with the group as analysts begin marking 2Q CFPS estimates to market for oil and gas prices, which are considerably above the number they use in their models at present. CHK won’t get as big of an impact as other names being well hedge but their numbers will be coming up too and the Haynesville hype I think would propel the shares back at least towards its recent highs.

  76. 76
    zman Says:

    QBIK – honestly I’d rather see it drift up. This kind of move will lead to profit taking and more volatility than I like to see. Plus, I only put one finger in.

  77. 77
    bill Says:

    just saw this

    http://www.transworldnews.com/NewsStory.aspx?id=49303&cat=8

    and this

    http://www.primenewswire.com/newsroom/news.html?d=143975

  78. 78
    zman Says:

    Bill – right, that’s all in my report.

  79. 79
    zman Says:

    …although they released that yesterday just afternoon. So much for efficient markets, lol.

  80. 80
    scoop006 Says:

    HYPERION ENERGY CO. Proposal to build a new oil refinery was approved by the voters of S. Dakota yesterday.

  81. 81
    zman Says:

    Scoop – makes a lot of sense if North Dakota is sitting on reserves bigger than Saudi Arabia.

    Do you show Hyperion as Mammoth energy MMTE?

  82. 82
    zman Says:

    WH = volatile. Still holding, may add a little. Drilling will ramp in U.S., Canada, and Mexico (see WFT contract for 600 wells signed yesterday). We are going to need lots of pipe.

  83. 83
    zman Says:

    Consensus estimate for NG storage tomorrow is an injection of 100 Bcf, vs 110 in the year ago week.

  84. 84
    zman Says:

    Refiners getting dropped here.

  85. 85
    zman Says:

    How is that Indonesia, China, India, and get that if you raise prices people will consume less and that will bring down oil prices but our Congress thinks that a tax holiday, in effect lowering prices, is the right idea?

  86. 86
    Fred Says:

    Z – Re#46 Seems like as oil drops the refiners will be printing money. Not sure how it’s bad for refiners as most likely the higher prices are here to stay. Are they being unfaily pounded today? Thx

  87. 87
    ram Says:

    Thoughts on WLT?

  88. 88
    ram Says:

    Thoughts on VLO SEP 50’s?

  89. 89
    zman Says:

    Fred – true enough unless the products they make out of crude fall faster than it does.

    Today
    Oil: down 0.96%
    Gasoline: down 4.25%
    Heating Oil: down 1.5%

    Ram – 1st thought, glad they did not take my bid. second thought, I need to buy some. third thought, given the oil market separating completely from NG at this point and the hot forecast, I don’t think a dip in the coals will last long. I may take some today or tomorrow.

  90. 90
    ram Says:

    Gracias.

  91. 91
    zman Says:

    VLO – I’m not buying refiners for now. That was a big break down in gasoline demand and it came as we are cranking up production. Not good for prices but that same cranking up action will require more crude which is supportive. If we have seen the highs on cracks for the season that is fine and the stocks could still go higher as they are very beat up for the most part but I sense a near term resting phase is in order. I will revisit the thought frequently but for now I am staying away.

  92. 92
    ram Says:

    Muchos gracias.

  93. 93
    kiaora Says:

    Z–FTO filled that gap like you said

  94. 94
    Garyinhou Says:

    Hey Z.. is there a coal tracking symbol I can use thats like UNG or USO??

  95. 95
    zman Says:

    K – saw that and wouldn’t you know now I’m feeling a little timid towards getting long. If I were to go long it would be them but I will wait for now.

    Coal tracker – KOL is for the coal companies but it is not perfect and it contains some producers and some consumers. I have not seen a coal ETF for the product but there may be one now. I watch the futures there and they are highly divergent depending on which type of coal you’re looking at, much more so than for oil. Powder River Basin coal from Wyoming is trading about $13 per ton depending on the heat content (it’s wet but low sulfur) whereas eastern coal is trading closer to $100 and though it contains more sulfur (which has to be scrubbed out or otherwise bagged) it has a much higher heat content so each ton produces more electricity.

  96. 96
    ram Says:

    Where does WLT fit in with regards to coal type?

  97. 97
    zman Says:

    Re WLT – they are largely met-coal guys. Metallurgical coal produced in Alabama and shipped overseas via the Gulf. Prices have more than doubled for met coal in the last year or so, I think around $250 per ton at present. Hello China, India, etc.

    I just wish I had listened more closely to Quarryman as he was pointing this name out over $50 ago.

  98. 98
    zman Says:

    Oil sell off, down $2 at 122.4 going into the close of Nymex. The energy stocks almost look like they want to mount a recovery once we get the oil markets closed. I will continue to hold the DUG calls which are up a bit and provide a small bit of peace of mind.

  99. 99
    Garyinhou Says:

    Great.. Thanks Z

  100. 100
    zman Says:

    JR – if you are around let me know what the latest rumored high lease price is in the Haynesville. I noticed on SONRIS last night that GDP has a bunch of wells in test and I think they may beat CHK to the punch as the next guy to announce a big rate down in those parts.

  101. 101
    zman Says:

    stepping out for 20 minutes.

  102. 102
    zman Says:

    I’m back, nice sell down in the broad market, like clockwork when Ben speaks now.

  103. 103
    uop Says:

    what is this ?

  104. 104
    zman Says:

    what is what?

  105. 105
    occam Says:

    Zman – What is your view of CHK Oct 60 calls here?

  106. 106
    uop Says:

    zman;

    now it works again but the day is over,

    what did I miss today ?

    oil down again,
    are any attractive things around which are now cheaper because of lower oil ?

    NG: as we know the spring drop in NG price did not occur an dNG is still heading higher, with hurricane season here, what can this do to NG ? if NG production getsa knocked out, NG prices will go even higher.

    Do you see it that way too?

  107. 107
    uop Says:

    zman;
    do your service people know why I could not blog all day ?

  108. 108
    VTZ Says:

    Weird how the broad market is selling off with oil today.

  109. 109
    Hoss Says:

    Afternoon Z

    Just noticed CHK will hold Shareholders Meeting (Live) 06/06/08 at 10:00 a.m. CT

    Do they ever let the cat out of the bag at these things or is it just business as usual?

  110. 110
    zman Says:

    Occam – I don’t own that particular expiration but I like CHK higher by then and think the stock will be well above current levels by the Fall unless we run into a mild summer (looks doubtful) or another mild hurricane season (who can tell?) which would reduce gas prices and ease the gassy group’s forward P/CF multiple lower which could put a summer time lid on the group. They have a number of catalysts coming and I do own the Stock and the June and July calls at present.

    Uop – I see that your modem was broken from your comments that were caught by the spam filter. The spam filter did not like the IP address you are using. You are back in b/c I disabled it.

    Sorry, but I can’t just summarize the day for you. Please read. Yes on NG, if hurricanes take out production prices will go higher. Oil is lower on the numbers which were bearish for products and refiners. That being said, most things in the energy group were inexpensive prior to today and got a little cheaper this afternoon. I continue to hold the DUG calls and added to the CHK July position and I took a little starting position I QBIK as per last night’s post.

  111. 111
    zman Says:

    Hoss – I doubt they are ready to say anything along the lines of cats in bags.

  112. 112
    zman Says:

    Beer Thirty!

  113. 113
    Pete Says:

    I agree

  114. 114
    Hoss Says:

    Evening Z

    News on COG – acquistion in East Texas.

  115. 115
    zman Says:

    Thanks for the headsup Hoss. Good to know, am breaking out the deal in Thursday’s post.

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