20
Jun

Wrap – Week Ended 6/20/08

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I'm off to Honduras in the morning and will be out all of next week. I will not respond to emails and there will be no new posts for the site after this one until Monday, June 30. If you're reading this free weekend wrap post and have not subscribed by now why not wait until I have something new to say. If you just can't wait to get access to the site please know that while PayPal subscriptions are automated, Google Checkout subscriptions require activation by me and I will get to that July 1.   

Subscribers Say The Nicest Things Watch: These were some of my favorites this week. 

"Zman - HK June 40s in at .75 out at 1.20. First Ztrade and enough to re-up for a year. I have learned more about short term interactions in the past 1/2 month as a subscriber than in a year of haphazard independent study. While i’ll never post another trade, i hope to contribute to the discussion in the future though my ocupation is far from the oil/gas patch." ~Italyinvestor

"italy he has been so good for 6 months its unbelieveable. i rarely trade options like he does, but often trade the underlying stock and option spreads, and while i have made an astounding amount of money the option boys have made that much more. he also has a real reason for the stocks he buys. am one happy subscriber!!! (plus i now know about horizontal drilling, oil shales , and a lot more!)" ~ KA

"My finance and I thank you all for our new Harley Softtail Custom" ~ JR

 

Holdings Watch:  Look ma, no Scuds! We usually have 3 to 5 complete losses or scuds in the portfolio each month. Despite a last minute valiant effort to create one via an ill-conceived (CHK) day trade I'm happy to say I failed. Here are the Trades Closed And/Or Expired To Date In June: 

closed-062008aaa.jpg

Asset Balance at Day's End:

  • Cash: 59%
  • Equities: 24%
  • Equity Options: 17% 

On To The Wrap... 

wrap-062008.jpg

Have a great week gang, I know I will.  

313 Responses to “Wrap – Week Ended 6/20/08”

  1. 1
    zman Says:

    open positions and closed Junes updated. Wiki tab updated. Have a great week!

  2. 2
    crysball Says:

    Update on Chattanooga Shale Play

    Atlas Energy Announces Four Successful Horizontal Wells in Tennessee’s Chattanooga Shale, and a Net Acreage Position of 105,000 Acres in the Play

    Plans 50 Horizontal Wells in the Next 18 Months

    PITTSBURGH–(BUSINESS WIRE)–June 20, 2008–Atlas Energy Resources, LLC (NYSE:ATN) (“Atlas Energy” or “the Company”) announces today that it has drilled or participated in four successful horizontal wells in the Chattanooga Shale of Eastern Tennessee. Initial results indicate that horizontal Chattanooga Shale wells, with a 3,000 foot lateral, can be drilled and completed for approximately $1.1 million, and are capable of stabilized production into a pipeline of between 300 and 500 Mcfe per day.

    Over the last 18 months, Atlas Energy has accumulated 105,000 net acres located in Eastern Tennessee. The Company believes that its acreage contains up to 500 potential horizontal drilling locations in the Chattanooga Shale. Furthermore, most of this acreage is prospective from conventional reservoirs, such as the Monteagle (Big Lime), the Fort Payne Limestone, the Stones River and the Knox Group, for which the Company believes it has up to 750 locations.

    Atlas Energy entered Tennessee approximately four years ago through a farm out with Knox Energy, LLC, which has since expired. Today, Atlas Energy operates over 375 vertical wells producing from conventional zones, as well as the Chattanooga Shale, and is the largest producer of oil and gas in the state. The Company has plans to drill and complete approximately 150 conventional wells by March 31, 2009 and plans a two rig horizontal shale program capable of drilling four wells per month.

    The Devonian Chattanooga Shale is an organic, hydrocarbon rich shale found throughout Eastern Tennessee. This productive horizon is located beneath the Mississippian Fort Payne Limestone at a depth of between 3,000 and 4,000 feet. The shale thickness ranges from 80 to over 200 feet and is thought to be the source rock for the hydro-carbons produced from many of the conventional reservoirs in Tennessee. The Chattanooga Shale is the stratigraphic equivalent of the Lower Huron found in Eastern Kentucky and West Virginia.

    Natural gas produced in Tennessee is generally high Btu and will require processing within the next twelve months in order to be delivered into Spectra’s East Tennessee Natural Gas Pipeline. Atlas Energy’s affiliate, Atlas Pipeline Partners, L.P. (NYSE:APL) (“Atlas Pipeline”), is currently installing two natural gas processing plants that will be capable of serving a broad area of Eastern Tennessee. Atlas Pipeline’s ownership of these facilities, along with its recently acquired intrastate pipeline system, offers Atlas Energy an advantage in acquiring additional leasehold acreage.

    In light of its expanding operations in Tennessee, Atlas Energy has named Ronald E. Huff to the position of President of its subsidiary, Atlas Energy Tennessee, LLC. Ron has already joined our talented and growing team in Oak Ridge, Tennessee. Ron brings over 25 years of experience in the oil & gas industry, including most recently President and Chief Financial Officer of Aurora Oil & Gas Corporation, and prior to that President and Chief Financial Officer of Belden & Blake Corporation.

    “We are thrilled to have added Ron to our senior management team with responsibility of accelerating our growth in Tennessee and the Southern Appalachian Basin generally,” commented Richard D. Weber, President & Chief Operating Officer of Atlas Energy. “The combination of our growing acreage position, the horizontal development of the Chattanooga Shale, Atlas Pipeline’s control over significant gathering and processing assets and our exceptional operating team is quite exciting and we expect Tennessee to become another driver of growth at Atlas Energy.”

    Atlas Energy Resources, LLC develops and produces domestic natural gas and to a lesser extent, oil. Atlas Energy is one of the largest independent energy producers in the Appalachian Basin and northern Michigan. Atlas Energy sponsors and manages tax-advantaged investment partnerships, in which it co-invests, to finance the exploration and development of the Company’s acreage in the Appalachian Basin. Atlas Energy is active principally in Pennsylvania, Michigan and Tennessee. For more information, visit Atlas Energy’s website at http://www.atlasenergyresources.com or contact Investor Relations at bbegley@atlasamerica.com.

    Background Notes:
    ATN is an M[P, with a very significant postion in the Marcellus Shale Fairway, and is very aggressively drilling Marcellus, using primarily vertical wells [and some Horizontals]. It also has shallow gas wells over the same area of PA, and also has shallow wells in the Antrim Shales of MI. They have their a separate Pipeline company and have much of the gathering infrastructure in place for Marcellus, & Antrim. They are very quick in converting a strike into cashflow. Additionally, they have a long established , tax advantaged drilling partnership program [separate from ATN]which they use to rapidly convert new DISCOVERIES, into PRODUCING FIELDS.
    As a final note they pay a 5.5% dividend………..which should increase with all their E&P activity in Marcellus and now Chattanooga Shale.
    In summary, they are a TOTALLY integrated E&P Gas company[using their sister companies]……..with the exception they contract out their drilling & completion. Their finding cost in both Marcellus and Chattanooga Shales is less than $1mmcf, and they receive a distance premium on their gas due to their proximity to the NE & MW corridors.

    ATN is not your typical MLP.

    Not a lot of option volume so bid/ask spreads can be problematic

    Crysball

  3. 3
    bhr5491 Says:

    Article in WSJ Sat re: very high tariffs on Chinese pipe may be coming soon.

  4. 4
    bhr5491 Says:

    Here is another article from Bloomberg, does not mention oil and gas pipelines so not sure how it affects WH.

    http://www.bloomberg.com/apps/news?sid=a3V7ZYOjEc4E&pid=20601103

  5. 5
    crysball Says:

    Chevron has halted onshore oil production at its Escravos oilfield after an attack on a pipeline.

    The loss could equate to about 120,000 barrels per day, about 6.6% of Nigeria’s total daily crude production.

    The Nigerian military said militants blew up the Niger Delta pipeline, but the region’s main armed group blamed angry youths for the attack.

  6. 6
    Nicky Says:

    I am seeing a lot of headlines to effect the oil market this weekend.

    Chevron – as above.

    Libya threatening to take supply some supply of the market – that is surely going to counteract any supply that the Saudis add.

    Iran rejects the amended terms.

    and the latest –

    Mend declares a unilateral ceasefire.

  7. 7
    Nicky Says:

    Crude Oil Falls on Saudi Production Pledge, Nigerian Cease-Fire

    By Gavin Evans

    June 23 (Bloomberg) — Crude oil fell in New York trading after Saudi Arabia pledged to increase production next month and militants in Nigeria called a cease-fire in their attacks on oil pipelines and vessels.

    Saudi Arabia, the world’s biggest oil exporter, will pump an extra 200,000 barrels a day next month and may increase output again if needed, Oil Minister Ali al-Naimi said in Jeddah yesterday. Attacks on foreign oil companies will end midnight local time on June 24, the Movement for the Emancipation of the Niger Delta, said in an e-mailed statement yesterday.

    Crude oil for August delivery fell as much as 0.8 percent to $134.31 a barrel and was at $134.63 in after-hours electronic trading on the New York Mercantile Exchange at 8:19 a.m. in Sydney. The contract jumped $2.76, or 2.1 percent, to settle at $135.36 a barrel on June 20.

    Prices rose late last week after militant attacks cut output from Chevron Corp. and Royal Dutch Shell Plc fields in Nigeria, and a slump in the dollar increased investment in commodities. The New York Times reported June 20 that Israel is increasing pressure on the U.S. and Europe to halt uranium enrichment by Iran, the second-largest producer in the Organization of Petroleum Exporting Countries.

    The July contract expired June 20, gaining $2.69, or 2 percent, at $134.62. It reached a record $139.89 on June 16.

    Brent crude oil for August settlement rose $2.86, or 2.2 percent, to settle at $134.86 a barrel on London’s ICE Futures Europe exchange on June 20.

  8. 8
    bill Says:

    hk ceo

    http://www.thestreet.com/_yahoo/video/cramerinterviews/10422266.html?cm_ven=YAHOOV&cm_cat=FREE&cm_ite=NA#10422266

  9. 9
    Sambone Says:

    7:55 am Monday, June 23

    Crude Up As Saudi Talks Fail To Cool Prices

    By Lananh Nguyen
    Of DOW JONES NEWSWIRES

    LONDON — Crude oil futures rose in London Monday as Saudi Arabia’s promise to raise its oil production to the highest level in 27 years failed to dampen prices.

    The unilateral move by OPEC’s largest oil producer to raise output by 200,000 barrels a day to to 9.7 million barrels a day was largely shrugged off by market participants, who shifted their focus to longer-term supply concerns.

    At 1141 GMT, the front-month August Brent contract on London’s ICE futures exchange was up $1.39 at $136.25 a barrel.

    The front-month August contract on the New York Mercantile Exchange was trading $1.44 higher at $136.80 a barrel.

    The ICE’s gasoil contract for July delivery was up $6.00 at $1,239 a metric ton, while Nymex gasoline for July delivery was up 230 points at 346.22 cents a gallon.

    At a hastily-convened producer-consumer summit in Jeddah over the weekend, Saudi Arabia also said it was ready to boost capacity by a further 2.5 million barrels on top of its existing expansion plans.

    But market participants said Saudi plans weren’t enough to calm oil prices’ relentless upward march.

    “With no other actions announced, with the immediate benefit of higher Saudi production seemingly already lost and with limited visibility on capacity expansion plans, there seems to be little here cool prices,” said analysts at Citigroup in a research note.

    The summit didn’t resolve the longer-term dilemma of robust oil demand outpacing supply growth, which has so far boosted the oil price to record highs.

    The conference “does not seem to have changed the underlying supply-demand balance, nor does it yet seem to have altered the market’s psychology,” said Peter Beutel of Cameron Hanover.

    Stephen Schork, editor of the Schork Report newsletter, said the summit did little to clarify the debate about the cause of high oil prices.

    “We fear that since the Saudis did not give this market a reason to sell, the market will interpret that as a reason to buy,” Schork said.

    In geopolitical news, comments by Iran and Israel sparked concerns that a military conflict between the countries could disrupt oil flows from the Persian Gulf.

    Iran Sunday dismissed reports that Israel had been practicing for air strikes against its nuclear drive as “psychological operations’ but warned of a limitless response to any attack.

    Elsewhere, a major Nigerian militant group Sunday declared a ceasefire in the oil-rich Niger Delta region effective Tuesday “until further notice.”

    The Movement for the Emancipation of the Niger Delta, or MEND, last week claimed responsibility for an attack on the Bonga oil field, operated by Royal Dutch Shell, knocking out 225,000 barrels a day of oil output. MEND is thought to be responsible for a large number of attacks on oil infrastructure in the restive region.

    The ceasefire was a negative price signal, according to Andy Riddell, energy broker at ODL Securities in London.

    While the market still showed signs of indecision, Riddell said the bears could be gaining ammunition.

    “The bears will argue that as we have failed to break through recent highs in a rampant bull market the end may now be in sight,” Riddell said.

    While some participants suggest the market is topping out by failing to reach new highs, the price rally could still gather steam.

    “We always wait for some strong supports to give way before jumping on the reversal bandwagon,” said Clive Lambert of FuturesTechs.

    “Every time the market’s got down to the key area of support in the low $130s we’ve suggested buying the weakness. Friday was no exception, and once again it proved to be the right decision,” Lambert said.

    —By Lananh Nguyen, Dow Jones Newswires

  10. 10
    tater Says:

    Thank you Sambone, I really appreciate that you are posting, it’s nice to not have to attempt to listen to CNBC for market updates.

  11. 11
    tater Says:

    Nicky and everybody else too!

  12. 12
    Dman Says:

    Hi Nicky – well, you were asking if the Saudis would disappoint. I’d say they’ve left the shorts high & dry (and underwater all at the same time).

  13. 13
    Sambone Says:

    T – I found that Dow Jones is clearer than the talking heads on CNBS

  14. 14
    Dman Says:

    Sam, according to accuweather it is all quiet in the tropics. Are you seeing anything?

  15. 15
    Sambone Says:

    9:23 am EST, Monday, June 23

    Oil Down As Saudi Meeting Matches Expectations

    By Brian Baskin
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures fell slightly Monday, as Saudi Arabia’s pledge Sunday to increase output came as no surprise.

    Light, sweet crude for August delivery traded 71 cents lower at $134.65 a barrel on the New York Mercantile Exchange. Monday marks the start of trading the August contract as the front month. Brent crude on the ICE futures exchange traded $1.02 lower at $133.84 a barrel.

    Saudi Arabia raised its production by 200,000 barrels a day to 9.7 million barrels a day at a meeting it held in Jeddah over the weekend. While this move was widely anticipated, the world’s second-largest oil producer said it would raise capacity to 12.5 million barrels a day in 2009 and 15 million barrels a day further out.

    The latter disclosures were intended to reassure the market that there will be enough oil to meet world demand far out into the future. But the meeting failed to soothe market fears of a long-term supply and demand imbalance.

    “This is in some sense a no confidence vote in the Saudi summit,” said Jim Ritterbusch, president of trading advisory firm Ritterbusch & Associates.

    The Jeddah meeting may have been overshadowed in the short term by some of the worst production problems in Nigeria in 25 years. Militant attacks had already cut production by up to 1 million barrels, while a strike by Chevron Corp. (CVX) workers is seen reducing output by another 350,000 barrels a day.

    Nigeria produces a high-quality oil well-suited to produce distillates, including heating oil and diesel. For now, supplies of those fuels are seen coming under strain from rising Asian demand, even after China raised prices on Friday.

    “Clearly the market for gas oil (and) diesel is dominated both by firm demand and tight supply,” wrote analysts at JBC Energy in Vienna.

    Front-month July reformulated gasoline blendstock, or RBOB, recently traded down 1.25 cents, or 0.4%, at $3.4267 a gallon. July heating oil traded 4 points lower at $3.7713.

    —By Brian Baskin, Dow Jones Newswires

  16. 16
    Sambone Says:

    D – Nothing on my radar for the next several days. All quiet at this point.

    http://www.ssd.noaa.gov/goes/east/tatl/loop-rb.html

  17. 17
    Sambone Says:

    Key Producers Struggle To Pump Oil

    By DAVID BIRD
    A DOW JONES NEWSWIRES COLUMN

    NEW YORK — As Saudi Arabia pledged Sunday to lift oil output next month by 200,000 barrels a day to a 27-year high of 9.7 million barrels a day, consider a chilling set of numbers that speak to why oil prices are near $140 a barrel.

    Oil output in four of the top five suppliers to the U.S. — the world’s biggest oil consumer — dropped by nearly 1 million barrels a day last year.

    Some of the declines were based on politics — Saudi Arabia, Nigeria and Venezuela are members of OPEC, which has restrained output. And the Saudis have pledged to more than offset the dropoff.

    But among other top suppliers, Nigeria has been wracked by civil unrest in its oil producing region, while fields in Venezuela and non-OPEC Mexico are showing strains of age and under-investment. Even Canada eyes lower long-term output amid regulatory scrutiny of its vast oil sands production.

    A senior Nigerian oil official on Sunday said Nigeria’s output now stands at a 25-year low, between 1.2 million and 1.5 million barrels a day, with 900,000 to 1 million barrels a day shut in due to attacks in the Delta region.

    The numbers underscore the notion that even if the Saudis agree to crank up output, there’s a deeper long-term supply issue to overcome. With escalating geopolitical tensions surrounding Iran — OPEC’s number two producer — oil output declines and unrest in key corners of the oil patch, prices may stay at extremely lofty levels for a long time.

    Figures from BP’s annual statistical review, which include crude oil, shale oil, oil sands and natural gas liquids in their count, show output from Saudi Arabia, Mexico, Nigeria and Venezuela dropped by 959,000 barrels a day in 2007.

    Canada, the top source of U.S. crude oil imports since June 2005, added 101,000 barrels a day of output last year, trimming the output shortfall from the main U.S. suppliers to 858,000 barrels a day.

    Rising Angola Flows To China

    Still, BP data show, output rises from other countries, like Angola, Russia, Iraq and Qatar, trimmed the 2007 global output drop to just 126,000 barrels a day, the first decline since 2002. Oil demand rose by near 1 million barrels a day, BP reckons.

    Wellhead production can ebb and flow and export may swing from month-to-month, and total imports from the top 5 held relatively at around 7 million barrels a day of volume, or near 70% of imports. But there are reasons to be concerned about emerging trends that are also impacting mid-level suppliers.

    Angola showed the fastest growth rate of any oil producer last year — a whopping rise of near 21%, or 300,000 barrels a day — to 1.7 million barrels a day.

    But the world’s fastest growing oil producer has hooked up with the fastest growing oil consumer. In the first four months of 2008, Angola has become China’s top source of crude imports, with a surge of nearly 43% to 660,000 barrels a day. Angola accounted for 18.4% of demand in China, the world’s second-biggest oil consumer after the U.S.

    U.S. imports from Angola slid 15.6%, or about 85,000 barrels a day in the first four months of the year, and it ranks as the seventh biggest crude source, down from sixth in the 2007 period.

    Ascendant Angola has passed Nigeria as Africa’s largest oil producer in the past two months, as violence in the Delta region has cut Nigerian output.

    Nigeria Heading To 20-Yr Low?

    Amid the latest unrest, Shell declared force majeure on deliveries of 225,000 barrels a day of Bonga crude for June and July. Chevron confirmed a production shut-in in recent days and French news agency AFP quoted industry sources saying the company declared force majeure on deliveries of 120,000 barrels a day of crude.

    Even though the U.S. gasoline market is slumping amid record high retail prices above $4 a gallon, U.S. refiners are strongly reliant on supplies of Nigerian light, sweet crude oil, which is easy to refine and yields high gasoline volumes.

    In April, latest data show, the U.S. imported 1.1 million barrels of Nigerian crude, making it the fourth largest crude supplier, with 11.2% of imports.

    Nigeria has pushed ahead of Venezuela as a top supplier to the U.S. Volumes from Caracas have dropped even before the country cut off oil sales to Exxon Mobil in a dispute over the nationalization of oil facilities in Venezuela.

    For Mexico, the giant Cantarell oil field is showing its age and declining faster than had been expected. The country is struggling to hold the line on output, with energy ministry officials warning that by 2016 or before Mexico could be a net importer of crude, if the current situation continues.

    State oil company Petroleos Mexicos said Friday that crude oil output in June has risen to above 2.8 million barrels a day from a nine-year low in April, but still below the company’s target of 2.9 million barrels a day for the month.

    In the first five months of the year, Mexico’s output averaged 2.86 million barrels a day, down 9.3% from a year ago.

    U.S. Energy Information Administration data show that crude imports from Mexico have dropped by 16.4% in the first four months of the year from January-April 2007. Mexico dropped to third place from second so far this year in the table of top suppliers to the U.S., trading places with Saudi Arabia, the world’s largest oil exporter.

    Signals From The Saudis

    In light of oil price climbing to record levels near $140 a barrel, Saudi Arabia’s King Abdullah called the meeting of major oil producing and consuming countries held Sunday in the Red Sea city of Jeddah.

    Saudi officials confirmed earlier indications that the kingdom would produce 9.7 million barrels a day in July. That’s less than the 10 million barrels a day level hinted at earlier.

    The Saudis also said they could increase oil output capacity expansion plans further if needed. Capacity now at around 11.4 million barrels a day is scheduled to rise to 12.5 million barrels a day by the end of 2009, but officials now say capacity could be raised to 15 million barrels a day within the next decade.

    While Canada has lifted exports to the U.S. to near 2 million barrels a day in April, the outlook for supplies from the north isn’t completely benign. While refiners have invested in upgrades to handle Canadian crude produced from tar sands and turned into liquid form, the process brings heavy environmental concerns. Producing oil from tar sands produces more pollution-causing greenhouse gases than conventional oil, drawing higher scrutiny amid growing global-warming concerns.

    There’s no direct assault on oil-sands crude imports, but comments from some in Congress have raised concern among Canadian authorities. Energy officials in Canada have commented about the nation’s ability to export the crude to Asian markets, if the U.S. turns sour on oil sands. On Wednesday, the Canadian Association of Petroleum Producers revised downward by about 180,000 barrels a day its expectation for demand for oil sands crude in 2015, amid rising costs and regulatory scrutiny.

    David L. Goldwyn, president of Goldwyn International Strategies in Washington, said he’s optimistic that growing supply from Brazil, Saudi Arabia and perhaps Libya and Angola will make its way to the U.S. market in the medium term.

    But, the former assistant secretary of energy for international affairs in the Clinton administration warned, in Nigeria the “outlook is bad for the next year or so.”

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

    — By David Bird, Dow Jones Newswires

  18. 18
    Dman Says:

    Nicky, what’s with the broad market? Have they given up giving up?

  19. 19
    Pete Says:

    So far today I believe Z would have liked this color shade on his screen

  20. 20
    uop Says:

    Oil exploration and Refining UP.

    WHY ?

    Plenty of oil around.

  21. 21
    uop Says:

    CHK, HK, PQ flying.

  22. 22
    pwdrhound Says:

    Any thoughts on OIS? With all of the new exploration taking place does this exploration services and products company have further upside? It has been on a nice uptrend since March, earnings due 7/28.

  23. 23
    irished Says:

    Almost everything is green today because we are brilliant. Z says buy this, we buy. Rocket scientist that I am, that is pretty simple for us simpletons!!!.

  24. 24
    Nicky Says:

    Morning all.

    Yes Dman it looks like the market is disappointed with the Saudis. That said why would they pump more oil that nobody wants? Also I read it that they would pump more oil if it was needed so that would seem to be fine to me. But somehow you just know the market wanted to be disappointed!

    Nobody is talking about the MEND ceasefire – just the number of barrels off the market in Nigeria.

    My take is that if as so many say speculators are not running this market then take the speculators out of the market (they won’t complain surely as they aren’t in it!!) and then let’s see what happens. If it really is a supply and demand problem the market will hold up.

    Near term we still appear to be in a triangle that could reach up to between 138 – 139 before another sell off.

  25. 25
    Nicky Says:

    Broader market. Looks like a slightly lower low is needed. Dow has very good support in the 11700 – 750 level and spx at 1305. If this is made on technical divergences it should set up a decent bounce. Probably back to the 12070 area in the Dow and 1344 in the SPX.

    I would be remiss however if I did not warn you of a very bearish chart pattern that is presenting itself. It is not my preferred count but its out there!

    The upcoming bounce is a wave ii with a iii of iii down to come. This could take the markets SUBSTANTIALLY lower. ie the Dow would go well below 10,000. Its likely that oil could shoot up towards $200, gold up, $ down. Without a doubt in my view this would be caused by an attack on Iran and would cause markets to collapse worldwide.

    My preferred count says that the upcoming drop will not be as severe and the market puts in a decent rally into the election. That said I would still expect the lows earlier this year to be tested and most likely exceeded.

  26. 26
    bill Says:

    GDP did a deal in haynesville up 13 %

  27. 27
    Dman Says:

    Nicky, if energy keeps on this way I think your downside DOW & SPX tests will be indeed be quite spectacular.

    I just saw this article on the MEND ceasefire:

    http://www.csmonitor.com/2008/0623/p99s01-duts.html

    I think maybe one reason the ceasefire has been met with a yawn is that these noises have been made before & nothing ever seems to come of them. Also, they just finished one of their biggest attacks, so it looks like a tactical move to try to avoid the heat coming down on them.

  28. 28
    crysball Says:

    China Oil Demand
    Kevin Houser of the Rhodium Group [an energy expert on gas/oil/coal/electricity in China just completed a lengthy interview on Bloomberg, and UNEQUIVAOCALLY stated the recent [Friday] price increase for oil, due to the peculiar economics of the Chinese economy.

    He also stated the only way oil demand in Chain would decrease would be if China ha a SEVERE recession……which is highly unlillely.

  29. 29
    crysball Says:

    China Oil Demand

    typo……….should have said

    UNEQUIVOCALLY stated due to the peculiar economics of the Chinese economy, the DEMAND for Oil will actually increase…..

  30. 30
    el_vogel Says:

    Hi all –
    Just checking in, not much to contribute so I won’t clutter the board, but what an amazing day…

  31. 31
    kiaora Says:

    Can someone direct me to a list of the Haynesville players? re #26

  32. 32
    scoop006 Says:

    Re # 31 Go to upper left hand of page “Z SCRREENS”

  33. 33
    Dman Says:

    Hey scoop, what have you got yer eye on ?

  34. 34
    scoop006 Says:

    D- Bought “X” puts July $165 avg. cost now $3.50 & “X” put July $190. @ $.9.70. I think the stock pulls back after the GS upgrade.

  35. 35
    apbd Says:

    What a beautiful day. Everything is green and in bloom. LOL
    apbd

  36. 36
    BossmanG Says:

    Anyone planning to sell anything ahead of this weeks fed?

  37. 37
    irished Says:

    Have sold some already. Last week was too ugly and painful. I want to get to a level of Z, closer to 50% cash. Still have a few dogs however.

  38. 38
    irished Says:

    Just sold half CHK 55 with about 250% profit and it still going up. What a stock ZMAN!!!

  39. 39
    scoop006 Says:

    sold all my July CHK $65 calls @$4.60 today bought Fri.6/20 @$3.10.

  40. 40
    irished Says:

    scoop
    did likewise earlier as well. still have 1/2 of CHK 55 that I plan to exercise some. Taking Z’s concept of buying stock with some profits so I do not go crazy buying options. I can be crazy fool sometimes. Some days brill ant and other days an absolute bumbling idiot, sometimes in the same day.

  41. 41
    scoop006 Says:

    # 40 my sentiments exactly

  42. 42
    irished Says:

    hasta manana

  43. 43
    italyinvestor Says:

    Sold my CHK 65s as well today – hoping for the proverbial pullback. For those interested i’ll work on a short piece on MEND – i’ve got a bit of experience with miscreants. I’ll probably send it to Z to post somewhere if there is any interest or anything unique discovered.

  44. 44
    jsaun14 Says:

    IOC had a solid gain after retreating from the whacky close last week…

  45. 45
    Fred Says:

    The refiners time maybe nearing:

    http://www.bloomberg.com/apps/news?pid=20601213&sid=aC42xa9nwu5A&refer=home

  46. 46
    gbennett Says:

    Anyone have an analysis of GMXR?

  47. 47
    crysball Says:

    Regarding CHK Jul 65 Calls
    Hold or fold(and take a profit)???
    Zman indicated CHK would likely announce HS well results prior to July options expiration.

    Have obtained some hints of the outcomes of recent CHK HS wells [data source as published in the Shreveport, LA Times newspaper over the wekend], which has lead me to continue to hold CHK Jul 65 Calls:

    Latest CHK Haynesville Completion!!!!!!!!
    What a joke!!!! Production of 1.488 mmcfe/day on a 3/64-inch choke!!!! That thing was barely open and produced 1.5 mmcfe!!! What is the well capable of producing to the pipeline today on full production????????

    This is one of the many CHK producing wells and wells being drilled in the Johnson Branch and Bethany-Longstreet Fields

    Caddo Parish
    COMPANY: Chesapeake Operating Inc., HA RA SUA; Williams 22 H: 3, 235919. WHERE: Caspiana Field, S. 22, T. 15N, R. 15W. DAILY PRODUCTION: 1,488 mcf gas on 3/64-inch choke; 0 barrels water. PRESSURE: 7,600 lbs. SPECIFICS: Haynesville RA; perforations, 11,734-14,650 feet, depth, 14,725 feet.
    .
    Here is another nice completion in a much swallower level in the Hosston formation.
    .
    Lincoln Parish
    COMPANY: Chesapeake Operating Inc., HOSS SU29; Brown 11: 1-Alt., 237038. WHERE: Simsboro Field, S. 11, T. 17N, R. 4W. DAILY PRODUCTION: 2,283 mcf gas on 22/64-inch choke; 6.68 barrels 59 gravity condensate; 26 barrels water. PRESSURE: 850 lbs. SPECIFICS: Hosston; perforations, 8,297-8,414 feet, depth, 9,523 feet.
    .
    http://www.shreveporttimes.com/apps/pbcs.dll/article?AID=/20080622

    It takes some reading between the lines to interpret, however the near 1.5 million cubic feet flow rate on a 3/64 choke is pretty impressive…..and hints of future announcements which will drive not only CHK, but other players in the field [note QBIK leasehold is surrounded by GDP & CHK.

  48. 48
    Bleemus Says:

    Pardon the stupid question crysball but is there any pattern to when you could expect them to announce well results?

    I took half my positions of the CHK 65s off yesterday and thinking about the timing of the second half.

  49. 49
    crysball Says:

    Re: CHK HS progress report timing
    No insight on timing, except Zman’s comments last week that CHK has a pattern of ‘managing’ announcements in between Quarterly results…and he expected some announcement prior to July option expiry.

    Jay Reynolds may have some additional insight on CHK activities in HS as he is ‘on the scene’ in NW Louisiana, and an update from his ‘HAIR ON FIRE’ level of activity.

  50. 50
    Bleemus Says:

    Independent Refiners: Q2 ests fall in tough refining environment; lowering ests and tgt prices – Credit Suisse

    Credit Suisse reduces most of their U.S. independent refiner EPS ests for 2Q08 due to the following factors: Lower actual realizations vs. benchmark refining margins due to continued wide negative spreads on heavy ends. Higher natural gas prices increasing operating costs. Weak wholesale and retail marketing margins given weakening end-user demand. Based on the above mentioned factors, firm is adjusting their EPS ests for the Independent Refiners, and as a result, their 2Q08 and FY08 EPS ests fall on average by 33% and 31%, respectively. Firm is also lowering the following refiners’ target prices to reflect the challenging refining environment that is expected to persist in 2008.

  51. 51
    Pete Says:

    crysball thanks for the heads-up on the Jul 65 CHK calls

  52. 52
    Bleemus Says:

    Thanks Crysball.

  53. 53
    isleworth Says:

    Jefferies is raising their price tgt on GDP to $84 from $82. Firm notes that GDP announced a small bolt-on acquisition in North LA for $1,150 per acre, which they view as an exceptional deal for GDP. Jefferies says GDP has added a prospective Cotton Valley/James Lime asset base with significant Haynesville Shale potential that should serve to grow production and cash flow for the foreseeable future.

  54. 54
    tater Says:

    Just a quick reminder for anybody in SLB that there is price resistance to this move at 109.68 from the gap on the chart back in Oct ’07. Doesn’t mean it will stop there, just something to consider in risk/reward targets.

  55. 55
    ram Says:

    Did anybody see a negative comment on OII?

  56. 56
    Bob Says:

    ram -OII cut to add from strong buy by Capitol One; = buying opportunity?

  57. 57
    ram Says:

    I think OII is a buying opp. Since their 2nd qrtr release is 7/31, I will probably look at AUG or OCT.

  58. 58
    Nicky Says:

    Morning all. As expected the SPX made a test of support at the 1295 – 1305 area. This I think may have concluded this wave down in which case we can look for a 3 wave bounce to test at least the 1340 area.

  59. 59
    ram Says:

    Thanks BOB.

  60. 60
    ram Says:

    Good Morning Nicky. Do you have any thoughts on the energy complex?

  61. 61
    Bob Says:

    ram- I have nibbled on the OII Aug 85’s today. Hopefully last summer’s chart will repeat. First tropical disturbance should move it.

  62. 62
    Nicky Says:

    Ram – my best guess with the energy complex is that the triangle count is still playing out. D may have concluded this morning at 138.80. Lower highs are being made and if this count is right I would expect us to dip below 134 possibly below 132.

  63. 63
    italyinvestor Says:

    Finally got my O&G Investor May issue and right there on pg 85 is a 5 page special on Haynesville. Tucked in a inset story is another small player – The Meridian Resource Corp. From their press release:

    HOUSTON, April 17, 2008 (PRIME NEWSWIRE) — The Meridian Resource Corporation (NYSE:TMR) today announced results of recent field exploitation and development activities, increased production and reserve additions. Recent activities in several of the Company’s south Louisiana fields have proven successful in scope and targets to arrest declines in production rates while the Company focuses on exploration and development of other play opportunities…

    Recently, the Company has leased positions in the north Louisiana region targeting multiple prospective formations, including the Cotton Valley and Haynesville shale. The Company has budgeted for a minimum of two wells for this region for 2008.

    Nothing in their latest presentation and nothing easy to find on the website. An OCT 07 presentation showed a big ellips over the Haynesville but that is it.

    The company’s stock has been flat and is likely in the single digits for good reasons, but it seems to have been missed by the Haynesville mania. It would be interesting to know where their land is, if they have any at all.

  64. 64
    ram Says:

    Thank you Nicky.

  65. 65
    Hoss Says:

    WFT

    Wachovia 18th Annual Nantucket Equity Conference

    Weatherford International Ltd.

    Wednesday, June 25, 2008 @ 11:15 a.m. ET

    http://www.wsw.com/webcast/wa50/

    Registration required

  66. 66
    occam Says:

    re TMR. Be careful. I have heard that management may have siphoned lots of cash out of the company.

  67. 67
    scoop006 Says:

    Hi, Anyone have an opinion on TSO July $22.50 calls? 56,000+ contracts today

  68. 68
    Fred Says:

    Latest on the oil speculation discussion:

    http://www.marketwatch.com/news/story/gas-could-fall-2-if/story.aspx?guid=%7B2673C102%2D68E0%2D41D9%2D9C9A%2D10EE2E723948%7D&dist=TNMostRead

  69. 69
    Fred Says:

    Scoop – rumor on TSO board about a SUN merger. Disclosure I own the TSO common.

  70. 70
    ram Says:

    It seems like alot of bottom fishing in all the refiners.

  71. 71
    ellwodo Says:

    CHK – The pattern so far has been a big move up every time a small Haynesville player issues news. Whenever there is finally news from a major player (e.g. CHK or HK)there should be an even bigger move. If you want to bet that happens in the next few weeks, take a look at the CHK July 70s, now ask $2.10 after a high for the day of $2.90. (Disclosure: I’ve already taken that bet today).

  72. 72
    doc Says:

    Anyone have any ideas on mmr? Stock is very weak. Sellers come in on any uptick

  73. 73
    irished Says:

    Just read there was some large “recent” (do not know when) insider buying of TSO. But have to admit, just repeating what I read with no investigation by me.

  74. 74
    jsaun14 Says:

    I was thinking about nibbling some more on those MMRHH’s, but the stock doesn’t seem to have any momentum lately.

    Even when sector volatility produces a pop, MMR moves w/ it half-heartedly.

    Hm…

  75. 75
    irished Says:

    my sentiments exactly on MMR. Been sitting on them awhile, it sometimes almost breaks even, then goes down around 15-20 percent and that is it. Nowhere forward fast and just spinning its wheels. Almost sold it last week at break even but did not. Will probably dump them next chance.

  76. 76
    Fred Says:

    I found some more info on TSO July $22.50 calls.

    http://seekingalpha.com/article/82526-tuesday-options-update-tso-qid-xrt-lly-ek-bac-ntap?

  77. 77
    irished Says:

    good man Fred. That was what I read this morning.

  78. 78
    scoop006 Says:

    TY FRED

  79. 79
    jsaun14 Says:

    irished –

    I was thinking about that too, but all the common holders are fired up for forthcoming blackbeard update. I debating whether to wait around or not.

  80. 80
    jsaun14 Says:

    Irished –

    I was thinking about the dump too, but aren’t both Z and the common holders anticipating news in July (besides earnings)?

  81. 81
    jsaun14 Says:

    Double-fault and a grammar penalty…Sorry gang.

  82. 82
    Popeye Says:

    It’s a bloody red day on my screen. Where is the love today.

  83. 83
    crysball Says:

    NEW YORK, June 24 (Reuters) – U.S. oil production and reserves were flat in 2007 as oil companies faced challenges in finding investment and production opportunities, according to an Ernst & Young report to be released later this week.

    U.S. oil production of the companies analyzed for the report was 1.2 billion barrels for the fourth straight year. Proved oil reserves ended the year at 16.1 billion barrels, flat with 2006.

    Ernst & Young said the results for the report were gleaned from publicly available information from the U.S. operations of 40 exploration and production companies that hold about 74 percent of U.S. oil reserves and 68 percent of total U.S. gas reserves.

    The companies’ natural gas reserves and production for the year increased 7 percent to 138.6 trillion cubic feet and 10.2 trillion cubic feet, respectively.

    Oil companies have struggled to replace new production in recent years due to restricted access to new fields, project delays and other factors.

    The lack of reserves growth has left some analysts worried about the companies’ long-term growth prospects even as oil prices have doubled over the last year.

    The costs incurred by the companies analyzed for the report fell 16.5 percent to $96.6 billion in 2007 as acquisitions of both proved and unproved assets dropped dramatically. They raised their spending to develop already-owned properties by 28 percent. (Reporting by Michael Erman; editing by Jeffrey Benkoe)

  84. 84
    ram Says:

    At least on the selling today, the volumes seem to be below average.

  85. 85
    irished Says:

    You are all right on MMR which is probably why I have not sold it. Just red is ok for my hair, but not my options.
    Adios.

  86. 86
    Sambone Says:

    8:32 am EST
    Saudis Foil Large-Scale Oil Field Attack — Al Arabiya

    Dow Jones Newswires

    DUBAI — Saudi Arabia has foiled a large-scale attack on oil fields in Yanbu on the Red Sea and in the Eastern Province involving militant groups in Iraq, Al Arabiya TV reported Wednesday.

    Saudi security forces have so far detained 701 suspects, Al Arabiya reported.

    The suspects are of Saudi, Arab, Asian and African origin, the news channel added.

    —By Reem Shamseddine, Dow Jones Newswires

  87. 87
    Sambone Says:

    8:39 am EST

    Crude Flat, Traders Wait For Inventories, Fed

    Dow Jones Newswires

    [Dow Jones] Nymex crude is trading flat to lower ahead of the 10:35 am EDT release of weekly US oil stockpile stats. Analysts expect the data to show US crude stocks fell by 900,000 bbls last week, gasoline stocks shrank by 100,000 bbls while distillate fuels rose by 1.9 million bbls. Refinery use is seen climbing by 0.3 percentage point to 89.6% of capacity. Nymex Aug crude -34c at $136.66/bbl. (greg.meyer@dowjones.com)

    Reported Earlier:
    LONDON — Crude oil futures strayed little from Tuesday’s closes Wednesday as traders opted to wait for the latest readings on U.S. oil inventory levels and an interest rate decision from the U.S. Federal Reserve due later in the day.

    Traders also continued to monitor shifting developments in Nigeria where a spate of militant attacks have crippled the country’s output and a threat of strike action has raised concerns of further shut-ins.

    At 1116 GMT, the front-month August Brent contract on London’s ICE futures exchange was up 32 cents at $136.78 a barrel.

    The front-month August light, sweet, crude contract on the New York Mercantile Exchange was trading 4 cents higher at $137.04 a barrel.

    The ICE’s gasoil contract for July delivery was up 75 cents at $1,240 a metric ton, while Nymex gasoline for July delivery was down 80 points at 345.55 cents a gallon.

    The U.S. Department of Energy’s weekly inventory snapshot will show U.S. crude oil inventories dropped by 900,000 barrels last week, the average of a Dow Jones survey of 13 analysts’ forecasts suggests. Gasoline inventories are expected to have shrunk by 100,000 barrels, while stocks of distillates, which include heating oil and diesel, are predicted to have risen by 1.9 million barrels.

    Refinery use is seen climbing by 0.3 percentage points to 89.6% of capacity.

    If the data does reveal a draw in crude stocks, it will represent the sixth straight week of declines. Many analysts have suggested that the fall in stocks owes less to a tight supply situation, and more to reduced demand from U.S. refiners given high storage costs and lower refinery runs. Meanwhile, the markets will also be eager to get a fresh insight on demand for oil products.

    “In the weekly stats we will focus on the distillate demand and stock number as heating oil carries most of the refinery margin and is the key support pillar to the oil complex,” said Olivier Jakob, managing director of consultancy Petromatrix in Switzerland.

    Strong demand for distillate products such as diesel — particularly from China as it both prepares for this summer’s Olympics and recovers from the recent earthquake — has contributed to crude price strength in recent months, and has helped offset the impact of relatively weaker U.S. demand for gasoline. A report from MasterCard Advisors LLC, revealed Tuesday that U.S. gasoline demand in the latest four weeks was down 3.6% from a year earlier.

    Beyond the DOE release — due 1435 GMT Wednesday — the crude market, alongside all financial markets will be poised to learn the Federal Reserve’s Fed Funds rate decision due 1815 GMT. The decision itself may take secondary importance to the accompanying comments, however.

    “Although markets expect no change here, participants are nervous about the Fed’s inflation wording. Stronger language could send the dollar higher, thus creating more downward pressure on energy prices, while talk about flagging growth could be a signal for further rate decreases and potentially higher commodity prices,” said Edward Meir, analyst at MF Global in New York.

    Nigeria’s supply scenario remains fluid, meanwhile, with fresh developments reaching the market on near-daily basis. Royal Dutch Shell reported late Tuesday that its 225,000 barrel-a-day Bonga offshore field has resumed production after militant attacks forced a suspension of operations last week. Precise details of the restored output levels remain uncertain, however.

    Meanwhile, Chevron announced late Tuesday that it has declared force majeure at its Escravos facility, a move that indemnifies it against missing contracted deliveries due to circumstances beyond its control. The move comes after Nigerian militants blew up a key oil supply pipeline last week, slashing output by 120,000 barrels a day at Escravos, according to industry sources. Chevron said the Escravos terminal is still operating but wouldn’t release production figures.

    The U.S. company faces further challenges from striking workers at its Nigerian operations. Pengassan union staff at Chevron launched a strike on Monday after weeks of talks broke down over safety standards, staffing and the removal of the company’s head in Nigeria. A union official said Tuesday that it would shut down production if Chevron is not forthcoming on their demands. Chevron’s Nigeria production is around 350,000 barrels a day from around 30 fields.

    —By Nick Heath; Dow Jones Newswires

  88. 88
    Sambone Says:

    By Gregory Meyer
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–Crude oil futures shifted lower Wednesday in calm
    trading ahead of the release of closely watched weekly U.S. oil inventories.
    Light, sweet crude for August delivery was recently down 56 cents, or 0.4%, at
    $136.44 a barrel on the New York Mercantile Exchange. Brent crude on the ICE
    futures exchange fell 36 cents to $136.10 a barrel.
    Trading was muted ahead of the Energy Information Administration’s scheduled
    10:35 a.m. EDT release of weekly data on U.S. oil stockpiles. Analysts expect
    the report will show crude stocks dropped by 900,000 barrels to about 300
    million barrels last week, making a sixth straight weekly decline. Crude stocks
    are in the lower end of the average range for this time of year.
    “We’ve seen a number of consecutive draws in crude oil inventories,” said
    Peter Donovan, vice president at Vantage Trading on the Nymex floor. “Another
    draw continues to be bullish for our market.”
    Analysts expect the data will show gasoline stocks shrank by 100,000 barrels
    last week, while stocks of distillates, which include heating oil and diesel,
    rose by 1.9 million barrels. Refinery use is seen climbing by 0.3 percentage
    point to 89.6% of capacity.
    Also front and center will be Wednesday’s conclusion of a two-day meeting of
    the Federal Reserve’s monetary policy committee. Market watchers cautiously
    anticipate the committee will hold its benchmark interest rate at 2%, but
    “participants are nervous about the Fed’s inflation wording,” said Edward Meir,
    an analyst at brokerage MF Global. “Stronger language could send the dollar
    higher, thus creating more downward pressure on energy prices, while talk about
    flagging growth could be a signal for further rate decreases and potentially
    higher commodity prices,”
    The rate announcement is expected at 2:15 p.m. EDT, 15 minutes before the
    close of Nymex pit trading.
    Worries over oil supply stability reemerged Wednesday after Al Arabiya TV
    reported Saudi Arabia has foiled a large-scale attack on oil fields in Yanbu on
    the Red Sea and in the Eastern Province involving militant groups in Iraq.
    Saudi security forces have so far detained 701 suspects, Al Arabiya reported.
    In Nigeria, Royal Dutch Shell PLC reported late Tuesday that its 225,000
    barrel-a-day Bonga offshore field has resumed production after militant attacks
    forced a suspension of operations last week. The militants responsible for the
    attack, the Movement for the Emancipation of the Niger Delta, or MEND, said in
    an email to the group had fired warning shots at the Nigerian military and
    threatened to call off a unilateral ceasefire “at the slightest provocation or
    threat.”
    Chevron Corp. (CVX) announced late Tuesday it has declared force majeure at
    its Escravos facility in Nigeria, which indemnifies it against missing
    contracted deliveries due to circumstances beyond its control. The move follows
    a militant attack on a key oil supply pipeline last week, slashing output by
    120,000 barrels a day at Escravos, according to industry sources. Chevron is
    also facing labor problems, with a white-collar union launching a strike strike
    at the company’s Nigerian operations Monday.
    Front-month July reformulated gasoline blendstock, or RBOB, fell 1.45 cents,
    or 0.4% to $3.4490 a gallon. July heating oil fell 36 points, or 0.1%, to
    $3.8100 a gallon.

    -By Gregory Meyer, Dow Jones Newswires; Dow Jones Newswires
    06-25-08 0935ET

  89. 89
    isleworth Says:

    Coker & Palmer raises their HK tgt to 65 from $38, noting that information flow out of the Haynesville Shale continues get better, although companies have been reluctant to provide significant well data. Firm says that given recent market data, the Haynesville could more than double the co’s current value and augment its already impressive growth rate. With the bulk of the land grab in the latter innings, they think companies should be more forthcoming with information as the 2Q08 conference calls approach.

  90. 90
    ellwodo Says:

    Any guesses on why the big sell off in the Haynesville players?

  91. 91
    Dman Says:

    Morning all,

    just bought some July EOG 125s as a way to dip a toe into this decline

  92. 92
    Popeye Says:

    Everything energy on my screen is on sale today.

  93. 93
    Dman Says:

    Oops: correction: EOG 130s

  94. 94
    Sambone Says:

    Nothing in GOM/Atlantic at this time of interest.

    http://www.ssd.noaa.gov/goes/east/tatl/loop-rb.html

  95. 95
    Dman Says:

    ellwodo: very broad selling in energy today ahead of inventories. In general the stocks are extended & they don’t come much more so than the Haynesville players. For the moment, this suggests the good news is priced in, but I think Z would say that longer term the fundamentals are still improving. Also doesn’t help that the companies are keeping a lid on the news to an extent, which will create buying opportunities at times. Maybe soon (???)

  96. 96
    ellwodo Says:

    Thanks, preferably sooner than later.

  97. 97
    Dman Says:

    Just added some NFX Sep 65s and a starter in some DITM CHK calls. Small buys & now I’m done for a while in case this meltdown continues …

  98. 98
    el_vogel Says:

    anybody have the results of the inventory report?

    NFX taking a bloodbath today.

  99. 99
    Dman Says:

    Sam, thanks for the Atlantic update & keep ’em coming. Glad it’s you interpreting the pics & not me 🙂

  100. 100
    sane Says:

    EIA

    Crude UP 800K
    Gasoline Down 100K
    Distillates UP 2.8M

  101. 101
    Dman Says:

    Meldown duly continuing on the inventories data. Broad market happy … I seriously doubt those two things can go on for long, but I’m using price, not time, as a buying guide. Would like more CHK but there is that gap at $56-58 to fill at some stage …

  102. 102
    scoop006 Says:

    WOW, This is ugly. Just bought RIG$150,DVN$125,CHK$65, All August calls

  103. 103
    Dman Says:

    Scoop, X approaching where support might lie. Sold those puts yet?

  104. 104
    VTZ Says:

    I think I’m sitting out on the sidelines for now and just holding the longer dated options.

  105. 105
    kiaora Says:

    Cramer is adding six energy names into this selloff

  106. 106
    crysball Says:

    Temporary SECTOR ROTATION out of energy, accelerated by this mornings EIA inventory report. is being alleged by the talking heads on Bloomberg in interviews this AM.

  107. 107
    scoop006 Says:

    Dman, Not yet contemplating taking $1 loss

  108. 108
    Popeye Says:

    Z sure picked a good week (so far) to take the money and run.

  109. 109
    el_vogel Says:

    Seriously considering taking more of a ‘straddle’ option approach as opposed to call-only — it seems like there’s an increasing likelihood of days/weeks like this to come… anybody on the board already doing this?

  110. 110
    Dman Says:

    Kiaora: plenty to like out there. Looking to get into some service names, eg OII for hurricane season.

  111. 111
    Dman Says:

    Just took a few January DITM calls on OII, will build on this if it falls further prior to any tropical excitement

  112. 112
    Dman Says:

    Nicky, you out there to tell us about what’s in the mind of the broader market?

    Looks like the Nigeria ceasefire yesterday may have prepped the oil markets for a selloff on a fairly minor inventory build (but the 1st in about 6 weeks, so why not get excited about it?)

    All history points to the ceasefire collapsing, but that’s tomorrow’s news, not today’s.

  113. 113
    sane Says:

    API

    Crude UP 1.2M
    Gasoline UP 1.1M
    Distillate UP 3.2M

  114. 114
    sane Says:

    API Correction Crude UP 1.6

  115. 115
    Dman Says:

    Tater: nice call on SLB falling back from support. What’s your take on the consolidation pattern there?

  116. 116
    tater Says:

    Thanks Dman, moving quickly into a couple of names, I will try to get an analysis to you in a bit here, but as for SLB

    Price currently retraced back to 20 EMA at $103, next support at $101ish for the 50 EMA and there is price range pattern support at $98.
    SLB has to get up enough momentum to get past the $110 mark, and I think that is going to take some news.

    As for this general rotation talk, I’ve been reading a bit of that myself and I have as yet to be convinced by the volume of the sell-off in energy. I guess that’s what makes a market. USO has big support around 104 at the bottom of the gap from that big Friday pop a couple of weeks ago.

  117. 117
    irished Says:

    Also just bought some Aug 65 CHK, Z’s cash cow. I like to stay with the horse until it proves otherwise.

  118. 118
    jsaun14 Says:

    How about getting into some WLL 105’s? It’s made this move several times.

  119. 119
    Dman Says:

    Thanks tater.

    Um … obviously #115 should have said “falling back from resistance” instead of “from support” but I guess that was obvious.

  120. 120
    italyinvestor Says:

    Never bought in during the rise, but QBIK is holding its gains nicley though volume seems to be tapering off.

  121. 121
    Sambone Says:

    11:28 AM EST

    Oil Drops Sharply After US Oil Stock Gain

    By Gregory Meyer
    Of DOW JONES NEWSWIRES

    NEW YORK — Oil futures sank more than $4 a barrel Wednesday after a government agency reported an unexpected increase in U.S. crude inventories and flagging petroleum demand.

    Light, sweet crude for August delivery was recently down $4.16, or 3%, at $132.84 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange fell $3.57 to $132.89 a barrel.

    The Energy Information Administration reported that U.S. crude stockpiles last week rose for the first time since early May, with 800,000 barrels added to inventories. Analysts surveyed by Dow Jones Newswires had anticipated stocks would fall 900,000 barrels.

    Stocks of distillates, which include heating oil and diesel, rose more than expected, by 2.8 million barrels, while gasoline stocks declined 100,000 barrels, in line with projections.

    “The report is bearish,” said Andy Lebow, senior vice president for energy at brokerage MF Global. He said the gains in crude and distillates stocks, combined with a weak picture of demand, are helping drive prices down.

    According to the data, U.S oil demand was down by 2.3% over the last four weeks compared with the same period a year ago, averaging 20.2 million barrels per day.

    “The combination of week product demand and the build in crude should be bearish overall,” Citi Futures Perspective energy analyst Tim Evans wrote in a note.

    Later Wednesday, traders will be watching the conclusion of a two-day meeting of the Federal Reserve’s monetary policy committee. Market watchers cautiously anticipate the committee will hold its benchmark interest rate at 2%, but analysts are concerned about how the committee addresses inflation in its meeting statement.

    The rate announcement is expected at 2:15 p.m. EDT, 15 minutes before the close of Nymex pit trading.

    Worries over oil supply stability reemerged Wednesday after Saudi Arabia foiled a large-scale attack on oil fields in Yanbu on the Red Sea and in the Eastern Province involving militant groups in Iraq. Saudi security forces have so far detained 701 suspects, news services reported.

    In Nigeria, Royal Dutch Shell PLC (RDSA) reported late Tuesday that its 225,000 barrel-a-day Bonga offshore field has resumed production after militant attacks forced a suspension of operations last week. The militants responsible for the attack, the Movement for the Emancipation of the Niger Delta, or MEND, said in an email the group had fired warning shots at the Nigerian military and threatened to call off a unilateral ceasefire “at the slightest provocation or threat.”

    Chevron Corp. (CVX) announced late Tuesday it has declared force majeure at its Escravos facility in Nigeria, which indemnifies it against missing contracted deliveries due to circumstances beyond its control. The move follows a militant attack on a key oil supply pipeline last week, slashing output by 120,000 barrels a day at Escravos, according to industry sources. Chevron is also facing labor problems, with a white-collar union launching a strike at the company’s Nigerian operations Monday.

    Front-month July reformulated gasoline blendstock, or RBOB, fell 10.85 cents, or 3.1% to $3.3550 a gallon. July heating oil fell 10.40 cents, or 2.7%, to $3.7096 a gallon.

    —By Gregory Meyer, Dow Jones Newswires

  122. 122
    irished Says:

    Italy and any others. Glad you reminded me. Brain is like a steel trap. Anyway had QBIK and kept looking at the bid/ask on Fidelity Active Trader and the number of shares offered to buy/sell was very strange. Every person buying QBIK from 3.87 to end wanted to buy 500 shares/ and the same for the selling. Every offer both ways was for 500 shares. Never saw anything like that before. Any thoughts?? I remember Fedelity Magellan when it was huge and wanted to liquidate a position, used to sell some shares and then buy back a small portion so as not deflate the price of the stock. Have no idea if applies to QBIK but thought I would ask.
    Thanks.

  123. 123
    john11 Says:

    Re 122, QBIK is a bulletin board stock so the bid ask size is set by the market makers, not by participants. Real size might show if ARCA ecn is used by the buyer or seller.

  124. 124
    irished Says:

    Thank you John. Never heard of that.

  125. 125
    VTZ Says:

    Nicky, the other day you were takling about a move down to 134 and then to 132. What are your levels now?

  126. 126
    arodeen Says:

    DVN looks like it’s hitting a good support level. Any comments?

  127. 127
    ram Says:

    What’s the deal with the FED anyone?

  128. 128
    Fiveanddimer Says:

    Fed left rates unchanged. Talked about how worried they are about inflation. (How can they be worried about inflation, when they created most of it?)

  129. 129
    kyleandy Says:

    wow HK and NBR all the way back to even

  130. 130
    apbd Says:

    Let’s get this market back up and make Z proud of us when he returns.
    apbd

  131. 131
    Dman Says:

    Fed is in a bind: if they raise, the banking system collapses (i.e. quicker than if they don’t). If they cut, inflation gets even more rampant. If they do nothing, they get some of each problem. They got problems all right. But either way, energy does well, unless the world economy collapses. Gotta keep the global collapse thing on the radar. Nicky normally helps with that. Nicky! Where are you?

  132. 132
    Popeye Says:

    DRYS up ~ 7%

  133. 133
    redjack Says:

    any news on PBR?

  134. 134
    john11 Says:

    Ken Heebner pumped PBR again on CNBC today, got it going.

  135. 135
    tater Says:

    Looks like what I was saying about volume earlier today may be coming to fruition. Take a look at the action in CLR, big sell-off spike down this morning when Biff and Skippy in NY got together to push it down, then the grab back up on increasing volume. Sometimes I really just hate New York, but I guess that’s how they’re trained to do it.

    Might as well throw in some candlestick voodoo:

    CLR seems (day is not over yet) to be forming a hammer at the edge of 20 EMA support as well as the bottom interior edge of a triangle formation. Without the boring TA verbage, it looks bullish as it is a trend reversal signal from the near term downward movement. The bottom of the candle shadow reversed today at the support price of the high of the May 20 candle.
    Before anybody jumps on it as a buy signal, it really isn’t. It only adds to the argument that it is done going down. Sideways is very possible.

  136. 136
    Dman Says:

    Used this bounce to sell the CHK and OII calls bought earlier. Didn’t originally intend as day-trades, but just staying light.

  137. 137
    Dman Says:

    Speaking of day-trading, my account keeps warning me that it will be flagged as a “pattern day-trader” if I do X more day-trades.

    So I read the info on what that means and it gets a bit technical. Does anyone know what the practical effect is if you get flagged?

  138. 138
    jsaun14 Says:

    Good move D…I priced several call trades on HK and WLL this am, but chickened out.

    No spoils to enjoy here today.

  139. 139
    ram Says:

    “pattern day-trader” doesn’t sound positive. I have never seen or heard of that phrase before.

  140. 140
    Dman Says:

    Ram, I just spoke to the broker & it is no big deal, although it is very technical. It turns out that you actually get *more* buying power for intraday use, but along with that is a total restriction on day-trading if your account goes below $25k. I guess that is because if you use these huge intraday buying power amounts then your account can fluctuate wildly and they won’t let you do that if you get below $25k. Anyway after speaking with the rep it didn’t seem like it would have any practical effect on me. I don’t intend to use that kind of buying-power leverage: if we wan’t leverage, that’s what options are for!

    But I’m a bit annoyed because I was going to trade out of the EOG calls when I got the flagging mssage and now they are only slightly up. But it’s worth figuring this out because it held me back from converting investments into nice day trades in recent months.

  141. 141
    jack Says:

    Dman – re: pattern day trading

    Pattern day trader is a term defined by Securities and Exchange Commission to describe a trader who executes 4 (or more) day trades in 5 business days, provided the number of day trades are more than six percent of the customer’s total trading activity for that same five-day period. As the trader is exposed to the danger of day trading and intraday risks, it is subject to specific requirements and restrictions.

    Contents [hide]
    1 Basic Summary
    2 Definition
    3 Requirements and Restrictions
    4 Day Trading Buying Power
    5 History
    6 Rationale
    7 Notes and References

    [edit] Basic Summary
    An NASD & SEC rule that applies to any margin customer who buys and sells a particular security in the same trading day (day trades), and does this four or more times in any five consecutive business day period. A pattern day trader is subject to special rules. The main rule is that in order to engage in pattern day trading you must maintain an equity balance of at least $25,000 in a margin account.[1]

    [edit] Definition
    A pattern day trader is defined in Exchange Rule 431 (Margin Requirement) as any customer who executes 4 or more round-trip day trades within any 5 successive business days[2] If, however, the number of day-trades is more than 3 but is 6% or less than the total number of trades that trader has made for that five business day period, the trader will not be considered a pattern day trader and they will not be required to meet the criteria for a pattern day trader. [3]

    A non-pattern day trader (ie someone with only occasional day trading), can become designated a pattern day trader anytime if it meets the above criteria.

    If the brokerage knows, or reasonably believe a client who seeks to open or resume an account will engage in pattern day trading, then the customer must immediately be considered a pattern day trader without waiting 5 business days.

    Source: Information Memo of Amendments to Rule 431 (“Margin Requirements”) Regarding “Day Trading” [4]

    [edit] Requirements and Restrictions
    Under the rules of NYSE and NASD, a trader who is deemed to be exhibiting a pattern of day trading will be subject to the “Pattern Day Trader’ laws and restrictions, which is treated differently from a normal trader. In order to day trade:

    Day trading minimum equity: the account must maintain at least US$25,000 worth of equity (where equity includes cash and stock, but does not include options or warrants), and traders can only trade in margin accounts.
    Margin call to meet minimum equity: A day trading minimum equity request is called when the pattern daytrader account falls below US$25,000. This minimum must be restored by means of cash deposit or other marginable equities.
    Deadline to meet calls: Pattern day traders are allowed to deposit funds within 5 business days to meet the margin call
    Non-withdrawal deposit requirement: This minimum equity or deposits of funds must remain in the account and cannot be withdrawn for at least 2 business days.
    Cross guarantees are prohibited: Pattern day traders are prohibited from utilizing cross guarantees to meet day trading margin calls or to meet minimum equity requirements. Each day trading account is now required to meet all margin requirements independently, using only the funds available in the account.
    Restrictions on accounts with unmet calls: if the call is not met, the account’s day trading buying power will be frozen for 90 days or until day trading minimum equity margin call is met again.

    [edit] Day Trading Buying Power
    The rule increases day trading buying power to up to 4 times a pattern day trader’s maintenance margin excess. For example, if a trader has $100,000 worth of equities, the leverage ratio is 4:1 meaning that it can buy securities of up to $400,000.

    For day trading in equity securities, the day trading margin requirement shall be 25% of either:

    the cost of all day trades made during the day; or
    the highest open position during the day.
    If a client’s day trading margin requirement is to be calculated based on the latter method, the brokerage must maintain adequate time and tick records documenting the sequence in which each day trade is completed. Time and tick information provided by the customer is not acceptable

  142. 142
    irished Says:

    Google pattern day trader

  143. 143
    Dman Says:

    Well, just closed the EOG calls at slight profit. Figure there will be more zaniness before tomorrow’s NG numbers.

    Broad market now not happy. Who woulda thunk??!!

  144. 144
    Dman Says:

    jack, thanks for all the pattern day trader info. My last trade will have triggered it, so I hope I was right in assessing it is no big deal 🙂

  145. 145
    doc Says:

    Dman,do you trade nov? Its a good stock but very volatile

  146. 146
    Fred Says:

    There was an “IRS Professional Trader” designation. I remember some rule to sell all holdings at year end but your losses or gains could be carried forward in full y-o-y with that designation. Does anyone know about that? Thank you in advance.

  147. 147
    Fred Says:

    Dman – One of the benefits of being declared a day trader is you can apply for a “IRS Professional Trader”. Once your a professional trader you can write off losses, god forbid we have any, against regular income.

    http://www.topgunsoftware.com/paulmann.html

  148. 148
    Dman Says:

    doc – yes I’m holding calls on NOV that have swung back and forth recently between slightly in the green and well in the green and it has driven me nuts ‘cos I wanted to daytrade ’em and this flagging thing was deterring me. But not anymore!

    Today I was looking hard at NOV and wanted to add but decided to leave that ’till day 3 of the selloff. That might have been a mistake: it sure looks like it wants to move on up.

  149. 149
    crysball Says:

    XTO Energy Gets Antitrust OK For Bakken Shale Drilling Rights

    Jun 25, 2008 10:33:41 (ET)

    XTO Energy Inc. (XTO) received clearance from the Federal Trade Commission to buy 352,000 acres of land from privately held Headington Oil Co. for $1.85 billion.

    Federal regulators granted early termination Monday of the waiting period required under the Hart-Scott-Rodino antitrust law, the FTC disclosed.

    The cash-and-stock deal involves land in Montana and North Dakota that is known as the Bakken Shale property. The U.S. Geological Survey announced in April the area could hold about 3.7 billion barrels of oil, the biggest single deposit in the U.S. outside Alaska.

    The 1976 Hart-Scott-Rodino law requires, under certain circumstances, that prospective acquirers of voting securities or assets apply for clearance from U.S. regulators. Requests for early termination or clearance are granted when the FTC and the Justice Department’s antitrust division have decided against taking action during the waiting period.

    -Ingrid Pedrick Lehrfeld, Dow Jones Newswires; 202-862-1361

    (END) Dow Jones Newswires

  150. 150
    Fred Says:

    Obama Would Collect on Idle Oil Leases
    June 25, 2008;
    Sen. Barack Obama said rather than opening more federal land to drilling, he would dun oil companies for the leased lands they aren’t using and would use the money for sustainable-energy projects.

    http://online.wsj.com/article/SB121436588642802619.html

  151. 151
    Dman Says:

    Sam, thought you’d like to know that Todd Harrison described the current price of the banking index as being the result of “an organic 2:1 split by the BKX”. Priceless.

  152. 152
    ellwodo Says:

    Dman, one downside of the day trader designation is that it can impose absolute limits on $ amount you can trade in a day, even with no margin. I happened to sell a lot of actual stock one day (a lot more dollars than my normal options trading) then tried to buy some calls for cash (no margin) and was told no by Schwab. The limit resets the next day, but it can be a pain.

  153. 153
    texana Says:

    a note to the daytraders that trade options. the value of options is subtracted from your total acct balance & if that amt falls below $ 25k ,your trading account is frozen & u can only sale r deposit more funds. i.e. act bal $50k ,options value $30k ; the brokerage views u as only having 20k in your acct for daytrading purposes & u would be below the 25k mininum. it is all computerized & automatically happens…. whomever asked about TMR be aware that they r big talkers but don’t make money even @ these prices. they do have out the for sale sign so they may get taken out but almost any other bossierville player would be better than them.

  154. 154
    crysball Says:

    While recent US gasoline demand decreased 2.1% as a result of the recent surge in US gasoline prices………no one seems to be paying attention to the fact the BRIC nations which represented 5% of world GDP in 1997, represent 15% of world GDP in 2007 and are growing at a torrid rate [choose your country, but China is perhaps the best example.]………The BRIC demand grwoth for oil/gasoline is going to FAR EXCEED any oil/gasoline demand destruction in the US………..and without comensurate global supply growth demand will continue to outstrip the supply ON A GLOBAL BASIS.

    In the meantime, year over year US crude oil production,continues to decline, and we have to import more crude, sending more US $ to unstable regimes……..and the ill-conceived US biofuel program has managed to raise food & fertilizer prices by diverting corn production to ethanol, and the material/energy balance of corn based ethanol are negative [fossil fuel energy input BTU’s almost equal or exceed the ehtanol output BTU’s] when you consider the fossil fuel BTU’s required for the fertilizer, planting, growing & harvesting the corn and processing it into ethanol.

  155. 155
    italyinvestor Says:

    Texana – That was me mentioning TMR, agree they haven’t made any $ and it seems like they threw Haynesville into their press release to say “me too,” but there is no detail to be found. I don’t own any and appreciate the collective warninigs from all.

  156. 156
    Sambone Says:

    6:39 am EST

    Oil Rangebound As Investors Take A Breather

    Dow Jones Newswires
    From Market Talk:
    1022 GMT [Dow Jones] Crude oil prices are expected to stay stuck in the $132-$138/bbl range, as investors take a breather, says Olivier Jakob of Petromatrix. Open interest is declining and daily trading volumes are “again down to rock bottom,” he adds. Little momentum is evident on WTI technical charts, while 3-2-1 refining margin remains under pressure on latest DOE report. ICE August Brent +50c at $134.83/bbl, Nymex August light, sweet crude +47c at $135.02/bbl. (LAN)

  157. 157
    Sambone Says:

    Gasoline Weak, But Watch Heating Oil Stocks

    By DAVID BIRD
    A DOW JONES NEWSWIRES COLUMN

    NEW YORK — Record-high gasoline prices above $4 a gallon have slashed demand to a four-year June low and helped pull total U.S. oil demand down to its weakest level since January 2007.

    But even amid the bearish data published Wednesday by the Energy Information Administration, there are some bullish signals that could reinforce the market’s bullish trend.

    Though summer has just arrived and winter is a long way off, distillate stocks (diesel and heating oil) in the world’s largest heating oil market are at their weakest level at this time of year in eight years and more than 17% below their five-year average.

    Gasoline futures prices posted the biggest losses Wednesday, falling 2% or nearly 7 cents a gallon to $3.3941, after EIA data showed demand in the four weeks to June 20 trailed the year-ago level by 2.1%, or 203,000 barrels a day. That’s the biggest year-to-year gap since October 2005, after hurricanes Katrina and Rita hit the Gulf Coast.

    At 9.281 million barrels a day, gasoline demand is the lowest in the current-for-week period since 2004. On a year-to-date basis, gasoline demand is running at 9.09 million barrels a day, down 1.1%, or 101,000 barrels a day below a year ago.

    On its face, EIA data looked bearish for distillates, with output surging in the week by 149,000 barrels a day, or 3.4% to a record 4.588 million barrels a day. Despite a plunge in imports of 58.4% in the week, to 107,000 barrels a day, the lowest level since April 2000, stocks rose by 2.8 million barrels, compared with expectations of a gain of 1.9 million barrels.

    The data sent heating oil futures sliding by 1.7% or 6.44c to $3.7492 a gallon Wednesday.

    New England Stocks Not Building
    But a closer look at the data shows stocks are weak in the main consuming region. Distillate stocks in New England are their lowest ever level for this week, on records dating back to 1990, at less than 4.2 million barrels.

    Voracious Chinese demand for distillate has pulled in supplies from around the world, helping lift U.S. heating oil prices counter-seasonally to record highs. Exports of distillate were higher than normal in the first quarter, EIA data show, and Chinese data for May show distillate trickled into the country from the U.S. for the first time in two years.

    Distillate stocks typically build in the summer when demand is slack. But since the end of March, New England stocks have dropped by 818,000 barrels, compared with an average build between March and June of 2.3 million barrels a day in the past five years.

    What’s more, for stocks to reach their five-year average level at the end of September, ahead of heating oil season, inventories will have to rise by nearly 8 million barrels from current levels. That’s more than twice the average rise of past five years and a build of that size has only occurred once in the past 15 years.

    The Department of Energy said Monday it will spend $3 million to purchase heating oil for the emergency reserve housed in the Northeast. Last year, while issuing new storage contracts for the reserve, DOE was forced to sell some 35,000 barrels of heating oil to raise funds to cover higher costs.

    DOE said it wasn’t to restore the reserve to its 2-million-barrel capacity, but looks likely again to fall short of the target for the second straight winter.

    At current prices of near $3.75 a gallon, the $3 million DOE has to spend would buy less than 20,000 barrels of heating oil, or about 54% of the target. It would take more than $5.5 million at current prices to replace the full 35,000 barrels, but there aren’t any more funds budgeted.

    Angela Hill, a DOE spokeswoman, said that after the current purchase program now under way, DOE doesn’t expect any more heating oil to be added before the October start of the heating season. She said DOE currently isn’t considering any other measures, such as swapping crude oil from the Strategic Petroleum Reserve for heating oil to transfer to heating oil reserve.

    Year-To-Year Crude Gap Widens
    Crude oil futures rose by 800,000 barrels in the first gain in six weeks and against expectations of a 900,000-barrel decline.

    Crude stocks, at 301.8 million barrels, are sufficient to cover 19.8 days of current refinery demand, down from 22.7 days a year ago, and below the five-year average of 20.4 days. The level of cover is the lowest for this week since 2003.

    Despite the rise, the year-to-year gap in stocks widened to 50.7 million barrels, or 14.4%, the biggest since April 2003.

    Still, analysts viewed the data as bearish because of a drop in refinery runs of 181,000 barrels a day, or 1.2%, to 15.258 million barrels, the lowest level for the week since 1999. Crude runs in the week were 3.4%, or 535,000 barrels a day below the five-year average.

    Despite the lower crude runs, EIA said it appeared that refiners were using more partially processed fuels to boost output of gasoline, distillate and other products in the week. EIA doesn’t report processing rates of such feedstocks, but the data does count inventories of so-called unfinished oils, which dropped 800,000 barrels in the week. EIA analyst John Duff said this suggests those unfinished oils were processed in refineries during the week.

    Nymex crude futures fell 1.8% or $2.45 to $134.55 a barrel in response to the data.

    Lehman Brothers analyst Adam Robinson said U.S. crude stocks are hovering at “dangerously low levels.” He said the trend of declining imports from Mexico and Venezuela are likely to outpace rising imports from Saudi Arabia, which said it would boost output by 200,000 barrels a day in July, after a 300,000-barrel-a-day rise in June.

    Robinson noted that U.S. crude oil imports are down 220,000 barrels a day from a year ago so far this year, averaging 9.85 million barrels a day. If import levels were on par with a year ago, “crude oil stocks would be 40 million barrels higher,” he said.

    Stocks are expected to remain tight in July and August, but with the combination of looming additional Saudis crude supplies, weak gasoline margins this summer and autumn refinery maintenance, crude oil stocks should rebound from near the low end of their five-year range to the top by the winter, he said.

    Then, bloated products stocks and crude inventories in the major industrialized countries, “combined with a potential demand slowdown in China after the Olympics, should put downward pressure on oil prices.

    —By David Bird, Dow Jones Newswires

  158. 158
    Sambone Says:

    OPEC Doesn’t See Oil Hitting $200

    Dow Jones Newswires

    PARIS — The president of the Organization of Petroleum Exporting Countries, Chakib Khelil, said he doesn’t expect the price of oil to reach $200 a barrel but forecasts crude oil trading between $150-$170 a barrel in the next few months, according to the transcript of an interview to be broadcast Friday on television channel France 24.

    “I foresee probably prices of $150 to $170 during this summer. This will perhaps decline a little towards the end of the year,” France 24 quotes Khelil as saying in the interview. The channel Thursday sent a transcript to Dow Jones Newswires.

    When asked whether he sees oil hitting $200 a barrel, Khelil said: “I don’t think so. I think that the devaluation of the dollar against the euro, if everything happens as I think, will perhaps be around 1% or 2%, and this will probably generate an $8 rise in the price of oil.”

    —By Adam Mitchell and Jethro Mullen, Dow Jones Newswires

  159. 159
    Nicky Says:

    Morning all.

    VTZ – yes move below 134, maybe 132 as part of the triangle. Played out perfectly and reversed on cue! Now it ‘should’ move higher – imo above 140. Line in the sand if this count is wrong is 131.75.

  160. 160
    Sambone Says:

    Wow, Oil up 4 bones. US$ falling, so that’s probably the reason. Gold up big. Love B52 Ben!

  161. 161
    Sambone Says:

    Crude Steady As Market Eyes Demand, Dollar

    By Nick Heath
    Of DOW JONES NEWSWIRES

    LONDON — Crude oil futures strayed little from Wednesday’s closes in a largely lifeless European trading session Thursday, with a slight weakening in the U.S. dollar offering one of the few clues for direction.

    Prices failed to extend Wednesday’s declines that followed U.S. government data showing demand from the world’s largest oil consumer has slowed, with concerns over supply disruptions and geopolitical tensions continuing to provide an undercurrent of support for crude prices. The head of the Organization of Petroleum Exporting Countries meanwhile suggested prices could reach as high as $170 a barrel this summer.

    At 1145 GMT the front-month August Brent contract on London’s ICE futures exchange was up 40 cents at $134.73 a barrel.

    The front-month August light, sweet, crude contract on the New York Mercantile Exchange was trading 40 cents higher at $134.95 a barrel.

    The ICE’s gasoil contract for July delivery was up $18 at $1,224.25 a metric ton, while Nymex gasoline for July delivery was up 145 points at 340.86 cents a gallon.

    Having dropped lower down the agenda in recent weeks, U.S. oil demand received fresh scrutiny following Wednesday’s publication of U.S. Department of Energy inventory data.

    The DOE reported U.S. crude stockpiles rose last week, breaking a five-week run of drawdowns. Stocks of distillates, which include diesel and heating oil, grew more than anticipated. The DOE also revealed demand in the world’s largest oil consumer slumped 2.3% over the last four weeks compared with the same period a year ago.

    “(Yesterday’s DOE) weekly statistics and sharply bearish price action served as a reminder of how pernicious a persistently weak product demand outlook can be for oil product balances,” said Adam Robinson at Lehman Brothers.

    The U.S. dollar traded lower against most major currencies again Thursday, providing a source of some upwards pressure for crude prices. Wednesday, the Federal Reserve left its benchmark federal funds rate unchanged at 2%, as expected.

    “Currency traders apparently did not detect any inclination from the Fed that the central bank may be considering raising rates soon,” said Edward Meir at MF Global in New York. “We suspect that yesterday’s decline would have been far worse if the dollar had strengthened on the back of the Fed decision to keep interest rates unchanged.”

    A weaker dollar has proved supportive for crude and commodity prices, helping insulate non-dollar denominated consumers from higher prices, and proving attractive as a hedging tool.

    OPEC President Chakib Khelil Thursday suggested the greenback will continue to influence oil prices.

    “I foresee probably prices of $150 to $170 during this summer. This will perhaps decline a little towards the end of the year,” French television channel France 24 quoted Khelil as saying in an interview.

    When asked whether he saw oil hitting $200 a barrel, Khelil said: “I don’t think so. I think that the devaluation of the dollar against the euro, if everything happens as I think, will perhaps be around 1% or 2%, and this will probably generate an $8 rise in the price of oil.”

    Disruption to Nigerian oil supply flows remains a concern, meanwhile. A number of crude oil installations in the Niger Delta remain disabled following a spate of militant attacks last week, although fears of more violence have moderated somewhat since militants announced a unilateral ceasefire effective from midnight Jun. 24.

    Royal Dutch Shell restarted production late Tuesday at its 225,000 barrel-a-day Bonga offshore oilfield following an attack last week, although force majeure remains in place and the company wouldn’t confirm details of current production. Exports from Chevron’s Escravos oilfield also remain subject to force majeure, after militants blew up a key oil supply pipeline last week, slashing output by 120,000 barrels a day, according to industry sources.

    Declaration of force majeure legally allows producers to miss contracted deliveries because of circumstances beyond their control.

    Meanwhile, the oil market’s geopolitical focus remains trained on Iran, and its continuing tensions with the West over Tehran’s nuclear program. Some market participants warned of a risk of rumors similar to those that emerged and were proved unfounded earlier in the week. Financial markets were briefly rattled Tuesday on rumors Israel had attacked Iranian nuclear installations.

    “Rumor mills on Israel attacking Iran could however be revived towards the end of the week as Admiral Mullen, the head of U.S. armed forces, makes an “unscheduled” but well publicized visit to Israel,” said Olivier Jakob of Swiss consultancy Petromatrix.

    —By Nick Heath; Dow Jones Newswires

  162. 162
    irished Says:

    chk is down at good prices as yesterday

  163. 163
    Sambone Says:

    By Tatyana Shumsky and Gregory Meyer
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–Crude oil futures leaped more than $4 Thursday morning
    after the Organization of Petroleum Exporting Countries’ president forecast
    higher prices and OPEC member Libya reportedly threatened a production cut.
    Light, sweet crude for August delivery was recently up $3.15, or 2.3%, at
    $137.70 a barrel on the New York Mercantile Exchange, after earlier rising as
    high as $138.95 a barrel.
    Brent crude on the ICE futures exchange climbed $3.06 to $137.39 a barrel.
    OPEC President Chakib Khelil forecasts higher crude prices in the next few
    months, according to the transcript of an interview to be broadcast Friday on
    French TV station France 24.
    “I foresee probably prices of $150 to $170 during this summer. This will
    perhaps decline a little towards the end of the year,” France 24 quoted Khelil
    as saying in the interview.
    Libya’s top oil official, Shokri Ghanem, told Bloomberg News in an interview
    Thursday that Africa’s third largest crude producer may cut oil production
    because the market is oversupplied. His comments echoed statements he made to
    Dow Jones Newswires last weekend, in which he said he “sees a possibility for a
    decrease in production.”
    Libya pumped about 1.7 million barrels of crude a day in May, according to the
    International Energy Agency.
    The statements follows an special meeting last weekend in Saudi Arabia, OPEC’s
    largest exporter, in which the kingdom agreed to increase output by 200,000
    barrels a day to about 9.7 million barrels a day.
    “The internal dissent in OPEC was brewing all week last week and maybe it’s
    bubbling over,” said Ray Carbone, president of Paramount Options, an energy
    brokerage in New York.
    The Federal Reserve’s mixed statement on inflation and economic growth left
    the oil market in a state of uncertainty, but the dollar has weakened slightly
    against the euro since its decision to leave the benchmark federal funds rate
    unchanged at 2%. The dollar’s weakness has contributed to oil’s rise of more
    than 40% this year as investors seek a hedge against its decline.
    “Some people were disappointed the Federal Reserve wasn’t more hawkish on
    inflation,” said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.
    “This seems to be driving the market right now.”
    The Fed’s open market committee balanced concerns about growth and inflation.
    “Certainly people who were looking to comments out of the Fed as a reason to
    sell oil yesterday were disappointed,” said Addison Armstrong, an analyst at
    Tradition Energy in Stamford, Conn. “The Fed comments were not bullish enough
    for the dollar.”
    Front-month July reformulated gasoline blendstock, or RBOB, rose 7.76 cents,
    or 2.3% to $3.4717 a gallon. July heating oil rose 9.28 cents, or 2.5%, to
    $3.8420 a gallon.

    -By Tatyana Shumsky, Dow Jones Newswires; -By Gregory Meyer, Dow Jones Newswires;

  164. 164
    VTZ Says:

    Lots of names rallying to yesterdays close and going green

  165. 165
    Jason Says:

    Does anyone think they’ll start pulling down the energy names if the selloff gets too bad today?

  166. 166
    Dman Says:

    crysball – re your 1st paragraph in #154. It’s curious that the market is now “back to the future” in waiting for the weekly inventories to guide crude prices, when over the last 6 months it had figured out that those inventories are only one piece in the puzzle. Furthemore the other pieces are moving faster. I guess this is the 1st time there’s been any really convincing demand destruction, so momentarily the market forgets what it learned about BRIC etc.

    BTW, where are your numbers sourced from?

  167. 167
    cadillac Says:

    Nicky,

    Do you have a call on the broader market? Seems to me that there is no conviction to move the market up. If it is to be down, how far and for how long do you project?

  168. 168
    ram Says:

    Numbers good or bad?

  169. 169
    Dman Says:

    From what I can make out, gas injections were at 90 versus expectations of 95, so slightly good from our viewpoint.

  170. 170
    ram Says:

    TY.

  171. 171
    Dman Says:

    Broad market even less happy than usual.

    Jason, slowly the market is figuring out that energy is one of the very few places to be. But if the market really falls off a cliff on a given day, it will drag our fave names with it to an extent. Given the time of year and the drumbeat of bad news, some kind of “market event” (i.e. rush to the exits) can’t be ruled out. This is just one reason why maintaining a high cash position as per Z’s “standard operating procedure” is a good idea. You want to be able to buy the merchandise when things get a little unhinged.

  172. 172
    Jason Says:

    TY, Dman. Making any trades today?

  173. 173
    kyleandy Says:

    i think not a good sign when WTI is up $4 and oil stks are quite red.

  174. 174
    VTZ Says:

    It’s the same old story about oil going up, dollar down, market getting killed and energy getting taken down with it.

  175. 175
    ram Says:

    The energy service stocks are holding up well. Did anybody see news on WFT?

  176. 176
    Fred Says:

    VTZ – welcome to stagflation.

  177. 177
    Dman Says:

    Jason,

    I don’t think I’ll be doing much today because:

    1. my internet service is intermittant today. Just went about 20 minutes without connection. Not good. Usually great, but flaky just now. I’ll look to get some wireless service as a back up for my DSL.

    2. The 1st snafu from my account being flagged “pattern daytrader” has cropped up: they neglected to tell me that I would need to take my cash out of the money-market sweep thingy and just into straight cash. So I can’t day-trade until tomorrow! Great start to this pattern daytading thing. They call you a daytrader and then you can’t daytrade. Should be OK tomorrow.

    I happened to have a small legacy tech position (CTXS) which I haven’t really known what to do with lately. It’s been the only holding outside of energy and metals that I’ve had and its just been sitting there (well, declining steadily, really). So given the possibility of a “market event” in the near future, I finally decided today to raise cash and ditch the CTXS and I feel better already.

    I was going to sell some calls in AUY which are up nicely with the gold spike (which looks like it might have hit the upper end of a seasonal decline channel). But then I lost internet connection and now it’s a little lower so I haven’t sold yet.

    More on topic, I’ve been wondering whether maybe now would be a good time to sell high-multiple energy stocks like NOV and look to buy ’em back in a nasty market that might be here soon enough. However, a crash or mini-crash is not a done deal. Another possibility is a grindingly misearble broad market slowly declining for a long time. How will energy stocks fare in that environment? Don’t know, but if they are the only sector with rising earnings, what will money managers do? Hide their money under a mattress or buy energy?

    If we see more zaniness today in energy stocks, as per yesterday, I am looking for long term buys.

    Nicky sez crude is going higher. In agreement with her are Todd Harrison at Minyanville, who has been saying lately that crude oil shows a bullish consolidation pattern and Jim Cramer who sez next stop is $150. As for NG, my reading of Z’s comments lately is that the fundies are still good there.

    So the underlying energy thesis remains solid, but market turbulence is the short-term issue. NG seems to be reacting well to todays numbers after. And while I’ve been writing this I see the market has taken another tumble…

  178. 178
    kiaora Says:

    Hi all….Can someone tell me if this is the fire-sale of the quarter or were we just that overbought up to last week.
    I’m gettin’ bloddy hands trying to catch this falling knife.

  179. 179
    VTZ Says:

    kiaora – I think part of the reason oil is down today is that some people are saying now might be the time to move abck into financials for longer term investors so on days like today where the broader market gets trashed people could be selling some energy where they’ve made profits and moving into financials, etc.

    It happens every time. Plus the oil stocks just get caught in the sell off. If oil continues its move up then the money will come back.

  180. 180
    Sambone Says:

    K – Profit taking from weak sisters/fair weather fans. Just ride the pony.

  181. 181
    scoop006 Says:

    DMAN, Half out “X” July $165calls -$.90@

  182. 182
    scoop006 Says:

    Re# 181 change calls to PUTS

  183. 183
    scoop006 Says:

    Cramer just bought DVN & COG for his trust

  184. 184
    Dman Says:

    Scoop, nice to see someone making a profit today!

    A while ago I raised Boeing (BA) as a short idea, simply because there is no way their commercial aircraft order book can hold up with oil above $130. However, my analysis went no further than that and needed to consider other business (eg military) and the fact that the stock had already fallen. But yesterday Goldman downgraded BA along with aerospace in general, with (I gather) high oil being the reason and this has taken one of the few remaining supports out from the market.

  185. 185
    Sambone Says:

    Off subject – Wow, GM has broke it’s 1974 chart (34 years). Can’t find support. “Help me, I’ve fallen and can’t get up” http://www.retrojunk.com/details_commercial/1087/, LOL. GM needs “Lifecall!

    Glad I own SKF, go baby.

  186. 186
    scoop006 Says:

    DMAN #184 Did not make a profit. Lost $.90 per share . My avg. cost is $3.50 sold for $2.60.

  187. 187
    Hoss Says:

    ram

    WFT – #65

    Presentation was moved 2:30. Latter part of Q&A addressed contracts with PEMEX in the Chicontepec Field. There was some concern over the pricing and profitability of those contracts – apparently considered low by many. Response was that there was more to the contracts than met the eye and the real concern was performance not price. The bit that seemed to prick up the ears of the audience was the notion that PEMEX wants two “architects” for the Chicontepec Field. SLB apparently filled the first position and the choice for the second position was between WFT and HAL. Potential addtional contract value of $1B – $1.5B. It’s a good listen – CEO, Bernard J. Duroc-Danner is a sharp guy and quite a character.

  188. 188
    occam Says:

    Direct links for EIA oil and gas numbers (Wed &
    Thur about 10:30 AM Eastern time, normally). The EIA NG chart is helpful.

    http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/weekly_petroleum_status_report/current/txt/wpsr.txt
    http://www.eia.doe.gov/oil_gas/natural_gas/ngs/ngs.html

  189. 189
    ram Says:

    Thanks Hoss.

  190. 190
    kyleandy Says:

    hoss thks for info will listen tonite

  191. 191
    kyleandy Says:

    sane off subject but i’m short sprint S . have big increase in call buying and stock has been strong all day. u hear anything?

  192. 192
    tater Says:

    Some voodoo for NFX

    NFX is in a trading range that takes the form of an ascending triangle pattern with resistance at $68 and support being the uptrend line draw from the bottom trading of May 1st and June 13th.
    Today’s action saw a bounce off this trend line around $62.20.

    Closing prices have tended to show a bounce off of the 50 EMA.

    On the chart (link below) I have circled in green the bullish candlesticks, and in red, the bearish candles. I will spare you the goofy names for each, just know that the best analysis of candlesticks usually comes from their interaction with technical support and resistance lines.

    Link

    http://stockcharts.com/c-sc/sc?s=NFX&p=D&yr=0&mn=6&dy=0&i=p94529725661&a=13

  193. 193
    tater Says:

    I’ll have to check to see why the link is not working

  194. 194
    BossmanG Says:

    Hi tater,

    Thanks for the analysis…for some reason I’m unable to view the link? It just says please visit stockcharts.com to view this chart…

  195. 195
    Nicky Says:

    Crude above 140.00

  196. 196
    Sambone Says:

    Wow, 140

  197. 197
    tater Says:

    Maybe this will work for NFX chart:

    http://stockcharts.com/c-sc/sc?s=NFX&p=D&yr=0&mn=6&dy=0&i=p94529725661&a=143911545&r=59

  198. 198
    Dman Says:

    Some amazing strength in certain oil service names with the Dow nearly 300 points down. SLB, HAL, CAM,NOV even or slightly green.

    Is this rubbing off from WFT up 2% ??

    NBR an exception: the MACD worries me there, looks to be turning down and on a pure chart basis it looks extended. But I’m sure Z would point out that it is the cheapest and so the most immune to multiple compression. Tater, what do you make of it?

  199. 199
    tater Says:

    Sorry for my bad attempts. Thought I could get that done simply, guess not.

  200. 200
    Dman Says:

    #197 nope, no dice.

  201. 201
    Nicky Says:

    What’s happened to Congress’s attempts to curb the speculators? I thought they were voting on things this week.

  202. 202
    Fiveanddimer Says:

    Gold up $30 today, trending higher with the crude oil price. Interesting that the US$ is down, but not selling off that badly today.

  203. 203
    Nicky Says:

    Support in spx 1280 – 85

  204. 204
    tater Says:

    sorry to keep cluttering the site, I don’t know how to see if it works without just posting it

    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2933882

  205. 205
    doc Says:

    does anyone like oxy or su? They should make alot of money. I dont see any crash in the price of crude comeing any time soon. The big rally in the dollar never came and gold is strong.

  206. 206
    Sambone Says:

    There she goes!

  207. 207
    doc Says:

    I am not buying any july calls til zman gets back but i am looking for puts to buy

  208. 208
    VTZ Says:

    Nicky – Oil through 140? or is this a test and pullback?

  209. 209
    Dman Says:

    Tater: wow, that’s quite a chart there.

    Yikes, think I’ll keep the gold position (AUY) for now.

    Looks like some forced margin selling going on now.

  210. 210
    Dman Says:

    XCO, UPL, APA all nicely green. Anyone know why they are standing out?

  211. 211
    Dman Says:

    Doc, all the talk of a big dollar rally did seem incredible given the fundies. Didn’t stop a lotta pundits embracing it, naturally.

  212. 212
    Sambone Says:

    D – No news

  213. 213
    Nicky Says:

    Its a difficult call VTZ as to how high oil goes now. Technically we just needed to make new highs which we have now done. But nothing to say we don’t go to 170.

  214. 214
    Fiveanddimer Says:

    Why the spike in gold today? Don’t know. I did hear a rumor that Russia is using SWF monies to buy gold. That’s as good as anything else I’ve heard today to account for the rise in the spot price.

  215. 215
    Sambone Says:

    Watch last 30 minutes on overall market. could get ugly. You havn’t seen nuthin yet!

    GFD

    N – Target for Crude could get to 200-240. Could see a pull back before. My support is 130, currently.

  216. 216
    Nicky Says:

    Yes Sam re crude – don’t see it that high without a pullback first however.

  217. 217
    Nicky Says:

    Broader market – volume is light today (maybe the only good thing to be said!). It is however heavier on this down move which argues for lower lows before a rally is attempted. Hourly breadth is showing some divergence….

  218. 218
    Dman Says:

    Just converted my Sep 47.50 NBR call position into a spread by selling the 55 calls against it. If NBR keeps on up, it will do very well. If NBR pulls back drastically, I’ll buy the 55s back lower.

    Also just bought some January PDS DITM calls.

  219. 219
    Nicky Says:

    You have to wonder what OPEC are playing at. The Saudis spend all last weekend trying to stabilize the oil market and the head of OPEC comes out today and says he sees 150 – 170 this summer. What a complete waste of time last weekend was. Along with the Libyans now saying they are going to take oil off the market.

  220. 220
    jsaun14 Says:

    Tater-

    I’m not too familiar w/ tech. analysis. Could you give me a laymen’s terms version of what the NFX chart is suggesting?

    Thanks –

  221. 221
    Dman Says:

    Good point Nicky. Quite a farce really, all things considered.

  222. 222
    Nicky Says:

    You have to wonder whether the market knows something we don’t ie an attack on Iran is on the cards. They would have to be out of their minds imo to go ahead with that. Markets will collapse worldwide…

  223. 223
    sane Says:

    Nickey,

    OPEC and gang are just taking us for suckers. They are thinking, look at those knuckle heads over there, the price must now be high enough because they are still not really competing in the market by bringing more oil on the market and or making huge strides on alternatives, they are just sitting there bickering and sniveling. Why help those who can’t help themselves.

  224. 224
    Nicky Says:

    Broader market – not pretty guys and gals…..

    I still think we see a bounce into a minor cycle high due Monday/Tuesday of next week. It could bounce all the way back to yesterdays highs but equally it could fail at around 1310 spx and 12700 ish on Dow. Cycles point lower through July so this could go down a lot lower yet.

  225. 225
    Nicky Says:

    Gold is looking interesting. It has resistance at 920 – 925 and ‘should’ turn down. A move above 936 says this is wrong!

  226. 226
    Nicky Says:

    Which begs the question what happens to oil tomorrow? If gold turns down then I expect oil to follow so maybe tomorrow we see a slightly higher high towards 141- 142 and then the trade turn lower. IF gold does not turn down then the downtrend looks to be broken and we could therefore see both metals and energy march firmly higher.

  227. 227
    Dman Says:

    Nicky & sane,

    the vibe I got from the weekend KSA summit thing was that the Saudis were trying to play a role (the swiing producer with the power to sell the market down) that they simply no longer can deliver on. So why were they embarassing themselves in this way? It looked to me very much like something they had been put up to do and were going along with it half-heartedly. Who might have put them up to it? Jim Kingsdale thought it had something to do with W and Dick, those frequent fliers to the Kingdom of late & that’s sure what it looked like to me.

  228. 228
    Nicky Says:

    House passes bill requiring CFTC to curb speculation in energy markets.

  229. 229
    tater Says:

    re: #220 jsaun14

    I don’t know if you saw what I wrote above in #192 above, but take a look at that first and then here is a some more;

    It is kind of difficult to say “exactly” what a chart says as it is something of an art form (very similar in that fashion to fundamental analysis and the assignment of “multiples”, very subjective) but here is my analysis (I do my own charts, they are not copies of other people’s work).

    Quick disclaimer: This is not trading advice and I do not advocate that you should even listen to anything that I have to say. It is very likely that I am a drunken idiot attempting to play connect the dots.

    NFX

    NFX is currently in a bullish trend contained by the trading range of $68 on the top end and an upward trending line (the green line on the chart) that is currently in the vicinity of $62 on the low end.

    The price range can be referred to as an ascending triangle. They are generally thought to be bullish, as the lower trend line is rising, showing that people are tending to show up earlier and earlier to buy the stock each time it bounces back down from the $68 price (where for the last month people have tended to show up and prove that $68 is a reasonable price to sell the stock for).

    I have circled candlestick patterns in red for bearish and green for bullish. No need to go into why they are or are not, only know that a candlestick pattern is merely shorthand for that days intra-day chart. It basically attempts to sum up the information that can be gleaned from moving down to a one day chart of 15 minute periods.

    Today’s candle (Thurs 6/16) is called a Long-Legged Rickshaw Man Doji. Big deal, who cares. It’s just a shorthand way of signaling that the market is undecided, price got pushed up and down and wound up in the middle. What is important to me is that when combined with the action of yesterday, we have two days in a row when the bulls showed up and said with their money that they would “support” prices at around $62. Good enough for me and my money, as I showed up at $62ish as well.

    I don’t look at today’s action as a “trend reversal” candle as much as it is more of a confirmation of “trend continuation” of the bigger ascending triangle formation. Is price going to continue upwards and hit $68 again? I certainly don’t know, but should it fall to the green line again, I will probably buy and sell it again, and should it make it all the way to $68 without me, I will probably be there to sell call options at that time. (Unless it closes above $68. Then it’s time to change strategy).

    The OBV, RSI and MFI are technical indicators that attempt to mathematically determine if there is accumulation or distribution going on with the stock (basically, whether Wall Street is dumping the stock to you and me even though price is trending higher). In this case they are conflicting with each other, leaving me to scratch my head and go get another cold one.

    Thank you to everyone here who helps me to understand which stocks are fundamentally good choices for me to apply a little voodoo.

    Hope this is of some help.

    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2933882

  230. 230
    Nicky Says:

    Oil Falls From Record as U.S. House Passes Speculation Measure

    By Christian Schmollinger and Margot Habiby

    June 27 (Bloomberg) — Crude oil fell in New York, retreating from the record $140.39 a barrel reached yesterday, as the U.S. House of Representatives approved a bill aimed at curbing excessive energy-market speculation.

    The bill, which passed 402-19, would require the Commodity Futures Trading Commission to consider using position limits, or constraints on the size of the stake each speculative investor can own, and raising margin requirements, the amount of money required to trade. The vote came after the record was set.

    “Sentiment may push prices down initially,” said Mark Pervan, a senior commodity strategist with Australia and New Zealand Banking Ltd. in Melbourne. “Curbing the speculative element might cause prices to fall so sentiment alone would suggest that we might see some profit-taking.”

    Crude oil for August delivery fell as much as $1.03, or 0.7 percent, to $138.61 a barrel in after-hours trading on the New York Mercantile Exchange. It was at $139.38 a barrel at 9:35 a.m. Singapore time.

    Yesterday, oil rose $5.09, or 3.8 percent, to $139.64 a barrel, a record settlement price, as Libya threatened to cut output, OPEC’s president said prices may reach $170 by the summer and the dollar weakened. Yesterday’s all-time-high intraday price surpassed the $139.89 reached June 16.

    Oil futures have moved by 2 percent or more on half of the trading days this month. Prices veered 43.4 percent from the 30- day average yesterday, the highest volatility in 16 months, according to Bloomberg data. Volatility is a measure of how far the price of a commodity such as oil deviates from average closing prices over a prior period, such as 30 or 60 days.

    “When you’ve got such an active market, it’s very news sensitive,” said ANZ’s Pervan. “These markets can move quite sharply because you’re talking about a higher volume game.”

    Pre-Recess Vote

    The House passed the measure just hours before recessing for a week for the July 4 Independence Day holiday, a time when members typically return home and meet with constituents. Rising retail gasoline prices, which averaged $4.07 a gallon on June 25 and reached a high of $4.08 on June 16 according to the AAA, have angered voters. Gasoline prices are up 34 percent this year.

    The measure calls on the CFTC use its emergency powers to “curb immediately the role of excessive speculation” in any market it oversees in which energy futures or swaps are traded.

    An emergency in commodity markets is defined as a “threatened or actual market manipulations or corners,” any domestic or foreign government decision affecting prices, or “any other major market disturbance which prevents the market from reflecting supply and demand,” the CFTC said in a statement yesterday.

    The agency “has never exercised emergency power based on price trends that have developed over months or years,” the statement said. Emergency powers have been invoked four times since the CFTC was formed in 1976.

    Task Force

    The measure is “not likely to be bullish,” said Tim Evans, an energy analyst for Citi Futures Perspective in New York. “You can argue that it may not be effective, but I don’t know that you can actually argue that it’s bullish.”

    The measure needs to be passed by the Senate and signed by the president before becoming law.

    The CFTC, which regulates U.S. commodity futures and options markets, said earlier this month that it formed an interagency task force to evaluate developments in commodity markets, including the role of speculators. The task force includes the Federal Reserve, the Securities and Exchange Commission, the CFTC and the U.S. Departments of Treasury, Energy and Agriculture.

    The House defeated a separate measure mandating that oil companies produce energy from current leases or be disqualified from future leasing.

    Brent crude oil for August settlement was at $139.50 a barrel, down 33 cents, on London’s ICE Futures Europe exchange at 9:10 a.m. Singapore time. It rose $5.50, or 4.1 percent, yesterday to settle at a record $139.83 a barrel. Prices touched $140.56 a barrel, the highest since trading began in 1988.

  231. 231
    Sambone Says:

    Crude up 2.26 to 141.95 as of 7:30 am EST

    6:15 am EST

    Crude Surges Over $140/Bbl, Hits All-Time Highs

    By Angela Henshall
    Of DOW JONES NEWSWIRES

    LONDON — Crude oil futures surged Friday to all-time highs in London and after breaking out of a sideways trading pattern, fresh buyers jumped in to the market.

    Both benchmark crude oil futures contracts broke through the $140-a-barrel ceiling in U.S. trading Thursday, ambivalence over the Federal Reserve’s future actions and a weakening dollar acted as a launching pad to prices rising.

    “The rally (Thursday) was so quick that fresh longs didn’t really have time to enter the market and we would expect that buying to surface Friday if we don’t fall back into the range,” said Glen Ward, a broker at ODL Securities

    At 0729 GMT, the front-month August Brent contract on London’s ICE futures exchange was up $1.15 at $140.98 a barrel, after briefly touching $141.71 a barrel.

    The front-month August contract on the New York Mercantile Exchange was trading $1.21 higher at $140.85 a barrel after hitting $141.98 a barrel.

    The ICE’s gasoil contract for August delivery was up $18.00 at $127.175 a metric ton, and Nymex gasoline for July delivery was up 187 points at 353 cents a gallon.

    —By Angela Henshall, Dow Jones Newswires

  232. 232
    Sambone Says:

    Crude oil up 42.5%
    Ethanol up 20.7%
    Heating oil up 43.9%
    Natural gas up 76.5%
    Unleaded gas up 39.5%
    Cattle up 1.0%
    Corn up 58.8%
    Soy beans up; 26.4%
    Coffee up 5.9%
    Aluminum up 32.7%
    Copper up 25.7%
    Platinum up 33.4%
    Gold up 6.0%
    Silver up 13.4%.
    S&P 500 down 10.24%
    Frankfurt DAX down 18.32%
    London FTSE down 12.23%
    Paris CAC down 19.64%
    Hong Kong Hang Sang down 18.33%.
    Tokyo Nikkei down 9.47%
    Singapore Straits down 14.04%.
    Seoul Composite down 9.57%
    Sydney All Ordinary down 15.76%
    Taipei Telex down 7.40%

  233. 233
    Fiveanddimer Says:

    Sambone, re 232,YTD appreciation?

  234. 234
    tater Says:

    XTO voodoo (chart at bottom of page on link below the NFX chart)

    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2933882

    Was going to post this later, but today may be a pivotal one.

    XTO has returned into its ascending triangle pattern with price support denoted by the green uptrend line and resistance formerly at $70ish.

    Price finally broke through and closed above $70 on 6/18 on 125% of average 10 day volume. Price then pulled back on the next day with good volume to exactly 70 and closed at 70.14, showing at the time how the resistance price of 70 transformed into a support price level. Support held at 70 for the next 3 days.

    On 6/25 price shot down through 70 to 67 in the first half hour of the trading day, catching some people, especially me, off guard as the break of price support at 70 reminded of the need to set sell stops when away from the market. Price bounced off of the green trend line support and closed at the 20 SMA.

    On 6/26 price opened up at the 20 EMA, dropped sharply, then back up in a V shape, then proceeded to probe back down to $66 and make a rounded bottom shape before closing very near the previous day’s closing price. This intra-day pattern is typically referred to as an Adam and Eve bottom (you can guess which is Adam and which is Eve).

    This marked the second day in a row that the green uptrend line held as price support. Adding to the seeming strength of the uptrend line is that it currently corresponds with the 50 EMA.

    Additionally, the shape of the last two day’s candlesticks in combination with the green uptrend line can be argued to form a Tweezers Bottom, which points to a stoppage of the near-term downtrend.

    Also adding to the area as price support is the small window gap from 6/5 to 6/6, support at $65ish.

    Almost done, but possibly most importantly, the pop up through $70 was not sustained by the bulls and has shown itself to be an “upthrust” false breakout. The downside target for such a false breakout is its most recent low or the bottom of a recent trading range. Looking to the chart, the most recent low would be on June 13th at $67.11 (fairly equal to the closing price that we have now had the last 2 days).
    But be aware, the bottom of the most recent trading range is the low of June 4th at $62.

  235. 235
    Sambone Says:

    Five – Yep, sorry I didn’t include that.

  236. 236
    BossmanG Says:

    Thanks Sambone for the calc.

  237. 237
    Sambone Says:

    Got a feeling it’s gonna be another ugly day for Jim Cramer.

  238. 238
    Sambone Says:

    Commodities Rally Despite Oil-Led Growth Concerns

    Dow Jones Newswires

    SINGAPORE — Gold has by far been the biggest gainer from the slump in U.S stocks to a near two-year low, widening credit spreads and a surge in oil prices, but other commodities including base metals and grains could also continue to gain despite worries about slowing global economic growth, analysts said Friday.

    “It’s important to remember the components that drive metal demand aren’t the consumers. If anything, if GDP softens, governments often respond by increasing infrastructure spending to boost the economy,” said a senior analyst with Citigroup’s global commodities team.

    The latest round of financial market turmoil prompted gold’s biggest one-day rise since 1985 according to HSBC analyst James Steel, lifting prices to a one-month high of $918 a troy ounce overnight.

    The gains were prompted by a 3.0% overnight drop in the Dow Jones Industrial Average 11453.42 after a weaker dollar prompted a 3.8% surge in crude oil prices to a record high above $140 a barrel on Nymex.

    A downgrade by Goldman Sachs of its U.S brokerage peers and its warning about further hefty write-downs in the wake of the sub-prime collapse added to the woes of the Wall Street.

    Asian stocks fell across the board in early trading Friday following renewed concerns about the ongoing turmoil in global financial markets.

    That has given back gold some of its safe-haven glitter that the precious metal seemed loosing lately.

    “Fundamentally, gold is supported by oil, and I don’t think oil’s going to come off,” said Joseph Ng, a trader with MKS Finance in Kuala Lumpur.

    Gold pared some gains in early Asian trading, retreating to $910.75/oz, down $6.05 on the New York close but the overall outlook continues to be bullish, analysts said.

    Given the signs of distress in credit markets, sentiment on risk aversion could be reaching a tipping point again, they said.

    “There is an element of complacency in markets at present. Signs from the forex markets are worrying, and it’s looking ominous for riskier assets, just like last August when we saw the massive price drops,” said Westpac Currency Strategist Robert Rennie.

    In this environment, gold should continue to do well and break $930-$950/oz in time, he added.

    Cost Pressures Remain A Worry For Base Metals

    While gold managed to break free from its weeks-old range and looks poised for more gains, the case for base metals is more of a mixed bag, centering around the short-term impact of speculators moving into the commodity basket, higher production costs and how the high oil price will play out for global growth.

    London Metal Exchange copper prices rose some 1.6% overnight to $8,445/ton,, and technical buying boosted zinc 7% to a two-week high of $2,000/ton.

    Inflation concerns with oil striking above $140/bbl have prompted investors to buy commodity indices, to diversify from poorly performing stock markets and for seeking refuge from inflation concerns.

    But the follow-on impact for base metals will probably be limited, said the Citigroup analyst. “For base metals, I’d be surprised to see a major impact in terms of speculative positioning from last night.”

    Moreover, the higher cost of oil will also intensify the focus on energy costs. For aluminum, electricity accounts for about 30%-35% of overall production cost. As well as higher power costs, higher fuel prices will only intensify cost pressures for miners and smelters.

    But despite oil doubling since last year, global growth has stayed robust which “has been a matter of surprise,” said the Citigroup analyst.

    While equity and credit markets have languished, oil futures are up 45% so far this year and have more than doubled from where they were a year ago.

    Diversification of energy supply as well as continuing subsidies in key countries such as China and India have probably helped insulate economic growth from the impact of sky-high oil prices, but analysts said they don’t expect this scenario to last for long.

    Base metals won’t eventually circumvent a slowdown in global growth, they said.

    Bio-Fuel Feedstocks Have Priced In Oil At $140/Bbl

    According to some analysts, corn prices, which lead the grains complex, have already factored in crude oil at $140 per barrel and are likely to stay in the range of $7-$8 per bushel.

    But the knock-on effect of high corn prices due to crude oil and floods in the U.S. corn belt has seen the substitution of wheat as a feed grain in many countries, supporting prices of wheat.

    Australian wheat futures were already tracking gains in the U.S, with the most active ASX January 2009 contract trading at A$372.00/ton early Friday, up A$11.50/ton from Thursday’s settlement, helped also by some unease about the prospects for the local crop.

    “The general increase in the commodities (prices) will pull up wheat prices at a time when grains-specific factors are anyway supportive,” said Mark Samson, vice-president for South Asia at U.S. Wheat Associates.

    At 0425 GMT, the Chicago Board of Trade July soybean contract was trading 5.6 cents higher at $15.80/bushel; July corn was up 2.6 cents at $7.564/bushel, while July wheat was up 5 cents higher at $9.29/bushel.

    Other agricultural commodities linked to biofuels such as soyoil, crude palm oil and sugar also stand to gain, said analysts.

    At 0455 GMT, the benchmark September CPO contract on Bursa Malaysia Derivative was trading MYR24 higher at MYR3,559/ton.

    While low inventories in soybeans have pushed up prices, making crude palm oil look relatively cheap compared to soybean oil, increased ethanol demand could push up sugar prices.

    “It looks like the fortunes have turned for sugar, and prices are likely to be on the uptrend,” said John Reeve, associate director of agricultural commodities at UBS investment bank in Singapore.

    “With oil at such levels, the U.S. tax on cane-based ethanol imports is beginning to look relatively manageable, making (ethanol) exports to U.S justifiable for Brazil,” he added.

    “In fact, we’re already seeing some raw sugar, which could have been exported, diverted to ethanol production,” he said. Brazil is the world’s largest exporter of sugar.

    However, commodities such as cocoa, which have already enjoyed a recent run-up, may see some pullback due to a technical correction, said analysts.

    —By Denny Kurien, Dow Jones Newswires

  239. 239
    Fred Says:

    Nicky’s 1280 spx holding so far.

  240. 240
    jsaun14 Says:

    Thanks Tater…No worries on the disclaimer…I had too many Pacificos last night and can also be a drunken idiot.

  241. 241
    Sambone Says:

    9:48 am EST

    Crude Bursts Through $142 Overnight, Heads Up

    By Tatyana Shumsky
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures broke through $142 a barrel overnight as buyers rushed to pick up crude, hedging against inflationary fears.

    Light, sweet crude for August delivery Friday was recently up 92 cents, or 0.7%, at $140.56 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange rose 34 cents to $140.17 a barrel.

    Nymex crude futures entered uncharted territory Friday morning, trading above $142 for the first time. The record prices are a reminder that the crude futures market is in a historic bull run, with crude futures rising 45% this year alone.

    This latest rally is fueled by factors ranging from rising inflation to investors’ search for higher returns as other markets drop.

    “The bullish momentum, weaker dollar and also probably the weakness in the equity markets is helping to attract money to the commodity markets,” said Tom Bentz at BNP Paribas.

    Continued confusion over Wednesday’s comments from the Federal Reserve pushed the dollar down against the euro Thursday. The Fed expressed concern about both high inflation and slow economic growth, without indicating which was a more pressing issue.

    “The Fed’s botched policy statement from Wednesday took its toll on the dollar for a second day in a row, triggering a sharp rise in commodity prices,” wrote Edward Meir at MF Global.

    The meteoric path of crude futures prices has been matched by slumping equities, as economic forecasts and business valuations take into account the crippling effects of higher fuel prices on business growth and consumer spending.

    Yet Meir warns the continued crude bull rally holds dangerous repercussions for world economies. “Commodity bulls should be careful what they wish for; equities can fall only so far before investors turn their focus to the fact that a global recession may be at hand. This is no longer a pie-in-the sky scenario,” he said.

    It is however, unclear what could stop this latest crude rally. “The path of least resistance is still up, unfortunately,” said Bentz, adding “I’m not recommending fighting this bull market.”

    Front-month July reformulated gasoline blendstock, or RBOB, recently traded 82 points, or 0.2%, higher at $3.5195 a gallon. July heating oil rose 2.61 cents, or 0.7%, to $3.9095 a gallon.

    —By Tatyana Shumsky, Dow Jones Newswires

  242. 242
    Sambone Says:

    GOM/Atlantic

    Nothing really to watch other than 40-30W, 10N. Too early at this point.

    http://www.ssd.noaa.gov/goes/east/catl/loop-rb.html

  243. 243
    redjack Says:

    radiocheck…

  244. 244
    irished Says:

    5×5

  245. 245
    Popeye Says:

    BLM freezes solar projects for two years. Incredible but bullish for oil/gas.

    http://www.nytimes.com/2008/06/27/us/27solar.html?_r=1&adxnnl=1&oref=slogin&adxnnlx=1214583642-bc7Zdg7qhIqkyGsQG5I/Bw

  246. 246
    redjack Says:

    kinda like standing in an empty room

  247. 247
    Sambone Says:

    Red – I’m here, back from lunch.

  248. 248
    apbd Says:

    Redjack:
    You’re not alone. I’m lurking.
    Lots of green on my screen. PQ, CHK & HK.
    Hope it stays green into the close.
    apbd

  249. 249
    irished Says:

    only green here is CHK july/aug. sold my PQ/HK last week and had some HK for day trade sometime. rest is ugly red because I have other than Z’s “stuff”, WMT, C, VLO and a few other brilliant choices of mine.

  250. 250
    Dman Says:

    Energy lookin’ good today.

    Broad market *still* not happy. Now who woulda thunk that?

    House passing it’s anti speculator bill has obviously had a huge dampening effect on the energy sector. AND THEN I STOPPED DREAMING AND WOKE UP!!!!

  251. 251
    redjack Says:

    the best energy related performer seems to be TS….

  252. 252
    irished Says:

    House does not have a great deal of clout. They do posses an overabundance of hot air and grandstanding. I do believe there is some manipulating of the markets but they are like eunuch! missing vital parts.

  253. 253
    Dman Says:

    irished – did you say C ?? I know Cramer isn’t perfect but I think he has been right in calling the financials toxic. I know that some smart people like Kass have been playing them for a bounce and I certainly can’t say it won’t happen (‘cos I’m not well enough versed) and I dare say it has to happen sometime, but then what? Another leg down? Some of those things could go to zero and they would go negative if that meant anything.

    Sam’s the expert on financials around here, all I’m saying is I don’t need ’em & the energy thing is still young. Maybe not quite cracking the egg open with its beak, but still young: most people are still complaining about energy instead of investing in it, which is amazing really.

  254. 254
    redjack Says:

    re TS, spoke too soon…

  255. 255
    Sambone Says:

    Off subject – For Nicky

    “Chicken in Every Pot” is a quotation that is perhaps one of the most misassigned in American political history. Variously attributed to each of four presidents serving between 1920 and 1936, it is most often associated with Herbert Hoover. In fact, the phrase has its origins in seventeenth century France; Henry IV reputedly wished that each of his peasants would enjoy “a chicken in his pot every Sunday.” Although Hoover never uttered the phrase, the Republican Party did use it in a 1928 campaign advertisement touting a period of “Republican prosperity” that had provided a “chicken in every pot. And a car in every backyard, to boot.”

    http://www.marketwatch.com/news/story/consumers-descend-further-economic-funk/story.aspx?guid={B55D733A-1F01-4B26-A3A2-1C51D30B5C94}

  256. 256
    Sambone Says:

    #250 – The “House”. Bwhahahahahah. The lowly onion.

    http://money.cnn.com/2008/06/27/news/economy/The_onion_conundrum_Birger.fortune/index.htm?postversion=2008062710

  257. 257
    irished Says:

    Most of the time I follow the reciprocal of Cramer. I know if he says buy and I have it, I get ready to sell when the Cramer crowd moves in. I do not spend much time on his thoughts but do read him everyday, sort of an Anti-stock analysis.
    C is the biggest bank in the world and like GM, probably (definitely) messed up, but I do not believe it will go out of business. I have been rolling down and out options plus buying some puts (for protection) and “God willing and the creek don’t rise, I will prevail”, or at least break even sometime!! I do not bet the ranch but I have found a few winners plus some losers too. It is a gamble. I also have plenty of Z’s stuff but do like to invest on my own as well. Have done, still do, lots of reading everyday but no guarantee of anything. Today like yesterday was red but hopefully setting up for the future. Made some decent change on Wednesday, gave back some yesterday and today but still ahead.
    Time will tell!!

  258. 258
    Dman Says:

    Sam, great article. When I glanced at the link I thought it was from TheOnion.com, but no it’s actual, you know, onions. Wow. Now all we need is the onion-energy correlation and we can start keying off the price of onions.

  259. 259
    irished Says:

    That was pretty good on onions. Am not an expert at all on the oil market, leave that to Mr. Z and some of you but have seen lots of shenanigans in stocks, bonds and options so it is no stretch to convince me of manipulation of the market. Prisons are “full” of some of the “great” ones. But I do not rule out market manipulations wherever, whenever, individuals can alter the situation to benefit themselves. I think free market is a myth. I know that is not the sentiment here but have seen way too many instances to accept that all is free is the oil trading business. (Don’t tell Z-I know he won’t read these!!!)

  260. 260
    Sambone Says:

    Good article on winners and losers in case of a “Cane” in the GOM.

    http://www.marketwatch.com/news/story/hurricane-season-sort-out-oils/story.aspx?guid=%7B26B16FCA%2D9D04%2D4890%2D858F%2DCA96CF7C3F2B%7D

  261. 261
    Sambone Says:

    By Brian Baskin
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–Crude oil futures hit a record high Friday as investors
    rushed into the market as a hedge against the weakening dollar and falling U.S.
    equities.
    Light, sweet crude for August delivery traded $3.06, or 2.2%, higher at
    $142.70 a barrel on the New York Mercantile Exchange. Brent crude on the ICE
    futures exchange traded $3 higher at $142.83 a barrel.
    Futures have set record intraday highs for two days running, despite a lack of
    major new developments on either the supply or demand fronts. Investors cite
    the dollar, which has weakened against the euro ahead of an expected interest
    rate hike by the European Central Bank next week. Commodities such as oil and
    precious metals act as a hedge against the weakening U.S. currency. The euro
    traded recently at a three-week high of $1.5783.
    “The metals are reacting, they’re showing you what people think of the
    dollar’s prospects” said Ray Carbone, president at Paramount Options.
    The oil market is seeing further momentum from the large drop in U.S. equities
    this week. With crude partly responsible for the troubled economy, oil futures
    provide a hedge as stocks fall. The Dow Jones Industrial Average was down 1.3%
    Friday afternoon.
    Front-month July reformulated gasoline blendstock, or RBOB, recently traded up
    6.47 cents, or 1.8%, at $3.5760 a gallon. July heating oil traded 8.84 cents,
    or 2.3%, higher at $3.9718 a gallon.

    -By Brian Baskin, Dow Jones Newswires; (Tatyana Shumsky in New York contributed to this article) Dow Jones Newswires
    06-27-08 1352ET

  262. 262
    irished Says:

    Sambone
    Thanks great article. Printed and up on the board.

  263. 263
    apbd Says:

    I made a mistake and now have to take delivery of 5,000 bags of onions. lol.
    Arrgh.
    apbd

  264. 264
    Sambone Says:

    Touted US Offshore Oil Drilling Expansion Hinges On High Prices

    By BRIAN BASKIN
    Of DOW JONES NEWSWIRES

    NEW YORK — Energy producers are likely to need years more of high oil prices in order to develop any new reserves opened up by the lifting of offshore drilling restrictions.

    With oil futures above $140 a barrel and U.S. retail gasoline prices above $4 a gallon, tapping restricted coastal waters for crude has become a central cause of Sen. John McCain’s, R-Ariz., presidential campaign. Although the Democratic majority in Congress remains opposed to the idea, some in the industry see a chance at a compromise that would allow individual states to allow drilling in federal waters off their coasts.

    That could give producers access to new territory in the Gulf of Mexico near Florida, or the Atlantic Ocean off Virginia, with drilling off the west coast a more remote possibility. Government forecasters see as much as 18 billion barrels of oil and 76 trillion cubic feet of natural gas, though in the vast majority of restricted areas the data is so old that the real potential is a mystery.

    Oil and gas producers are, predictably, lobbying hard for the chance to find out what’s there. They point to major discoveries off the coast of Louisiana, in parts of the Gulf of Mexico that were thought to be devoid of oil 15 years ago.

    The Gulf is one of the only parts of the country where oil production is rising, with established fields such as Mars and Na Kika likely to be joined by major finds from recent years like Jack and Kaskida. Most of these reserves lie less than 300 miles from the restricted region of the Gulf near Florida. Some believe the Atlantic Ocean’s seabed bears a resemblance to parts of offshore Brazil where billions of barrels of oil were discovered last year.

    But the industry is also certain to need high prices to pay for finding and extracting oil and gas hidden in the newly accessible seabed. Few rigs and even fewer people are sitting idle, waiting for an oil rush in virgin territory. Producers will either need to pull equipment and personnel from other projects or pay through the nose. Either solution is likely to delay production of some of those 18 billion barrels; other newly opened areas could remain untouched for lack of rigs or money.

    “There’s certainly the potential for multibillion-barrel resources to be found,” said Dalton Polasek, chief operating officer with Mariner Energy, a Houston-based energy company with assets concentrated in the Gulf of Mexico. “Perhaps the bigger question is, where are you going to get the rigs to test newly opened acreage?”

    Rigs More Precious Than Oil

    It would cost up to $600,000 a day to rent an offshore rig capable of drilling in the deeper waters of the Gulf of Mexico, though even a deep-pocketed producer would be unlikely to find one available before 2010. That price would almost certainly skyrocket if the U.S. opened up even a small portion of the 600 million acres it currently restricts. Shallow-water rigs are cheaper, but are also seeing dramatic markups, with many operators leaving U.S. waters for more lucrative contracts in the Middle East and India.

    “It’s not a situation where there is excess capacity with regard to rigs. The demand pull worldwide continues to be strong,” said Bill Herbert, an oilfield services analyst with Simmons & Co. “Pricing clearly would have to go up in the Gulf of Mexico in order for those rigs to repatriate back to us.”

    Herbert estimates that shallow-water rig prices would rise from $150,000 a day today to at least $200,000 a day if the U.S. lifts drilling restrictions.

    Even at $140 oil, service costs start to add up. A large new project offshore can easily cost over $1 billion, and as expenses have risen, companies have come to rely on higher and higher prices of oil to ensure that developments pay for themselves. Even in areas known to contain large amounts of oil and gas, not every promising rock formation ends up getting drilled.

    “A single deepwater well can cost more than $100 million, so drilling decisions are made very carefully,” Polasek said.

    Drilling Into The Unknown

    Producers will need to proceed carefully because, despite the 18-billion-barrel figure released by the government, no one knows what’s really in the off-limits waters.

    The U.S. Minerals Management Service, which oversees offshore energy development, came up with the estimate by extrapolating from nearby fields and exploration work performed before bans were implemented.

    In other words, it’s mostly guesswork. The Atlantic and Pacific coastal waters are almost entirely undeveloped, with even surface exploration work banned since the 1980s. The restrictions came as states worried about the environmental and economic impact of a spill from an offshore platform.

    Huge quantities of natural gas and some oil were discovered in the 1970s and 1980s in shallow Gulf of Mexico waters off the Florida Panhandle, before the then-President George H. W. Bush put the eastern Gulf off limits. Florida’s governor and legislature now support lifting the ban, as does the Virginia legislature.

    Long Lead Time

    Production out of the Atlantic would take 10 years or more. But energy companies estimate that wells could be drilled less than two years after Florida opens its waters. Gas would then be piped a short distance to existing infrastructure in Alabama.

    “Your drill times and drill costs are … probably a third of what they’d be out in deepwater,” said William Van Wie, vice president of exploration at Devon Energy Corp., an Oklahoma City-based producer that is one of the largest leaseholders in the deepwater Gulf of Mexico.

    A large shallow-water project might cost $200 million, compared with $3 billion for a big deepwater field, Van Wie said. California, the most promising region for new oil finds, is almost certain not to lift restrictions, he said.

    The most promising projects have almost without exception seen massive cost overruns and lengthy delays. But companies have also bid record amounts this year for the privilege to develop new territory leased by the government.

    “What (producers) do is prioritize geological prospects,” Yergin said. “You can’t prioritize if you don’t have the data.”

    (By Brian Baskin, Dow Jones Newswires

  265. 265
    Fiveanddimer Says:

    Any goldbugs on this site. Next to energy, the precious metals are my favorite sector. PM stocks have exploded this week.

  266. 266
    Sambone Says:

    F – I’m long GLD, my target $1,100.00 by end of year. Just bght some AEM couple of days ago.

  267. 267
    BossmanG Says:

    Do you guys/gals have any research sites like Z’s that you recommend for precious metals?

  268. 268
    Fiveanddimer Says:

    Sambone – I think $1,100 gold by year end is a good bet. I just hope that it doesn’t get there in a hurry, so I can add some more gold eagles at cheaper prices.

  269. 269
    Sambone Says:

    Boss – My favorite is Jim Sinclair’s free site. This guy is a Guru!

    http://www.jsmineset.com/

  270. 270
    ram Says:

    I’m long AUY OCT 13’s based on info. from someone here a couple weeks back – could have been DMAN – not sure. So far so good.

  271. 271
    Dman Says:

    Five – #265 was tempted to sell my AUY calls, both today & yesterday, but still holding & considering more gold/silver plays. Have found the Forbes “Professional Timing Service” to be very good on commodities (metals & energy) for the last year.

  272. 272
    doc Says:

    BossmanG,I listen to a 40 minute conference call from don cox of bmo harris every friday on banks ,gold, oil fertilizer, and natural gas. but i dont know how to send an email link to the chat room

  273. 273
    cadillac Says:

    Any feelings out there one way or the other on broader markets next week. Seems to me that the selling is overdone and we could get a nice bounce next week. I think I might pick up some bargains for next week. Do we have any reports that could kill my thesis coming out next week?

  274. 274
    Sambone Says:

    Off subject – Friday trival. Love #6 on instructions.

    http://maps.google.com/maps?f=d&hl=en&geocode=&daddr=Los+Angeles,+California&saddr=Sydney,+Australia&sll=23.241346,-123.925781&sspn=70.527083,151.347656&ie=UTF8&z=2

  275. 275
    BossmanG Says:

    Doc, could you email me the link?
    bossmanpg@rogers.com

  276. 276
    Sambone Says:

    C – I think we’ll get some type of “Dead cat bounce” possibly back to 1350 on the S&P by mid/end of July. If that happens, I’ll go VERY, VERY, VERY short. SKF could drop back to 110, and if so I’ll round trip it for the 4th time this year. I currently have a stop on at 137, which I’ll probably raise on Monday. Bottom line we make get a snap back, but it will a “Shorter’s dream”!

  277. 277
    cadillac Says:

    Thanks Sam – Thats where my head was at.

  278. 278
    doc Says:

    bossman, isent you the link to don cox. I sold jan 25 mmr for a small profit.

  279. 279
    ram Says:

    Anybody see news on WLT that’s creating a stampede?

  280. 280
    Fiveanddimer Says:

    Doc, I listen to the Don Cox webcast every Friday, also. He helps me keep my head on straight with his big picture perspective. Earlier this year I was tempted to bottom fish in the financial sector. He strongly advised against it, saying that their balance sheets were black holes. I’m glad I listened to him.

  281. 281
    texana Says:

    8 million shares of hk @ 42.96

  282. 282
    Fred Says:

    Sam I am short the TWM from $78. May work if we get the bounce back next week.

  283. 283
    crysball Says:

    NIGERIA, the Elephant in the corner….an interesting new article by Jim Kingsdale on the role of National Minsmangement’s role in the impacting the price sensitivity of oil.
    http://seekingalpha.com/article/83036-nigeria-the-elephant-in-the-corner?source=d_email

  284. 284
    crysball Says:

    HK Buyout imminent????????????????

    At the close on Friday there was an 8,000,000 [ yes 8 million] share block, and for the day trading volume was 21,338,506 shares, or approx. 4X the 3 month daily average.

    Some interesting option volumes Friday:
    July 40 Calls 1,638 contracts
    July 45 Calls 3,210 contracts

    August 45 Calls 1,362 contracts
    August 35 Puts 17,448 put contracts

    Insights about this trading behavior???

  285. 285
    texana Says:

    @ 1st glance i thought that hk was being taken out & well it probably will be. a review of the stocks i watch, showed these stocks which had the same trading pattern: hk, gmxr, eog, wll, sd & anr. volume, time of day and end of the qtr says this is fund buying of the top stocks in the qtr for the fund to show ownership of these stocks for their qtrly report. time will tell, i want to own all of these stocks because of their future growth prospects.

  286. 286
    crysball Says:

    Institutional ‘Window Dressing’ is certainly a part of the picture, it just seems the #’s are very large for HK.

    Perhaps some information about major Haynesville Shale well results is being leaked to institutions…. and this also accounts for some of the action.

  287. 287
    ellwodo Says:

    HK buys – probably rebalancing in anticipation of HK moving up to the Russell 1000 index.

  288. 288
    Sambone Says:

    Welcome back Z!

    BP Says Supply, Demand Driving Oil Price

    Dow Jones Newswires

    MADRID — High oil prices are not the result of speculation but of a fundamental shift in consumption, BP PLC’s (BP) chief executive reiterated Monday, a contrast with many statements by oil producers and others.

    Speaking at the World Petroleum Congress here, Tony Hayward dismissed what he said was the “myth” of higher oil prices being the product of speculation.

    Instead, they had stemmed from booming hydrocarbons consumption in Asia and the U.S. in recent years.

    Members of the Organization of the Petroleum Exporting Countries have blamed high oil prices on speculators. Earlier Monday, world oil prices reached close to $142 a barrel. The CEO said the world wasn’t running out of oil but that oil production was hindered by rising costs.

    “Supply is not responding adequately to rising demand,” Hayward said in a speech here.

    In order to sate markets, Hayward said governments should “keep markets liquid and accessible” instead of keeping high import tariffs.

    Taxes on production are also too high and should be lowered to release funds for investment, he said.

    Separately, the CEO called for a global cap-and-trade system of carbon emissions, where players sell credit on carbon they don’t produce. “A global price of carbon will soon emerge,” he said.

    —By Benoit Faucon, Dow Jones Newswires

  289. 289
    zman Says:

    Morning Sambone, it’s good to be back. Fresh post out in about 30 minutes.

  290. 290
    texana Says:

    z, hope u had fun. u proably already seen this on hk. ip #63 in elm grove field in the hynsvl shale 7 IP FOR 16.8 MMCFPD with 5600#of press thru 26/64th choke. 212 net ft of pay 11,oo5 vertical depth with 3,880 ft lateral. 11 stage frac , #63,sec9,t16w,bossier parish, la. Ac now up to 275,000ac

  291. 291
    To Kuala Lumpur Says:

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