20
Jun
Wrap - Week Ended 6/20/08
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:
Asset Balance at Day's End:
- Cash: 59%
- Equities: 24%
- Equity Options: 17%
On To The Wrap…
Have a great week gang, I know I will.
open positions and closed Junes updated. Wiki tab updated. Have a great week!
June 20th, 2008 at 10:58 pmUpdate 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
June 21st, 2008 at 7:18 amArticle in WSJ Sat re: very high tariffs on Chinese pipe may be coming soon.
June 22nd, 2008 at 10:55 amHere 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
June 22nd, 2008 at 10:58 amChevron 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.
June 22nd, 2008 at 2:43 pmI 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.
June 22nd, 2008 at 5:57 pmCrude 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.
June 22nd, 2008 at 6:03 pmhk ceo
http://www.thestreet.com/_yahoo/video/cramerinterviews/10422266.html?cm_ven=YAHOOV&cm_cat=FREE&cm_ite=NA#10422266
June 22nd, 2008 at 7:39 pm7:55 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
June 23rd, 2008 at 7:53 amThank you Sambone, I really appreciate that you are posting, it’s nice to not have to attempt to listen to CNBC for market updates.
June 23rd, 2008 at 8:28 amNicky and everybody else too!
June 23rd, 2008 at 8:29 amHi 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).
June 23rd, 2008 at 8:30 amT - I found that Dow Jones is clearer than the talking heads on CNBS
June 23rd, 2008 at 8:30 amSam, according to accuweather it is all quiet in the tropics. Are you seeing anything?
June 23rd, 2008 at 9:04 am9:23 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
June 23rd, 2008 at 9:18 amD - 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
June 23rd, 2008 at 9:21 amKey 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
June 23rd, 2008 at 9:22 amNicky, what’s with the broad market? Have they given up giving up?
June 23rd, 2008 at 9:57 amSo far today I believe Z would have liked this color shade on his screen
June 23rd, 2008 at 10:02 amOil exploration and Refining UP.
WHY ?
Plenty of oil around.
June 23rd, 2008 at 10:15 amCHK, HK, PQ flying.
June 23rd, 2008 at 10:16 amAny 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.
June 23rd, 2008 at 10:30 amAlmost 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!!!.
June 23rd, 2008 at 10:31 amMorning 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.
June 23rd, 2008 at 10:44 amBroader 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.
June 23rd, 2008 at 10:50 amGDP did a deal in haynesville up 13 %
June 23rd, 2008 at 10:51 amNicky, 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.
June 23rd, 2008 at 11:05 amChina 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.
June 23rd, 2008 at 12:59 pmChina Oil Demand
typo……….should have said
UNEQUIVOCALLY stated due to the peculiar economics of the Chinese economy, the DEMAND for Oil will actually increase…..
June 23rd, 2008 at 1:02 pmHi all -
June 23rd, 2008 at 1:32 pmJust checking in, not much to contribute so I won’t clutter the board, but what an amazing day…
Can someone direct me to a list of the Haynesville players? re #26
June 23rd, 2008 at 2:02 pmRe # 31 Go to upper left hand of page “Z SCRREENS”
June 23rd, 2008 at 2:08 pmHey scoop, what have you got yer eye on ?
June 23rd, 2008 at 2:25 pmD- 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.
June 23rd, 2008 at 2:34 pmWhat a beautiful day. Everything is green and in bloom. LOL
June 23rd, 2008 at 2:37 pmapbd
Anyone planning to sell anything ahead of this weeks fed?
June 23rd, 2008 at 2:37 pmHave 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.
June 23rd, 2008 at 2:46 pmJust sold half CHK 55 with about 250% profit and it still going up. What a stock ZMAN!!!
June 23rd, 2008 at 2:50 pmsold all my July CHK $65 calls @$4.60 today bought Fri.6/20 @$3.10.
June 23rd, 2008 at 2:50 pmscoop
June 23rd, 2008 at 2:56 pmdid 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.
# 40 my sentiments exactly
June 23rd, 2008 at 3:00 pmhasta manana
June 23rd, 2008 at 3:02 pmSold 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.
June 23rd, 2008 at 3:05 pmIOC had a solid gain after retreating from the whacky close last week…
June 23rd, 2008 at 3:12 pmThe refiners time maybe nearing:
http://www.bloomberg.com/apps/news?pid=20601213&sid=aC42xa9nwu5A&refer=home
June 23rd, 2008 at 9:31 pmAnyone have an analysis of GMXR?
June 23rd, 2008 at 10:30 pmRegarding 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.
June 24th, 2008 at 5:56 amPardon 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.
June 24th, 2008 at 6:25 amRe: 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.
June 24th, 2008 at 6:49 amIndependent 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.
June 24th, 2008 at 7:05 amcrysball thanks for the heads-up on the Jul 65 CHK calls
June 24th, 2008 at 7:53 amThanks Crysball.
June 24th, 2008 at 7:57 amJefferies 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.
June 24th, 2008 at 8:15 amJust 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.
June 24th, 2008 at 8:29 amDid anybody see a negative comment on OII?
June 24th, 2008 at 10:34 amram -OII cut to add from strong buy by Capitol One; = buying opportunity?
June 24th, 2008 at 10:38 amI think OII is a buying opp. Since their 2nd qrtr release is 7/31, I will probably look at AUG or OCT.
June 24th, 2008 at 10:47 amMorning 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.
June 24th, 2008 at 10:50 amThanks BOB.
June 24th, 2008 at 10:51 amGood Morning Nicky. Do you have any thoughts on the energy complex?
June 24th, 2008 at 10:52 amram- I have nibbled on the OII Aug 85’s today. Hopefully last summer’s chart will repeat. First tropical disturbance should move it.
June 24th, 2008 at 11:00 amRam - 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.
June 24th, 2008 at 11:27 amFinally 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.
June 24th, 2008 at 11:38 amThank you Nicky.
June 24th, 2008 at 12:17 pmWFT
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
June 24th, 2008 at 1:14 pmre TMR. Be careful. I have heard that management may have siphoned lots of cash out of the company.
June 24th, 2008 at 1:20 pmHi, Anyone have an opinion on TSO July $22.50 calls? 56,000+ contracts today
June 24th, 2008 at 1:29 pmLatest 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
June 24th, 2008 at 1:41 pmScoop - rumor on TSO board about a SUN merger. Disclosure I own the TSO common.
June 24th, 2008 at 1:45 pmIt seems like alot of bottom fishing in all the refiners.
June 24th, 2008 at 1:47 pmCHK - 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).
June 24th, 2008 at 1:51 pmAnyone have any ideas on mmr? Stock is very weak. Sellers come in on any uptick
June 24th, 2008 at 1:53 pmJust 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.
June 24th, 2008 at 1:56 pmI 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…
June 24th, 2008 at 2:03 pmmy 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.
June 24th, 2008 at 2:09 pmI 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?
June 24th, 2008 at 2:12 pmgood man Fred. That was what I read this morning.
June 24th, 2008 at 2:23 pmTY FRED
June 24th, 2008 at 2:25 pmirished -
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.
June 24th, 2008 at 2:27 pmIrished -
I was thinking about the dump too, but aren’t both Z and the common holders anticipating news in July (besides earnings)?
June 24th, 2008 at 2:29 pmDouble-fault and a grammar penalty…Sorry gang.
June 24th, 2008 at 2:32 pmIt’s a bloody red day on my screen. Where is the love today.
June 24th, 2008 at 2:52 pmNEW 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)
June 24th, 2008 at 2:53 pmAt least on the selling today, the volumes seem to be below average.
June 24th, 2008 at 3:05 pmYou 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.
June 24th, 2008 at 3:13 pmAdios.
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
June 25th, 2008 at 8:00 am8:39 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
June 25th, 2008 at 8:04 amBy 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
June 25th, 2008 at 8:36 am06-25-08 0935ET
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.
June 25th, 2008 at 8:44 amAny guesses on why the big sell off in the Haynesville players?
June 25th, 2008 at 9:01 amMorning all,
just bought some July EOG 125s as a way to dip a toe into this decline
June 25th, 2008 at 9:09 amEverything energy on my screen is on sale today.
June 25th, 2008 at 9:10 amOops: correction: EOG 130s
June 25th, 2008 at 9:11 amNothing in GOM/Atlantic at this time of interest.
http://www.ssd.noaa.gov/goes/east/tatl/loop-rb.html
June 25th, 2008 at 9:13 amellwodo: 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 (???)
June 25th, 2008 at 9:19 amThanks, preferably sooner than later.
June 25th, 2008 at 9:22 amJust 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 …
June 25th, 2008 at 9:30 amanybody have the results of the inventory report?
NFX taking a bloodbath today.
June 25th, 2008 at 9:33 amSam, thanks for the Atlantic update & keep ‘em coming. Glad it’s you interpreting the pics & not me
June 25th, 2008 at 9:36 amEIA
Crude UP 800K
June 25th, 2008 at 9:40 amGasoline Down 100K
Distillates UP 2.8M
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 …
June 25th, 2008 at 9:52 amWOW, This is ugly. Just bought RIG$150,DVN$125,CHK$65, All August calls
June 25th, 2008 at 9:55 amScoop, X approaching where support might lie. Sold those puts yet?
June 25th, 2008 at 9:57 amI think I’m sitting out on the sidelines for now and just holding the longer dated options.
June 25th, 2008 at 9:58 amCramer is adding six energy names into this selloff
June 25th, 2008 at 10:01 amTemporary 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.
June 25th, 2008 at 10:02 amDman, Not yet contemplating taking $1 loss
June 25th, 2008 at 10:03 amZ sure picked a good week (so far) to take the money and run.
June 25th, 2008 at 10:07 amSeriously 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?
June 25th, 2008 at 10:10 amKiaora: plenty to like out there. Looking to get into some service names, eg OII for hurricane season.
June 25th, 2008 at 10:18 amJust took a few January DITM calls on OII, will build on this if it falls further prior to any tropical excitement
June 25th, 2008 at 10:27 amNicky, 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.
June 25th, 2008 at 10:31 amAPI
Crude UP 1.2M
June 25th, 2008 at 10:33 amGasoline UP 1.1M
Distillate UP 3.2M
API Correction Crude UP 1.6
June 25th, 2008 at 10:34 amTater: nice call on SLB falling back from support. What’s your take on the consolidation pattern there?
June 25th, 2008 at 10:34 amThanks 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.
June 25th, 2008 at 11:01 amAlso just bought some Aug 65 CHK, Z’s cash cow. I like to stay with the horse until it proves otherwise.
June 25th, 2008 at 11:01 amHow about getting into some WLL 105’s? It’s made this move several times.
June 25th, 2008 at 11:22 amThanks tater.
Um … obviously #115 should have said “falling back from resistance” instead of “from support” but I guess that was obvious.
June 25th, 2008 at 11:28 amNever bought in during the rise, but QBIK is holding its gains nicley though volume seems to be tapering off.
June 25th, 2008 at 11:28 am11:28 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