22
Dec
Monday – Get Ready For A Holiday Light Week
Holiday Schedule:
- Monday and Tuesday – Business as usual except the A-team is off the desk, hanging in the Hamptons and commiserating about their pea sized bonues. Meanwhile, the B-team has been sacked and the C-team, accustomed to answering the phones and dashing out for coffee and dry cleaning, is running the trading show this week so look for wild swings on very light volumes and quick retracements of early day moves. I sort of expect a rally into the holiday but nothing magnificent.
- Monday – nothing on the economic calendar.
- Tuesday – 3Q08 GDP revision (-0.5% est), consumer sentiment (58.5), home sales
- Wednesday – equity markets close at 1 pm EST. Oil inventory report at the regular time (10:35 EST until next year when they move it back to 10:30). Natural gas inventory report comes a day early at 12:00 pm EST. Eco data including jobless claims and durable goods.
- Thursday – Market closed, Merry Christmas.
- Friday – Business as usual witht the C-team.
Taters TA If you don’t check this out I think you are missing out. Comments over the weekend on natural gas/UNG, (SWN), (HK), and (CHK).
In Today’s Post:
- Holdings Watch
- Commodity Watch
- Stuff We Care About Today
- Odds & Ends
Holdings Watch: The holdings spread sheet and Wiki Tabs will be updated a little later today.
Commodity Watch:
Crude oil got slammed for nearly $13 or 27% last week going off the boards at $33.87. The February contract takes over today as the front month and starts off at a much higher $42.36 due to the steep contango in crude futures. This is no cause for celebration and $40 will again prove to be a near term test for oil. See the wrap for OPEC related comments. This morning that Feb. crude contract is trading up slightly having been up over a buck overnight.
- OPEC Watch: No seriously, we mean it. On Sunday, OPEC’s president talked about the possibility of making further production cuts to stabilize price. ZComment: Poorly played, with OPEC benched for the moment yelling look at me coach in vain. It’s up to the tanker tracker companies to judge whether or not compliance is occurring at this point which will likely take another 3 to 4 weeks to show up in their estimates.
- Israel Threatens Hamas Offensive. Click here for story. 9 months ago this would have been cause for threat and counter-threat in the region and an escalation in oil prices. Today probably not worth a dime (literally) but it’s worth keeping an eye on.
Natural gas fell almost 3% close at $5.34 last week. This morning gas is trading off slightly. Usually in the winter the kinds of cold snaps were seeing now cause short term, playable price spikes. So far this year, the perception that supply is hot and the reality that the economy is not has served to put a firm lid on any attempts at a move back up, even for just a short term bounce (Tater was thinking along similar lines from a technical perspective over the week end as well). I expect that to change if we can get closer to in line with last year’s withdrawal profile.
- Weather Watch: Colder Still
- Last week’s HDDs came in at 215 vs the forecast of 185 and the prior week’s 200. That 200 HDD reading helped us to withdraw 124 Bcf from storage…not too shabby considering the apparent demand suppression we’ve seen in late November and early December.
- This should lead the Street towards a withdrawal number this week in the range of 140 to 160 Bcf.
- Last year saw a pull from storage of 165 Bcf.
- Big withdrawal country (200 Bcf+) generally doesn’t arrive until mid January.
- This week’s HDD forecast is 207.
- Last week’s HDDs came in at 215 vs the forecast of 185 and the prior week’s 200. That 200 HDD reading helped us to withdraw 124 Bcf from storage…not too shabby considering the apparent demand suppression we’ve seen in late November and early December.
- January Outlook from the CPC: Warmer than Normal. I like to have all the data when looking at anything so here’s NOAA’s look at December through February issued back on November 20; it too called for warmer than normal temps and December has been anything but warm.
Stuff We Care About Today:
Single Digit Midgets For 2009.
- Right now I’m taking a look at the following names: BEXP, BRY, CPE, DNR, EGY, END, GSX, HLX, KOG, KWK, ME, PLL, PQ, RAME, SD, SGY, TLM, TXCO, XCO.
- Suggestions of other U.S. companies that fall in the under $10 crowd and are of the E&P variety are welcome for consideration.
- I’ll have a piece on what I think will be the best and worst prospects for a rebound from this crowd out before year end.
PBR – No good opinion either way. Took a quick look, starting to look interesting on a chart as long as oil behaves. Recent month showed up production after several lackluster ones. Spending plans still not clear here and comments from president about oil price can be taken in a negative light casting much doubt on the economics of their recent sub-salt discoveries at current oil prices.
Tanker Multiple – Lot of people looking at OPEC’s new get tough on quotas stance and/or decline global demand and coming to the conclusion that the tankers are due for a fall. Jefferies and JPM downgraded the group today cutting ratings on (TNP), (OSG), (TNK), (NAT) and (FRO). The group is off roughly 40% from year ago figures and much more mid summer highs. And many of these names carry a yield that is safer than not but have been sold off, much like the dry bulks. This is just a headsup that I’ll be looking at these names a little closer going forward and that these downgrades today seem to be a bit behind the curve. The stocks appear to be already discounting a move quite a bit lower in terms of OPEC shipments.
Odds & Ends
Analyst Watch: In addition to the ratings cuts on the tankers, Raymond James cut price targets on all its Canadian oil and gas coverage by 5 to 10% over the weekend.
NFX on the tape saying it did not receive timely payments from a Rockies refiner for its Monument Butte black wax to the tune of $15 mm in November. Contract terminated.
This represents about 1/2 of NFX’s MB wax production (black wax is a type of oil that solidifies easily). They are attempting to sign a new contract with another refinery, probably a hiccup for the stock today.
If they can’t get another contract, they expect to reduce guidance by 4.5% for 2009 which would mean YoY growth of 6% instead of 11%. They are laying off rigs to accommodate the lower refinery take.
December 22nd, 2008 at 9:13 amBy Angela Henshall
Of DOW JONES NEWSWIRES
LONDON (Dow Jones)–Crude oil futures traded little changed in London Monday
drifting in a narrow range amid volumes around 15% lower than previous
sessions.
Profound fears over a deepening global recession however, have weighed on
crude in the last week, even in the face of a weakening U.S. dollar and
promised production cuts from the Organization for Petroleum Exporting
Countries.
“Crude fundamentals remain bearish but profit-taking ahead of the Christmas
holiday could push oil prices to the top of the range, close to $50 a barrel,”
said Marius Paun broker at ODL Securities.
At 1216 GMT, the front-month February Brent contract on London’s ICE futures
exchange was down 4 cents at $43.96 a barrel.
The front-month February light, sweet, crude contract on the New York
Mercantile Exchange was trading 26 cents higher at $42.62 a barrel.
The ICE’s gasoil contract for January delivery was up $6.50 at $452.50 a
metric ton, while Nymex gasoline for January delivery was down 73 points at
96.20 cents a gallon.
OPEC’s largest production cut in the group’s history has failed to lend
support to the market, oil prices nose-dived, closing down more than $3 a
barrel on Dec. 17.
Market players remain skeptical about the new cuts, which amount to around 2.2
million barrels a day, in part due to doubts about compliance. Traders feel
less confident member countries will be quick to act to trim their exports
after the last round of cuts.
“Market observers fear that cartel members may not adhere to pledged cuts if
they see no improvement in prices,” warned Robert Laughlin an analyst at MF
Global.
Russian Energy Minister Sergei Shmatko confirmed earlier Monday his country
has no plans to join OPEC, quashing hopes that the world’s largest non-OPEC oil
producer is ready to work more closely with the Middle East.
“Russian oil supply is seen contracting versus levels 12 months ago, on poor
upstream economics,” said Harry Tchilinguirian senior oil analyst at BNP
Paribas. “So Russian and Azerbaijani output is already constrained in a sense.
At this juncture, it is unclear whether (any) potential cut these countries
would make would be on top of the lower foreseen output or not.”
Aside from the OPEC news some of the majors are already looking to cover next
year’s expenses by snapping up crude now.
“(They are) storing it and selling it at June or July prices, which is why
Cushing is within half a million barrels of its all-time record,” Peter Beutel,
analyst at Cameron Hanover, said highlighting the high level of inventories
currently held at Cushing, Oklahoma the delivery point for Nymex futures.
While there are several Wall Street Bank’s calling $25 a barrel oil for the
first quarter of next year, Stephen Schork, an independent oil analyst, expects
prices to bottom-out before sinking to that level.
“These are the same guys, who as late as September, were still confident in
their $150 and $200 predictions,” Schork said. “If that is not a telltale
(sign) crude oil is about to bottom, we don’t know what is,” he said pegging
near-term support for Nymex light, sweet crude at $40.53 a barrel.
Volatility and uncertainty over near-term price direction for crude oil
futures has boosted Nymex option volumes and open interest. Investment flows
are now showing a large increase in the net futures length of large
speculators. “I’ve noticed the February and March $35 a barrel strike price has
attracted traders, leading to a significant increase in uncovered positions,”
said MF Global’s Laughlin.
-By Angela Henshall, Dow Jones Newswires
December 22nd, 2008 at 9:13 amDow Jones Newswires
12-22-08 0738ET
That’s a great point by Schork about the analysts and their projections. Goldman was top of the pack last summer and now they too are at $25.
December 22nd, 2008 at 9:33 amChanging times: probably would have had kids sooner in life.
http://news.yahoo.com/s/ap/20081222/ap_on_re_us/co_ed_dorm_rooms
December 22nd, 2008 at 9:40 amPBR on the tape talking about 2009 spending (I referenced the lack of data there this morning in the most, well, no more). Company says likely sell debt in 1Q09 with aim of spending $21B next year, which is up relative to 2008. They cite Mexico selling $2 billion last week at 6% as indication that they will be able to do the same and they see an improved lending market in 1Q.
December 22nd, 2008 at 9:47 amGroup slightly red on almost 0 volume and its Monday. Tues and Wed likely to be less exciting.
NFX getting hit worse on comment 1 above.
Market in general directionless on lack of eco data. I’m around if anyone wants anything but will shut up and read for awhile.
December 22nd, 2008 at 10:05 amFor BOP
Late one morning one December in a year we’ll all remember,
Writing Christmas poems had turned into quite a chore,
While I nodded, nearly napping, suddenly there came a tapping,
As of someone gently rapping, rapping at my office door.
“Tis some visitor,” I muttered, “tapping at my office door-
Only this, and nothing more.”
Open wide I flung the entry, stood there like an ancient sentry,
In there stepped a haggard trader who’d been up since half past four.
Not the least obeisance made he; not a minute stopped or stayed he;
But, with mien of lord or lady, walked in from the trading floor-
Stood next to a bust of Soros on a shelf well past the door-
Stood, and sighed, and nothing more.
Then this battered soul beguiling my sad fancy into smiling,
By the grave and stern decorum of the countenance he wore,
“Though thy P/L has cratered, you’ll get better soon or later,
Ghastly grim and somber trader wandering from the trading floor-
Tell me what thy problem is found upon the trading floor!”
Quoth the trader, “Nevermore.”
As he stood there slightly smirking, doubts I’d long felt vaguely lurking
My subconscience let emerge and push their way out to the fore.
“Though our P/L’s been stinking and our share price swiftly sinking
Surely I’m right to be thinking that the worst is in Q4?
When will we return to normal, back the way it was before?”
Quoth the trader, “Nevermore.”
“Come now, fellow,” I cried, shaken, “surely thou art quite mistaken!
There is sovereign wealth fund buying risky assets soon in store.
Banks will soon enough start lending, start consumers back off spending
Bring a swift and tidy ending to our all feeling quite poor.
Don’t you think that GDP growth soon enough will exceed four?”
Quoth the trader, “Nevermore.”
Was he simply trying to scare me, overwhelm me, or just dare me
To get out of my positions I’d put on the year before?
Though they trade at distressed prices, my sangfroid is cold as ice, as
I have made it through the crisis marking them at eighty four.
“Don’t you think if I hang on I’ll find a bid at eighty-four?”
Quoth the trader, “Nevermore.”
My portfolio’s diverse, moving on from bad to worse.
Managing a long-stock book had proven to be a chore.
As I glanced back at my screen I took on a pallid sheen
As the S&P careened below its key supportive floor.
“Will the Nikkei ever rally back towards where it was in ’94?”
Quoth the trader, “Nevermore.”
Then, methought, the air grew denser, perfumed from an unseen censer
Swung by Seraphim whose foot-falls tinkled on the tufted floor.
“Wretch,” I cried, “Satan’s thy master, he hath sent me to disaster
Tell me, who hath fallen faster, me or hedge funds shuttering their doors,
Causing panic on the streets of London, Moscow, and Lahore?”
Quoth the trader, “Nevermore.”
As the floor began to darken, a footstep I faintly hearkened,
Followed swiftly by another rapping beat against my office door.
In stepped an HR director, leering like Hannibal Lecter
‘Twas not my place to correct her as she told us what’s in store.
Then she escorted the trader by the elbow out and off the trading floor.
I saw him again- nevermore!
December 22nd, 2008 at 10:15 amZ: Good morning, congratulations once again. I’ve been on and off your site recently and have not kept up with your CHK view, namely January options. Are you still holding? Should we look to sell before year end and take our losses this year?
December 22nd, 2008 at 10:20 amNymex Crude Up As Trading Volumes Drop
By Hyun Young Lee
Of DOW JONES NEWSWIRES
OTTAWA — Crude futures were up slightly Monday, with trading volumes thinning out sharply ahead of the Christmas holiday.
Light, sweet crude for February delivery was up 49 cents, or 1.2%, at $42.85 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange was 15 cents higher at $44.15 a barrel.
The changeover to the new February front-month contract added a boost to prices, with some of the market pessimism rolling off the Nymex board with the expiring January contract. February crude closed at a $8.49 premium to January Friday, which expired at a near-five year low.
The gloomy demand outlook that pressured January crude prices hasn’t let up, but the February contract may get a brief reprieve over the quieter holiday period. While lower volumes can exaggerate price movements, making for more volatile trading, few market participants will want to stake big positions ahead of the new year.
“People who have made money want to keep their money, and people who have lost money want to limit these losses,” said Gene McGillian, an analyst at brokerage Tradition Energy in Stamford, Conn. “And there’s nothing to shake us out of this sideways trading over the next couple of weeks.”
The influx of new fund money which flows to the market at the start of each quarter will provide some direction to the market after the new year. But this is still likely to lead prices lower in the absence of any major brightening in U.S. and global economic data, McGillian said.
Some support may come from OPEC, which last week announced the biggest production cut in the group’s history, of 2.2 million barrels a day. At the time, the market shook off the announcement on lingering doubts about compliance, but the cutbacks will only start becoming evident in about four to six weeks’ time. Any signs that OPEC members are adhering to output quotas may offer some traction to crude prices.
There are also growing indications that market participants are looking for a bottom to crude prices. In recent weeks, large speculators have built up their long positions, or bets prices will rise.
While there was a big jump from the expiring January to the incoming February contract, “the big question is how much of this rally will survive the coming days and weeks of trading,” said Walter Zimmermann, an analyst at ICAP/United Energy in Jersey City, N.J.
“If [Friday's intraday low of] $32.40 a barrel was a major low, then $36.45 to $34.65 should now provide long-term support,” he said in a note, pegging Monday’s support level at $40.55 a barrel.
Front-month January reformulated gasoline blendstock, or RBOB, was down 20 points, or 0.2%, to $0.9673 a gallon. January heating oil was up 1.4 cents to $1.4060 a gallon.
—By Hyun Young Lee, Dow Jones Newswires
December 22nd, 2008 at 10:27 amVery funny Sam. Not ha, ha funny mind you but more boo-hoo funny. Gotta love Poe.
RS – I still have Januaries, the group may continue to get sold into year end, in which case I’ll reposition into lower and longer out strikes. Today volume everywhere is light, moves are exaggerated like we knew they would be.
Its evident in the case of some names like BEXP, tax loss selling is in full effect. The single digit midget crowd is getting pounded this morning and the list of names may grow simply due to the fact that more of the mid-caps are approaching that level.
Going back to CHK, I think the sell off has been overdone, plain and simple. Can it fall further, sure, as to put in a pretty smart money guy’s words, its already ridiculously cheap … so why can’t it fall further. Why like it over something else, something less leveraged, right here right now. I’m not sure I really do, at least as far as the short lifespan of a near month option goes. I much prefer the growthier, less indebted names like SWN or EOG for that. But CHK is cheap, really cheap and the big hedges insure estimates don’t continue to decline nearly as much as many of its peers even if natural gas does. Maybe the market has not interest in the names until Jan 2. But that is not generally the case for the beaten down. The tax loss selling in the E&Ps, Refiners, and Oil Service will continue for a bit but be mostly concluded by early next week. At which point, I think we turn. And as to the growthier, less leveraged names, like EOG, they are falling as well, in a void of buyers.
December 22nd, 2008 at 10:30 amOff subject
http://www.glenn.tapley.us/MC.swf
December 22nd, 2008 at 10:30 amZTRADE: $10KP Trade
Added (2) SWN January $30 Calls (SWNAF) for $1.55 with the stock at $27.30.
December 22nd, 2008 at 10:51 amGMXR, any reason for the sell off?
December 22nd, 2008 at 10:59 amWiki tab updated. Very light positions at present.
Orion – no, not that I’ve seen either in news (none) or a analyst comment.
Volume is pathetic at 77,600 shares (no 000 missing). This is what you get with C team action. I almost bought a little but thought, heck, it might pull back more.
December 22nd, 2008 at 11:01 amSUN outperforming- anyone hear anything?
ZMAN- congrats on intern #2!
December 22nd, 2008 at 11:22 amBy David Benoit
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)–With oil production expected to be slashed world-wide
December 22nd, 2008 at 11:25 amnext year, there will be rough seas ahead for oil tankers, analysts said Monday
as shares of the companies fell.
A week after the Organization of Petroleum Exporting Countries said it would
cut the supply of crude oil by a record 2.2 million barrels a day, or about 7%,
Jefferies analysts cut the investment ratings on four oil-tanker companies,
warning the demand would sink for the shipments of oil.
Economic recession and curtailed spending across the globe also will hurt the
tanker companies as demand for even what oil is produced is expected to be
lower.
“Pledged OPEC production cuts translate to an approximate 8% to 9% contraction
in crude oil tanker demand in 2009, while the crude tanker oil fleet is likely
to expand 14% to 15% next year” said the Jefferies note.
The firm cut the ratings on Tsakos Energy Navigation Ltd. (TNP), Overseas
Shipholding Group Inc. (OSG), Nordic American Tanker Shipping Ltd. (NAT) and
Frontline Ltd. (FRO), helping push shares of all four down.
Tsakos shares fell 6.6% to $19.07 while Overseas Shipholding dropped 6% to
$37.17 and Nordic American lost 7.7% to $31.80. Frontline was down 3.8% to
$28.69.
Meanwhile a note from JPMorgan said “we believe that the 2009 fundamental
outlook for tankers is extremely weak,” but added “the tanker market frequently
surprises to the upside owing to factors that are impossible to predict.”
JPMorgan cut the ratings on Nordic American saying it expected the company to
have to half its dividend payments next year, and said Teekay Tankers Ltd.
(TNK) would also see dividend cuts in 2009. Teekay shares slumped 12.6% to
$9.75 in recent trading.
But JPMorgan also gave a boost to Overseas Shipholding, raising the rating to
overweight from neutral while noting a strong balance sheet and liquidity
position.
-By David Benoit, Dow Jones Newswires
Dow Jones Newswires
12-22-08 1123ET
Nifkin – nothing other than their turf (Northeast) has the best cracks out there for the last couple of months, even positive gasoline cracks which is unique right now. Plus, all the cold is keeping regional heating oil aloft… not HO is off today down about 1% vs 3% off for gasoline and crude.
December 22nd, 2008 at 11:26 amre 16 – makes you think someone like a NAT, highest multiple in the tanker group has a bit further to fall.
December 22nd, 2008 at 11:28 amtater – at some point, after any holidays you have, can you take another peak at gold again for me?
Merry xmas everyone… I think I’m calling it a week already.
December 22nd, 2008 at 11:32 amNEW YORK, Dec 22 (Reuters) – U.S. refining margins climbed last
week as crude prices dropped to near five-year lows, according to a
report by Credit Suisse released on Monday.
“WTI crude prices fell last week by 11.3 percent or $5.06 a
barrel to $39.65 a barrel on a week-on-week average basis as the 2.2
million barrels per day incremental supply cut announcement by OPEC
could not fully offset continued fears of demand deterioration,”
Credit Suisse said in the report.
U.S. Gulf Coast refining margins jumped $6.62 a barrel to $6.83
a barrel, from the previous week’s margin of 21 cents.
Midwest margins climbed $5.85 to $6.68, from 83 cents the
previous week.
West Coast margins increased by $13.39 to $23.40. Rockies
margins climbed $6.36 to $12.37.
North East margins saw the smallest gains, up 79 cents to
$4.88.
U.S. crude has fallen more than $100 since their peak in July as
demand deterioration drives prices lower.
(Reporting by Rebekah Kebede; Editing by Marguerita Choy)
Mon Dec 22 15:32:23 2008
December 22nd, 2008 at 11:39 amRefiners and cracks tab updated for latest data. Showed big rebounds in all regions but Northeast which had been doing better than all other regions this quarter.
December 22nd, 2008 at 12:09 pmHayensville names getting whacked for no specific reason.
GMXR and GDP down 14%. GMXR volume 120K shares vs 550K avg daily volume half way through the session.
HK down 10% on 1.4 mm shares and no news vs 8 mm avg daily volume.
December 22nd, 2008 at 12:20 pmBig volume in DRYS today.
December 22nd, 2008 at 12:57 pmTater – when you get a chance take a quick look at the base being formed by the XNG. We used to see these stretch out over a couple of months (like it has) and see volume decline into that move until the chart broke one way or the other. In this case, I don’t get volume readings but looking at the E&P stocks that comprise the XNG I show decline volume and decline volatility for the most part. Question is which way does it break. I think it goes higher in the new year with the stimulus plan (now they’re talk a trillion) boosting demand and the fact that both oil and gas are oversold (I know you don’t like the term T but you know what I mean). Anyway, TA thoughts welcome.
December 22nd, 2008 at 12:59 pmSaw that Pop. Also saw rates had recovered somewhat for the Panamax, Capesize, Suez crowd. At some point, things start moving. I suspect today’s drop in the Drybulks as seen in DRYS and in the SEA ETF is due to the trade numbers out of Japan and things like Toyota pre announcing their first loss since the 1940s.
December 22nd, 2008 at 1:01 pmAdded the Gold monthly, weekly, and daily charts.
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2933882
Also put up one of my favorite charts, the monthly US dollar, at the top of page two on the link. Gives a good look at why it is so hard to listen those nice people on TV telling you about what direction the dollar is going at the present. I see that it is going in at least three different directions. The time frame in which you look at something can really make a difference.
December 22nd, 2008 at 1:02 pmI’ll take look at XNG, just saw that. I seem to remember it looking like poop though.
December 22nd, 2008 at 1:04 pmtater – nice charts. thanks for keeping up on swn and hk for us all.
December 22nd, 2008 at 1:10 pmLooks light a tightening wedge to me, again on low volume. Ya wanna see poop, come to my house.
December 22nd, 2008 at 1:13 pmXOM = huh?
December 22nd, 2008 at 1:18 pmanyone know anything about Aztec oil and gas? Good or bad?
December 22nd, 2008 at 1:18 pmDouglas – I don’t know it but just looking at name change, the price, where they are it has the hallmarks of one to avoid. I’ll look into it if you like.
December 22nd, 2008 at 1:22 pmZ congrats on intern #2
December 22nd, 2008 at 1:30 pm$XNG added
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2933882&cmd=shows157365386&disp=O
XOM – From TA perspective, if you look at the daily chart you can see the bottom Bollinger Band come ripping vertically to smash into the downward trending price. Crash. Bollinger band rejects to the downside, price bounces up….price falls as the Band is not there to smash into anymore.
December 22nd, 2008 at 1:38 pmThanks much K – just gave the first bath which is something I normally don’t do for interns for legal reasons.
GMXR just unreal move on 150,000 shares, now down $4.
Thanks Tater. Quadrillion now, oh don’t be silly, lol.
December 22nd, 2008 at 1:47 pmWyoming – any new thoughts on rig staffing?
December 22nd, 2008 at 1:53 pmFirst meeting of the so called gas opec meeting tomorrow, Russia takes lead.
http://www.guardian.co.uk/business/feedarticle/8167376
December 22nd, 2008 at 2:16 pmCommercial developers seek access to the TARP.
http://www.marketwatch.com/news/story/Commercial-real-estate-may-next/story.aspx?guid={B8584A95-BB8F-4DB4-A3B3-C9B183F10C92}
December 22nd, 2008 at 2:27 pmHey Z, been out of the loop, excellent news on new arrival, congratulations.
December 22nd, 2008 at 2:35 pmThanks John.
Slow but ugly day in market land. Stock declines just exaggerating in the direction of their initial move. GMXR and GDP scream bargain. We get GDP in the morning which could be scary, could yield another drop so I’ll not add today.
December 22nd, 2008 at 2:37 pmRig staffing, getting the RIF lists together. Just saw $1.49 gas. SLB buddies confirm, no new hires, no capex, prep to release in Jan.
December 22nd, 2008 at 3:01 pmFlying J(Longhorn Pipeline, LP etc) files BK. 20th largest privatedly held company in US with 16 B in annual sales and 16,000 employees. FYI BRY is a 26MM unsecured.
December 22nd, 2008 at 3:05 pmWonder how many funds are getting out of USO completely. The volume on that thing over the past month is just silly. Either that or it’s some complicated pair trade, short USO, long the hair on the back of my plumber crack.
December 22nd, 2008 at 3:08 pmRIF = reduction in force.
December 22nd, 2008 at 3:18 pmThanks guys. Very odd market indeed.
NG turned positive on the day after the close, crude kept dropping, down 2.50 to just under $40. Bargain hunting needs to start soon or they are all at 0.
Reef – what’s about BRY?
December 22nd, 2008 at 3:22 pmBRY owed 26 MM by Flying J. NFX owed 15MM by Big West(100% owned by Flying J).
December 22nd, 2008 at 3:25 pmFlying J owned 100% by Longhorn which filed BK today.
http://www.flyingj.com see Petroleum refining and restructuring plan
December 22nd, 2008 at 3:29 pmNFX: Is the MB hard to place customers for.
December 22nd, 2008 at 3:34 pmWoops. Thought you miss typed BK for 8K. Bankruptcy? Nice. Saw NFX killed their black wax contract this morning, took the stock down on reduced expectations. Wonder if insurance will cover the lost $ like it does when you topple a rig…business interruption insurance. Anyway, this is what happens when cracks stink for too long, belly up refiners.
December 22nd, 2008 at 3:34 pmThe monument butte production is waxy (has low pour point, kind of like the opposite of a melting point) so the market is more limited than regular crude. It had been a grower for them as demand rose. At these prices and in this economy that’s probably not going to be the case although they do allude to signing others to take the stuff…meanwhile, they are laying down 2 rigs.
December 22nd, 2008 at 3:37 pmI do not think it covers counterparty BK.
December 22nd, 2008 at 3:37 pmPersistent bottom fishing going on late, names like SWN and CHK doing less crappy.
Stepping out soon to grab some sort of portable gaming system to keep intern #1 from midget tossing intern #2.
December 22nd, 2008 at 3:44 pmJohn Naj on Fast Money shined up CHK. Lumped it with the Obama plan. Not getting political …
December 22nd, 2008 at 3:47 pmReef – yeah, pretty sure you’d have to have a business interupt policy specifically written for BK. Since they did not mention it in the pr, they ain’t got it.
Wyo – Its the holidays…go nuts re political.
December 22nd, 2008 at 3:51 pmPoltical is O.K. if it helps NG.
December 22nd, 2008 at 3:52 pmMay I curse too?
December 22nd, 2008 at 3:53 pmBut it’s Christmas?
December 22nd, 2008 at 3:54 pmPPlllleeeaaassseee. With sugar on top.
December 22nd, 2008 at 3:54 pmSorry no, my mother reads this.
December 22nd, 2008 at 3:54 pmSorry about the plumber thing then.
December 22nd, 2008 at 3:56 pmMerry Christmas Mother Z.
December 22nd, 2008 at 3:56 pmOK then. How can oil separate from gas as far as commodity pricing? With everything put in play and oil not getting any support from OPEC, Russia, Mexico. Coal will be stressed in the green world. The only stress I see in .09 on gas will be imports from the North flippin Hedged gas operators (good on them to be smart) and LNG.
Do you think this scenario pans out.
December 22nd, 2008 at 4:05 pmColorado solution to “Clean gas” initiatives:
1. Unholster gun,
2. Shoot foot.
http://online.wsj.com/article/SB122999246547828591.html
December 23rd, 2008 at 6:43 amWyo – those guys must be long natural gas.
December 23rd, 2008 at 6:45 amPerhaps they did not get the memo from the “Home Office”. Perhaps we have dissension within the ranks?
Still curious about your opinion on oil/gas separation / decoupling. Do we get $50 oil or $4 gas?
December 23rd, 2008 at 7:11 amI don’t see us going that low on gas, at least not for any length of time. Take the natural gas directed rig count from 1600 to 600 with 80% declines on the growthy part of the profile and you have my first reason why. There is additional LNG capacity coming, true, but everyone saw a tsunami of foreign gas flooding the U.S. this year and it did not happen. Lot of gas has been headed to China until just recently. Canada will very likely fall again in 2009. So that leaves U.S. production. Barnett likely to peak mid year 2009 from everything I can glean from DVN, EOG and despite the protestations by CHK, believe the two leads. Haynesville growth will be slower than people have thought since day one. Marcellus will be non-event until at least 2010, probably 2011 as there is no $ to drive all over that terrain looking for gas and add gathering to get it out. Wyoming (the state) likely flattens as well.
I’ve never been a big fan of BTU parity and I’m still not as oil is still global and gas is still mostly local and the two fuels have the square root of 0 to do with each other in terms of switching.
December 23rd, 2008 at 7:18 amI’d bet your CO news is bad for BBG, not great for NFX, PXD. Any other thoughts of who might not like it?
December 23rd, 2008 at 7:19 amBTW, talked with some friends yesterday. SLB is to re-organize North America. Basin offices will be returned back to sales offices and the OFS structure will be removed from the lower levels and maintained only up high. OFS is a Matrix type of structure for the business types (dual bosses/dotted line). No news on any operation closures but it should be coming. Losing contracts, Shell was one of them in a key area.
December 23rd, 2008 at 7:23 amOXY and ECA (U/P). All the service companies.
December 23rd, 2008 at 7:24 amRemember – Luck smiles on the prepared (hedged).
December 23rd, 2008 at 7:25 amAgreed, unless you are talking about it smiling on their stock price, then you have to look at CHK and groan.
December 23rd, 2008 at 7:27 amInteresting to see how fast analysts are cutting price decks at this point. Crude estimates have almost caught up with reality for the 4Q, about 25% too high to the strip for 2009. Worse for natural gas and not really catching up. When prices pop, even a little for crude, it will be the first time in 4 months that estimates will be low to reality.
December 23rd, 2008 at 7:33 amHey Wyo, did my 66 answer your question or are we talking past each other?
Agreed, re all the service names. You can plot the oih vs the rig count and see the moves correlate. (doing that in today’s post right now).
December 23rd, 2008 at 7:37 amYes, 66 answered. I am like one of those EW dudes. HHHummm (deep voiced) well if we see this, then we will have wave c of b of (i) go up but if this happens then all bets are off and we extend wave ….
So, I see NOC’s getting desperate for cash flow bringing the whole house of cards down. Reserves won’t matter, peak is on the back burner. FRO is smiling because they have a second source of revenue for their scary empty scenario.
And on the other hand, we have inflation and I am now out of my league but my stab here is that commodities should go up.
December 23rd, 2008 at 7:46 amThis is probably the point where commodity, refiners, E&P, Service all go their own way….maybe?
December 23rd, 2008 at 7:47 amRe differentiation of stock price based on story. I think we are within a month or so of that. Maybe February when we get some new data points on the reserves and all the E&P types announce CT writedowns.
On thing is for certain, there is too much doom and gloom out there for where prices are. E&Ps seem to be discounting much lower case than estimates or strip pricing so all hedges are upside. Generally when I see this much gloom, and we’ve seen it before in energy but maybe not this much in the broad market, its time for a reversal. “Hi, my name is Z, and I an optimist…”
December 23rd, 2008 at 7:53 amWyo – give me a minute to post Tuesday – I appreciate your thoughts and want to get them somewhere that people will read today.
December 23rd, 2008 at 7:54 amOk Tuesday up. Another question for Wyo, I think you once told me that your presence on the site (or not) was a good indicator of how busy drilling is. Your here so…
December 23rd, 2008 at 7:59 amFrom Reuters – Khelil is speaking at Moscow’s gas OPEC meeting outlined in the bullet in the post.
Khelil said Opec was disappointed in Russia’s lack of commitment to cut oil production.
“Well, they (Russia at the meeting in Oran) proposed everything except for a reduction… And maybe the reaction of the market was negative because of that,” he said.
“But wait… If there were no Opec reductions in September and October, I think we would have seen prices today at maybe $20 (per barrel). So it was because of Opec that revenues for Russia were at $40 now not at $20…,” he said.
December 23rd, 2008 at 8:03 amOn vacation, all work and no play makes me a dull boy.
December 23rd, 2008 at 8:06 amOh, ok thanks. There’s a Tuesday post up now. Got any other words of wisdom.
December 23rd, 2008 at 8:08 amDid not Mexico, Norway and Russia (?) sat their declines were there production cuts?
Oh, strange, but there are some headhunters still poking about. Most people have hiring freezes or only new hires …. must be the lucky well hedged folks.
December 23rd, 2008 at 8:09 amsat = say
December 23rd, 2008 at 8:09 amMex and Norway did. Russia just proposed cuts by other people.
December 23rd, 2008 at 8:10 amIn fact, OPEC is on the tape about that this morning, from Moscow, saying how ticked they are….its in comments at the bottom of the Tuesday post.
December 23rd, 2008 at 8:11 amSwitching over to new post. WOW – stay away (short) from Service, the gains of E&P will be at the service sector expense. It is now a buyers market and we will payback the past 2-3 years of bend over.
December 23rd, 2008 at 8:12 am