26
Jun

CAP & Trade + Amnesty Friday

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The House is expected to vote on H.R. 2454 , the American Clean Energy and Security Act of 2009, aka, the 2009 Energy Bill or more simply put, the Cap and Trade bill, later today. The vote is expected to be close. Here's a link to the full 1201 pages of the proposed legislation. I've skimmed the bill and it is essentially a plan to have a plan with most of the pieces on cap and trade for carbon being put in motion within 6 to 24 months of the bills passage.

  • The bill says things like:  "the status of oil as a strategic commodity, which derives from its domination of the transportation sector, presents a clear and present danger to the United States"
  • It goes on to compare oil to salt which was later replaced by technology to destroy the monopoly power evil salt miners had over the world. The focus immediately following this comparison is on ethanol to supplement and replace gasoline. 
  • The plug in electric vehicle language in the bill sounds more like an encouragement of the electric car technology as a test case to show that it works more than to really promote widespread use of electric vehicles. There are incentives for car manufactures to make electric cars but the details on timing are not in the bill (although $50 billion in incentives is with an initial $25 billion crossed out as it was deemed by someone as too little).
  • Natural gas is not mentioned as a transportation fuel to be encouraged.
  • The CBO has said the cost to American families will be $175 per year.  Not surprisingly, the API thinks the number will be considerably higher with one source saying $3,000 is closer to the mark. It's impossible to say given the lack of specifics here.
  • Either way, this seems rushed to congress for a vote prior to recess and it is NOT a comprehensive energy plan as much as it is a cap and trade and jobs plan. No energy plan could be considered comprehensive without addressing domestic oil and natural gas in the mix and they really are not taken into account. 

In Today's Post:

  1. Holdings Watch
  2. Commodities Watch
  3. Natural Gas Inventory Review
  4. Stuff We Care About Today
  5. Odds & Ends

Holdings Watch:

  • $10KP: $20,000 / 54% Cash

Yesterday's Trades:

  • Added KOG shares at $1.10 in a personal account. 

Commodities Watch

Crude oil rallied $1.56 to close at $70.23 on the back of a strong equity market. This morning crude is trading up slightly following renewed talk of amnesty for Nigerian rebels.

  • Nigeria Watch #1: MEND claims it blew up another Shell oil field well head. Still waiting on confirmation of the last 4 attacks on Shell facilities.
  • Nigeria Watch #2: Leaders of four rebel groups have said they want to meet with President Yar Adua to discuss accepting his previous offer of amnesty.  Nigeria says if the rebels agree to take amnesty it will release ailing rebel leader Henry Okah and will observe a ceasefire  from August 6 to October 4. MEND is not one of the four groups seeking to meet with the president. I'm not a conspiracy theorist but if I were, I'd point out that the rebels are too well armed to be conducting their activities without outside aid. I'd then add that these activities have helped to re-prop up the price oil and that the rebels are getting relatively little from the government with this amnesty other than a sick leader and the promise not to be eradicated. The pledges by the government to "share the oil wealth" are absent. So my sense is, if oil prices fall again, MEND and other rebel groups will be called upon to stir things up yet again. 

Natural gas weathered another natural gas storage (this one a bit smaller than expected - see below) to close up $0.08 at $3.99 on the August contract that takes over as the front month today. The 12 month strip was up a dime to $5.21. This morning gas is trading flat to up slightly with oil.


Natural Gas Inventory Review



ZComment: Smaller than expected injection, somewhat balances out last week's surprisingly super-sized injection.  Warmer weather wasn't warm enough to entirely account for the shift  from week to week so I suspect a bit of survey error came into play in the two week period. No matter, that's really just noise given how full storage is now. The next potential catalyst for gas comes at month end with the release of April production data. Obviously we have not yet seen, even in June, a large drop in natural gas production and while I don't expect to see a significant drop in the April numbers, I do expect them to start showing more directionality to the downside than the last few readings. In other words, more of the rolling top action in gas supply won't be good enough to support gas prices here ... we need to see some more definitive declines in Texas, Wyoming, and the "other states".  Not a big decline yet, just not so flattish.

 

Stuff We Care About Today

Deal Watch:

  • (PQ) Post Deal Wrap:
    • PQ raised $35 mm at $3.50
    • Deals continue to be well received:
      • Stock closed at $3.85 after pricing
      • UBS upgraded the stock citing increased liquidity, near term Gulf Coast catalysts

Otherwise pretty quiet on this lazy summer day in energy land. 

 

Odds & Ends

Analyst Watch:

  • All quiet on the energy analyst front.

Other Important Things To Watch Watch: The U.S. plays Brazil in the title match of the Confederation Cup Sunday, at 2pm EST on ESPN. 

121 Responses to “CAP & Trade + Amnesty Friday”

  1. 1
    tater Says:

    My limited understanding of verbiage like “clear and present danger” is that its inclusion automatically transfers control to the executive. Under what circumstances? Arguably any, as it is a clear and present danger.

    Oligarchy anyone?

  2. 2
    BirdsofpreyRcool Says:

    The Energy Bill is insane. It is nothing more than a Power/Control/Money Grab by Politicians. But, it’s brilliant. If climate still changes (as climate always has, and will), they can simply claim that “we didn’t do enough/soon enough”… if climate stabilizes (as climate does too, on it’s own) then they can say “see what we did! we are brilliant! give us more power and money.” So, win-win for a centralized government with complete power over every aspect of our lives.

    Not saying conservation is a bad thing. Just saying this is the wrong thing. It will hurt Americans and American jobs.

    You think $4 gasoline was expensive? Just wait…

    http://www.bloomberg.com/apps/news?pid=20601207&sid=a1ZiIqv3E4QE

  3. 3
    zman Says:

    right, as in:

    these oil cartels represent a clear and present danger to the United States

    but the better, non-titular line in that movie was:

    “the world is gray Jack” Too few people seem to get that these days.

  4. 4
    zman Says:

    As the API president said on CNBC this morning, “Pelosi wouldn’t be bringing it for a vote today if she didn’t think she had it. But we hope cooler heads in the Senate prevail”.

  5. 5
    BirdsofpreyRcool Says:

    HeadTrader is unexpectedly MIA this morning. And TechTrader is quiet. First time ever, HeadTrader has not shown up for work. So, we are flying blind into the volatility today.

    Nothing has changed his call for a rally into quarter end, tho. Not saying “big rally.” But not thinking big fall-off either.

    Climate/Energy vote today could change that, tho. Insane Govt Intervention has a way of upsetting “free” markets.

  6. 6
    tater Says:

    That’s what I mean by pointing to that line. I think it gets taken as only big flowery language because of the book/movie title, when in reality it has actual meaning. Talk about hiding in plain sight.

  7. 7
    zman Says:

    Oil coming off with the Nigerian rebel amnesty deal (see post) but dollar is coming close to its recent lows as well and that should act to preserve prices in the mid $60s to low $70s. I suspect the rebel leaders are coming to the president with new, higher monetary demands now that they have wreaked further havoc on the oil infrasture and shut in at least another 133,000 bopd in the last 6 weeks. Going to be interesting, have my serious doubts they will get what they want and that the amnesty will work.

  8. 8
    zman Says:

    Tater – I wondered if they toyed with “healthcare, wall street, etc etc represents a clear and present danger …”

  9. 9
    zman Says:

    If the bill fails to pass I’m likely to do some quick trades in VLO and BTU on the long side.

  10. 10
    john11 Says:

    PXD note from Simmons this morning;

    Pioneer Natural Resources (PXD – Overweight) Upgrading to Overweight from Neutral: With a deep discount to NAV, impressive free cash flow for FY’09 and FY’10 and significant leverage to oil prices, we are increasing our rating on PXD to Overweight from Neutral. PXD’s decision to drastically reduce capex and drilling activity in their low decline oil levered Spraberry and Wolfberry plays last year, enabled the company to traverse the striking decline in oil prices in a relatively unscathed fashion. As a result of that decision, PXD’s current valuation and the company’s asset composition, PXD is in a position of strength going forward. More specifically, due to the low decline nature of their production, based on the 6.16.09 forward strip, the company is positioned to throw off over $300 MM of FCF in 2H’09 and approximately $400 MM in FY’10 that could be used to pay down debt or repurchase shares. Additionally, PXD is extremely well positioned to begin increasing activity to reignite production growth in FY’10 that will allow them to both capitalize on the dramatically reduced energy services cost environment as well as the expected strength in the commodity prices. Finally, PXD has material exposure (~310,000 net acres) to a material emerging shale play (Eagleford) that could increase PXD’s $50/share NAV by $5/shr (10%).

  11. 11
    zman Says:

    Thanks John. Well written summary there.

  12. 12
    zman Says:

    Rodman Renshaw bumped their SWN target from $43 to $52. Gutsy move that.

  13. 13
    tater Says:

    Reading of Rev Shark’s morning piece. Talks about this being the day for the annual re-balancing of the Russell 2000 and he expects big block trading that jostles the market all over the place.
    Think I’m going to go have a good fight with my garden weasel.

  14. 14
    Dman Says:

    The Japanese claim to have experienced deflation in May:

    http://news.yahoo.com/s/ap/20090626/ap_on_bi_ge/as_japan_economy

    the article says their CPI excludes “volatile” food prices, but doesn’t mention energy.

    Well, the price of crude by about 30% in May, so hows that for deflation?

    I congratulate Japanese economists for their own version of “economic man”, who may consume energy but doesn’t need to eat. This non-eating consumer got to experience 1% deflation in May! Yippee!!

  15. 15
    Dman Says:

    Oops, meant to say:

    Well, the price of crude increased by about 30% in May, so hows that for deflation?

  16. 16
    zman Says:

    House discussing cap and trade now:

    http://www.c-span.org/Watch/C-SPAN_wm.aspx

  17. 17
    BirdsofpreyRcool Says:

    HeadTrader had a flat tire. Just got in. Will pass along any color later. (It takes a while to get all the trading systems up… so, will check back later.)

  18. 18
    jat Says:

    Z,

    did you hear anything in this energy bill about limiting E&P hedge activities?

    http://www.magnetmail.net/images/clients/IPAA_comm/attach/PelosiHedgingLetter.PDF

  19. 19
    choices Says:

    Re: Cap and Trade-watched on C-Span last eve Wash Perspective interview with VA Dem Rep committee member-seemed to be arguing to slow more rigorous provisions on coal fired plants until after 2020-what is incomprehensible to me is that he may represent Dem view on Nat Gas that any switch or increased emphasis for Nat Gas would increase demand and therefore price-some 58% of homes now heat with Nat Gas and they did not want to upset lower price stability of Nat Gas but he was defending coal-said some 51% of elec gen plants use coal-not sure if he was speaking for VA or for nation-obvious also pushing to alt energy sources. Dems position on Nat Gas is again incomprehensible.

  20. 20
    zman Says:

    Jat – I read the hedge section. It too is a plan to have a plan. I see disclosure of individuals who exceed an as of yet unset limit on positions. I see mention of commercial and non-commercial (speculators) in the bill but I don’t see a direct threat to E&P, but its so vague it could go that way. The bill just vows to set up a commission to make some rules. A lot of the bill is like that.

  21. 21
    zman Says:

    50 to 51% is a national number for coal fired generation of electricity.

    20% nukes, 20% natural gas, the rest is hydro, solar, wind, biomass, and crude oil (about 2%).

  22. 22
    choices Says:

    Has anyone seen a list of large contributors to committee members-my guess is alt energy supporters/lobbyists are large-I understand that GE may gain big time. I guess the question is who is providing the ‘grease” for this bill.

  23. 23
    BirdsofpreyRcool Says:

    TechTrader = buy morning dip for 60/40 odds long trade works.

  24. 24
    zman Says:

    Nevermind listening to the House debate. It will literally rot your brain.

    Solars up today, but after a pretty bad recent run, everything else red from E&P to Majors, to Service to refiners. Looks to be trading with the market and oil and oil is ignoring the dollar in favor of peace dreams in Nigeria.

  25. 25
    zman Says:

    Thomas Weisel reiterating outperform on KOG.

  26. 26
    zman Says:

    A 300 page amendment was added last night at 3 am to the energy bill. I have not read it obviously and have no idea what is in it.

  27. 27
    BirdsofpreyRcool Says:

    The Thomas Weisel price target for KOG is $1.90. KeyBanc has a $2.00 PT. Tristone goes out on a limb with $1.20. And BMO is the skeptic in the group with $1.00 (you would have to have a pretty dim outlook for the price of oil, to come up with that PT. OR, Unit would have to demand payment in full on that 2nd rig… it’s the Unit Rig situation that is currently holding the stock back, imho).

  28. 28
    zman Says:

    Even if they have to pay $6 to $8 mm to punt rig #2, it would not be enough to shave that much off the NAV. I assume all of the KOG following are using an NAV based target and I would further assume that BMO’s target is stale. Often firms follow these little, spec names because a banker wants them to. But the deals are small and the headaches can be big and as such, the names don’t get as much playtime from the analyst as a CHK or an HK who they consider to be real companies by comparison.

  29. 29
    zman Says:

    BOP – for my own understanding. Wells 1 through 6 have been drilled with Rig #1, correct?

    Wells 7 and 8 will be drilled with the same rig?

    Cost is $5 mm to conclude the contract on rig #2? What is the use / no use matrix on this rig. Do they need to bring in a partner to keep a two rig program running.

    What are they saying D&C is for wells 1-4?

  30. 30
    zman Says:

    1 1/2 hours of debate on a now 1500 page energy bill. This is no way to run a country.

  31. 31
    elijahwc Says:

    “Natural gas is not mentioned as a transportation fuel to be encouraged.”

    Howard Simmons has a relevant historical observation which follows:

    Howard Simons
    Natural Gas’ Role
    6/26/2009 10:24 AM EDT
    Jim, you ask why natural gas has relatively low prominence in the administration’s plan. The answer is “risk.”

    The most expensive BTU is the one you need and cannot get. Thirty-five years ago, natural gas was in a two-tier market, intrastate and interstate, with the former being unregulated and the latter under price controls. Needless to say, supplies were abundant in the intrastate market and scarce in the interstate — to the point where more industrial man-hours were lost to natural gas supply disruptions than to OPEC actions. This was particularly true in the winter of 1976-1977.

    The Carter-era NGPA and PURPA laws treated gas as a dwindling resource to be shifted away from both utility and industrial customers. Industrial contracts often had an interruption clause; a short call option for the user.

    Years of changing supply prospects — only three years ago the industry was lamenting dwindling discovery rates — made gas a riskier fuel than readily storable petroleum products and coal. These supply risks are embedded options and are a major reason why those who compare gas and oil prices directly regard one as “cheap” compared to the other. Until gas users feel safe in long-term contracts, gas will suffer as a baseload fuel

  32. 32
    nifkin Says:

    Invest 93
    http://www.wunderground.com/tropical/

  33. 33
    zman Says:

    Invest 93 – text description

    http://www.crownweather.com/?page_id=29

  34. 34
    BirdsofpreyRcool Says:

    z — great questions on KOG. Lemme do some legwork and get back to you.

    But, yes. Wells 1-6 have been drilled with Unit Rig #1. Expect that to be the case going forward. DK about bringing in a partner to utilize Rig #2. Don’t think that would be the driver on a decision like that.

    By the way, the acreage and promote swap they announced with the operations update was driven by one of their minority partners who couldn’t make the capital call. So, KOG bought them out. Quite bullish, with respect to KOG’s outlook for the prospectivity of the acreage.

  35. 35
    zman Says:

    Thanks Bop.

    Market in real paint drying mode.

  36. 36
    zman Says:

    Nifkin

    That might be showing a little bit of spin

    http://www.ssd.noaa.gov/goes/east/watl/loop-vis.html

  37. 37
    bill Says:

    pxp might get off shore lease after all but dont count on it

    http://www.independent.com/news/2009/jun/26/time-tranquillon/

  38. 38
    bill Says:

    z your opening remarks

    >”the status of oil as a strategic commodity, which derives from its domination of the transportation sector, presents a clear and present danger to the United States

    All i can say is amazing!

    These our our leaders.. a bunch of bumbling boobs and nincompoops.

  39. 39
    zman Says:

    Bill – let me know if it happens. I’ve been cooling my heals on the name and am writing up ROSE and ATPG first but honestly, there is not much of a rush. I may own a little PXP into 2Q earnings though.

  40. 40
    PackMan Says:

    Congress is insane; especially the Pelosi and Reid led Democrats.

  41. 41
    zman Says:

    Hey Bill, it could be worse:

    http://news.yahoo.com/s/nm/20090626/wl_nm/us_iran_election

  42. 42
    VTZ Says:

    I don’t know if anyone is interested in bullion but I thought I’d post it anyways because it’s a low premium for physical.

    http://www.firstmajestic.com/s/OrderForm.asp

    for 14.50 pricing today as compared to 14.xx spot.

  43. 43
    PackMan Says:

    Not seeing much volatility … very slow … no wonder your traders stayed home … see them in Sept.

  44. 44
    PackMan Says:

    the only stock trading any volume is PALM. Awesome short if you have the stomach for it here.

  45. 45
    BirdsofpreyRcool Says:

    I don’t know which is more frightening, the car or the guy who starts dancing at 3:02…

  46. 46
    choices Says:

    Just noticed consensus earnings est for Q2 for CLR went up from $0.064 to $0.075, 11 estimates with range of 0.02 to 0.14-recommend stays at Buy.

  47. 47
    zman Says:

    Choices – yep, that’s that marking to market action I’ve been jabbering about. It should continue to trickle higher.

  48. 48
    bill Says:

    http://www.downstreamtoday.com/news/article.aspx?a_id=16870

  49. 49
    zman Says:

    http://moe.met.fsu.edu/cgi-bin/cmctc2.cgi?time=2009062600&field=Sea+Level+Pressure&hour=Animation

    Hit FWD and watch the Gulf of Mexico

  50. 50
    bill Says:

    good article on nat gas

    oil to gas ratio over 16 to 1

    http://www.downstreamtoday.com/news/article.aspx?a_id=16866

  51. 51
    zman Says:

    As you know, since oil and natural gas are used for different things and since one is global and the other is primarily local, I don’t put a lot of stock in the ratio of gas to oil as it relates to U.S. pricing. I think its worth noting but I don’t think it is a causal relationship.

  52. 52
    zman Says:

    Market feels like it wants to continue at least the quarter end rally.

    Volumes are pathetic for the time of day.

  53. 53
    BirdsofpreyRcool Says:

    z — if the House passes this “energy bill,” the market will open up Monday morning, down 300+ points. JMHO. But, this is the biggest power/money transfer from the private to the public sector we have EVER seen in this country.

    Just had a really smart investor (engineering background) call up the trading desk to sell all his holdings.

  54. 54
    zman Says:

    BOP – that would seem to be an over reaction to passage to me. The senate will not take up its own version of the bill until August and they will have a harder time getting it through.

  55. 55
    BirdsofpreyRcool Says:

    That said, I don’t think the Senate will pass this “bill.”

  56. 56
    BirdsofpreyRcool Says:

    z — wrote 55 b/f i saw 54… so, yes. Hopefully it would be an over-reaction. On the other hand, it might wake up some people as to what this bill is really about.

  57. 57
    zman Says:

    NG going possible on that potential Gulf disturbance. Waiting on rig counts.

  58. 58
    BirdsofpreyRcool Says:

    And now, for a word from our fav cross-asset-class strategist… near-term-uncertainty (but long-term bullish)

    http://www.capmarkets.com/ViewFile.asp?ID1=302126&ID2=319572273&ssid=2&directory=11608&bm=0&filename=Into_The_Homestretch_6-26-09.pdf

  59. 59
    zman Says:

    Wonder when Kass goes bullish again. He seems to be making shorter term calls of late.

  60. 60
    zman Says:

    About to start 3 more hours of debate on the bill, then move for a vote so it will almost certainly be post close.

  61. 61
    VTZ Says:

    Z – Have you ever looked at Tristar (TOG on the TSX)? They seem to have lots of Bakken upside.

  62. 62
    VTZ Says:

    510,000 undeveloped acres and Montney exposure as well. They have experience drilling and their acreage is proven. It’s fairly expensive on this years multiples though.

  63. 63
    zman Says:

    V – Nope, are they on the north side of the border in the play? Am looking at ROSE for Alberta Bakken.

  64. 64
    VTZ Says:

    Yeah they are southeast Saskatchewan.

  65. 65
    VTZ Says:

    http://tristaroilandgas.com/assets/docs/cPresentations/corp2009.pdf quick bit of corporate propaganda.

  66. 66
    zman Says:

    V – Ok. I do so little looking north of the border I’m not your best view on it. I’ll take a quick look though.

  67. 67
    Wyoming Says:

    http://money.cnn.com/2009/06/24/news/economy/Clock_ticking_on_state_budgets/

    http://www.epmag.com/WebOnly2009/item41397.php

  68. 68
    zman Says:

    V – Ok, that’s TOGSF in the U.S. Can’t argue with their growth record, not sure how much of it is organic, work in the Bakken looks like they’ve gone into development modes with short, tightly spaced laterals. Good economics on those wells. Very cheap on P/CF. Balance sheet not shabby. Oily and its light oil which I like right now, stock hasn’t really come back much. Hmmm. First thoughts, still looking.

  69. 69
    VTZ Says:

    The reason I ask is there’s been much discussion about KOG but to me it seems like an unnecessary well risk as compared to TOGSF. You can’t argue with their acreage, their balance sheet is in good shape as you say and they have upside in Montney which is forecasted to be the best shale in North America. Encana has IPs above 25 if I’m remembering right.

  70. 70
    zman Says:

    V – I own EOG, which is a big cap U.S. E&P drilling the best wells in the Bakken with substantial undeveloped acres and a very strong balance sheet. It’s not oily but is getting oilier than it has historically been due to the Bakken and its Texas activities. KOG is a no pain, no gain play.

  71. 71
    BirdsofpreyRcool Says:

    KOG — information from the 1Q09 10-Q…

    Put the 1st Unit rig into service in Nov 2008 with a 2-yr drilling commitment. As of 3/31/09, obligation on that rig stood at $4.9mm.

    Unit rig #2 delivery still on hold with the drilling contractor. From the Q: “The Company is negotating with the drilling contractor to either cancel or delay its obligation with respect to the second rig in an effort to avoid all or a part of the contractual $5.6mm cancellation penalty.”

  72. 72
    bill Says:

    we have had ht weather this week so we should see a bigger drawdown in ng (lesser build)

    Last Year +86
    5-Year Av +85

    I think it could be 70 to 75 based on this week weather which might get ng jumping

    what do you think?

  73. 73
    zman Says:

    Wyoming in the middle of the day? Not seeing a step up in activity yet, eh?

  74. 74
    zman Says:

    Bill – I expect it to be smaller than last week, yes. I won’t work up my numbers until next week once I’ve seen the final CDD information (its broken out by census region which matters) and also the imports numbers.

  75. 75
    Wyoming Says:

    Hydraulic Fracturing:

    The CSPAN video –
    http://mms.tveyes.com/MediaCenter/332116.7415/CSPAN_06-23-2009_20.17.23.wmv

    Cliffnotes if you don’t want to watch video:
    http://screencast.com/t/gqV8Y0vvDG

    A corresponding letter:

    http://screencast.com/t/cZZuyiNd8m

    Remember you can click on the pointer after opening the screencast and there may be a plus magnifier to see it larger again.

  76. 76
    Wyoming Says:

    Z, half days every Friday.

  77. 77
    zman Says:

    Some of these folks debating the “energy” bill right now would have you working half days every day of the week.

  78. 78
    Wyoming Says:

    As long as they don’t cut my pay, I can pretend I am French.

  79. 79
    zman Says:

    For those with a high risk threshhold, here’s your clean coal play:

    EEE

    http://www.evgenergy.com/

    Not an endorsement, I’ve thought they were toast for some time now. But its the kind of thing that might run if people start looking for these plays. Dog with extra fleas.

  80. 80
    Wyoming Says:

    If you use Firefox as a browser, you may be able to ctrl + to enlarge the letter in #75.

  81. 81
    zman Says:

    Wyo – Somehow I don’t think it will be like farming where they pay you not to drill.

  82. 82
    md Says:

    On CDD’s
    I was surprised by this weeks low injection. It was roughly comparable to June 20/08 on CDD and injections. If Industrial is off by 12% this week should have been higher by 10 BCF.
    I did not do comp on regional basis.
    Don;t know of course what the NG electric consumption spike may have been.
    Any more thoughts

  83. 83
    Wyoming Says:

    Serious note, some of the vendors are being furloughed or pay redux, if hey have not been outright cut.

    Have to run some errands. Good weekend all.

  84. 84
    zman Says:

    MD – I think its a bit of balancing between last week and the week before it which was a much bigger than expected injection. Taken together they average 104 Bcf. Other thoughts,

    1) its a survey, can be 2 to 3% they say, off from reality, but I suspect it can be larger.
    2) its a government survey
    3) in the big scheme of things, it really doesn’t matter as we are just as full with a 90s type bcf injection as one in the triple digits.

    It does matter from sentiment for gas and I do think we see a smaller injection next Thursday due to the much warmer than normal weather we are seeing this week. But as far as pricing goes, it is the gas supply data which will provide the greater impact to price.

  85. 85
    zman Says:

    One rep saying the “energy” bill will cost each family the price of a stamp. That’s utterly ridiculous.

  86. 86
    zman Says:

    Rig Count Watch:

    Oil rigs up 23 to 219 vs 375 a year ago

    Gas rigs down 5 to 687 from 1530 a year ago

    Horizontals off 1 to 390 from 564 a year ago.

  87. 87
    zman Says:

    To be fair, he was a candidate when he said energy rates would skyrocket under his cap and trade plan and some things have changed.

  88. 88
    choices Says:

    Interesting how this plays out-Iraq oil contract bidding.

    http://www.nytimes.com/2009/06/26/world/middleeast/26oil.html?_r=1&hpw

  89. 89
    zman Says:

    NG up a dime now with oil still off a buck. Stocks not noticing at all but it is amazing what reaction the outside chance of a little bad weather in the gulf will do.

  90. 90
    zman Says:

    Jat – further thought on the hedging comment from above. It will raise the cost of hedging. I would imagine the number of counterparties big gas producers need will go up. At the same time, the counterparties currently in the business will find doing business less desireable so they will necessarily charge more.

  91. 91
    zman Says:

    This said slight chance this morning at 30%

    From 2 PM EST:

    A TROPICAL WAVE OVER THE WESTERN CARIBBEAN SEA CONTINUES TO PRODUCE
    A LARGE AREA OF SHOWERS AND THUNDERSTORMS FROM CUBA AND THE CAYMAN
    ISLANDS SOUTHWESTWARD TO HONDURAS. NO SIGNIFICANT DEVELOPMENT OF
    THIS SYSTEM IS EXPECTED BEFORE IT REACHES THE YUCATAN PENINSULA
    EARLY SATURDAY…BUT CONDITIONS ARE FORECAST TO BECOME A LITTLE
    MORE FAVORABLE ONCE IT MOVES INTO THE SOUTHERN GULF OF MEXICO LATE
    SATURDAY OR SUNDAY. THERE IS A MEDIUM CHANCE…30 TO 50 PERCENT…
    OF THIS SYSTEM BECOMING A TROPICAL CYCLONE DURING THE NEXT 48
    HOURS. LOCALLY HEAVY RAINS WILL CONTINUE OVER PORTIONS OF CUBA AND
    THE CAYMAN ISLANDS TODAY AND SPREAD WESTWARD OVER NORTHERN CENTRAL
    AMERICA AND THE YUCATAN PENINSULA OVER THE NEXT DAY OR SO.

  92. 92
    della05 Says:

    Any reason for the price drop in HK?

  93. 93
    zman Says:

    Della – nothing company specific that I see. It outperformed yesterday, it gives back a little more on a weak day like today. This trading day is meaningless. Volumes are very light. It’s possible some analyst commented on it but I don’t see anything.

  94. 94
    nifkin Says:

    The market keeps popping up, but the E&Ps arnt moving higher- bad sign if the tape fails. Large imbalances into the close…tonight is the Russel rebalance- only sub sector to buy is financials, the rest of the mkt is for sale for the most part

  95. 95
    zman Says:

    Della – if you are referring to the sell down from $26 to $20 over the last week plus I would attribute it to weakness in the group, then natural gas, then comments regarding a pipeline coming out of the Fayetteville shale that has had some startup issues and is causing a wider than expected differential for natural gas in 2Q than we were looking for. I think these guys have an ops update soon. I think they may (call it 50/50) up guidance with the 2Q press release in August.

  96. 96
    della05 Says:

    Thanks, was concerned there was a negative commentary that I didn’t see.

  97. 97
    zman Says:

    Again, could be but I don’t see one.

    They are getting close to wrapping up debate in the House.

  98. 98
    zman Says:

    Nifkin – very good points. Perhaps we get an early hurricane. Gas looks like it expects something.

  99. 99
    nifkin Says:

    i think nat gas is being pinned- the options expire today and $4 is largest open interest

  100. 100
    zman Says:

    Nifkin – normally I’d agree. But I think this is related to this:

    http://www.crownweather.com/?page_id=29

    as the whole strip is up 12 to 14 cents now.

  101. 101
    nifkin Says:

    copy that

  102. 102
    nifkin Says:

    thats a great link

  103. 103
    Popeye Says:

    This is the lowest vol day for HK that I can remember in the recent past but the buys are picking up into the close.

  104. 104
    zman Says:

    I wish I could post the live strip but the free link I have is delayed.

    My quotes are live showing August up 13 to 4.12 now with Jan10 up 14 cents at 6.07

  105. 105
    zman Says:

    More coal fired plants in China than there are in U.S. + India + Britain combined. ~ quote from the floor, don’t know if the MW are comparable or if China has lots of little ones.

  106. 106
    BirdsofpreyRcool Says:

    I’ll be out all next week. Gotta change the batteries in the Teddy Bear Cam. So, here is a preview of what’s in store for the last week of the quarter.

    Hope y’all have a profitable week. Will talk to you in July. Cheers!

    · Climate Change Vote to take place on Friday in the House (House leadership has said they have enough votes to get this through although it promises to be close). The bill narrowly passed a key procedural hurdle Fri, signaling that the votes could be there to push it through (It passed by a vote of 217-205)

    · Russell reconstitution – This year’s reconstitution effective date will be Friday, June 26.

    · Major events to watch for the week coming up – the calendar is pretty barren ahead of the kick-off to earnings season (AA is officially the first Q2 report on Jul 7 but the real activity doesn’t start until the week of Jul 13). The majority of the May-end Q companies are out of the way when it comes to earnings. The week of June 29 will be holiday-shortened in the US (Fri is off to observe the Jul 4 holiday), so watch for light volumes/activity. There aren’t any Treasury coupon sales (the next round of coupon sales will come during the week of Jul 6). Congress is technically on recess next week, although there will most likely be some behind the scenes work done on health care, climate change, and financial regulation (health care is key – when Congress returns Jul 6 Senate Finance Chairman Max Baucus has promised to have details on his committee’s new $1T bill). The California saga could come to a head this weekend – officials have said Jul 28 is a line in the sand in terms of when the state will officially run out of money unless action is taken on the budget.

    · Economic preview for the week ahead – Pretty full week of economic releases coming up with the Case-Shiller Home Price Index hitting in the US Tuesday, June Auto Sales on Wednesday, Pending Home on Thursday and the monthly jobs #/unemployment rate on Friday. In Europe, the ECB will hold a rate setting meeting Thursday (BoE meeting will be the following week) and the Eurozone Retail sales hit Friday.

  107. 107
    zman Says:

    They’re saying a vote may come 6 to 7 pm EST tonight.

    Thanks BOP, have a great vacation!

  108. 108
    zman Says:

    Accumulation of WRES into the close. Odd, throw away type of a day.

  109. 109
    Paul in Kansas City Says:

    KEG has a ton of volume compared to three month average. Any ideas other than the Russell rebalance?? I have no idea if/how much they constitute and have just stepped in; great posting today (as usual) gentleman

  110. 110
    zman Says:

    Beerthirty.

    All those weather links are located on the weather tab at upper left.

  111. 111
    Paul in Kansas City Says:

    VQ posting the last few days has sure played out well if you had bought around $7. Interesting company.

  112. 112
    zman Says:

    Keg – no idea

    VQ – yep, been watching that, interesting company, haven’t paid too much attention to them of late.

  113. 113
    zman Says:

    Re NG up, also Sakhalin LNG facility taking a longer break than previously thought for maintenance, not that big a deal in the big scheme of things but it is another wedge of LNG supply that won’t be showing up in the U.S. in June and July. That might have helped gas price sentiment a bit today.

  114. 114
    zman Says:

    Starting to see the typical seasonal pattern of tropical waves moving from east to west.

    http://www.accuweather.com/news-seasonal-headlines.asp?partner=accuweather&traveler=1&zipChg=1

  115. 115
    zman Says:

    Sambone – can I get your thoughts on the Gulf SSTs and potential development, you too redjack.

    Go USA, beat Brazil on Sunday!

  116. 116
    zman Says:

    Still watching the debate.

    Fun to know last night’s amendment, submitted as a 309 page document at 3:09 am (how cute) proposes many things, among them that all of the nation have essentially California style building codes for new and remodel construction.

    This is not a political statement. I find it abhorrent that the Speaker of the House in her closing remarks said to her side of the aisle they should remember 4 words as they cast their votes:

    “jobs, jobs, jobs, jobs”

    Silly me, I thought this was an energy bill.

  117. 117
    zman Says:

    House Bill 2454

    Passed 219 to 212

  118. 118
    Dman Says:

    CRK hit for 6% on huge volume. Anyone know anything?

  119. 119
    PackMan Says:

    Pelosi & company are an embarrassment. A frightening group of hypocrites.

    And yes, that is a political statement.

  120. 120
    BirdsofpreyRcool Says:

    PackMan — well said. Thank you.

  121. 121
    bill Says:

    cramer called the commodity’s treatment in Washington, and natural-gas companies’ failure to make their case, a “total travesty.” President Obama has done the country a huge disservice, the Mad Money host said, by promoting a cap-and-trade plan that discourages the use of natural gas. It will be decades before wind and solar power can replace oil, and we need nat gas to bridge the gap.

    Certainly coal can’t do the job. Natural gas is cheap, clean, plentiful, and cars can run on it. Apparently, Washington is more concerned with lithium-ion batteries. NG ep industry.. allowed themselves to be run over by other lobbies like the farmers and ethanol.

    Cramer’s suggestion to these firms: “Take your profits, go get some decent lobbyists,” and start giving “gigantic contributions” to senators and congressmen. It’s the only way you’ll have a fighting chance on Capitol Hill.

    —————————————

    THATS WHAT THIS ALL ABOUT

    A SHAKE DOWN

    Ctramers right on this one..go get some decent lobbyists,” and start giving “gigantic contributions” to senators and congressmen. It’s the only way you’ll have a fighting chance on Capitol Hill.

    Just like the mafia

    Pay to play

    Its time for a million person march on washington

    i wish one politician had the balls to call this what it is

    Our system (of governance is corrupt)

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