Monday Morning – Let’s Repeat Last Week’s Action

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Weekend Wrap Watch: If you missed it, click here. Lot's of juicy information plus a good wrap on last week's trades as well as end of the week data like rig counts, CFTC, and lots more!

Oil - Welcome to the land of backwardation. Although this may not matter right this second as the Euro keeps making new highs against the dollar pushing Brent to within a hair's breadth of it's all time high which of course helps support WTI. August crude is still hell bent for $75 but then I think we may see a pretty good set back into the upper $60s as the same tired old stories that were used as justification for oil's move from $65 to $70 are trotted out again as "news" to continue this rally. Obviously with the out months those news items are no long outweighing the fundamental fact that we have an aweful lot of crude in storage (9 year high).

  • Last Week Traders Seized Upon The IEA Increased Demand Forecast for 2008... From the Daily Times ~ Prices were also lifted by news that the International Energy Agency has lifted its 2008 forecast for oil product demand by 2.5 percent to 88.2 million barrels a day.
  • ...But They Failed To Notice The IEA predicted in a monthly report that tightness on the global oil market would ease next year, forecasting that supplies will exceed robust demand.
  • ...And That IEA Sees Refinery Upgrades Reducing Tightness in the gasoline markets and possibly reducing crude prices next year.
    • IEA Again Called On OPEC To Produce More Oil. From the Daily Times ~ The IEA suggested again that the OPEC producers’ grouping should pump more crude, notably during the ongoing US summer driving season when many Americans take to their cars for their holidays. Comment: Which would be a good suggestion if your car could run on straight crude and not gasoline. We could put in a pump at every stripper well in Texas and just fill up straight from the source on that logic.

    Natural Gas Is Getting Hit Early. Down $0.20 in early trading which would give back all of Friday's crude inspired rally and then some. Cooling degree days came in at 76, the warmest this year but well below expectations a week ago of 85. I'm looking for natural gas to resume it's prior course towards $6.

    • CFTC Net Short Position Hits Another Record. Can you say, the pendulum is swinging too far? Man are they going to be in a hurry when the bearish music stops (hurricane) and their aren’t enough sellers to accommodate all that covering.
    • Gas Directed Rigs Rebound To Record Topping 1,500. Rigs drilling for natural gas hit 1,501, a record since Baker Hughes started splitting out the data in 1987.
    • Weather Eye Watch: Nada unless you want to count a tropical depression and a tropical storm, both in the Pacific, and both headed generally towards Hawaii. I don't. In the Atlantic I count not five, not four, not three, not two, not one, but no tropical depressions, storms or large fluffy clouds.

    Stocks of Interest & Holdings Watch:

    • (SWN) Continue to hold the July 45 puts taken shortly after last Thursday's gas report. I thought Friday's run in gas prices was bogus and am happy to have puts here with sharply lower natural gas prices but just for a trade as I hate shorting good companies with tech like growth rates. If this morning's move in natural gas is sustained and (KWK) is slow to move we'll be looking at puts there as well.
    • (IOC) - Still no drilling news but it should be any day now.
    • (NBR) - Deal or no deal? Nothing yet could pull this one back to earth.
    • (PTR) - falls short of production target. 2Q production came in at YoY growth of 3.7% versus a stated 2007 goal of 5.3%. Could be a quick negative reaction this morning.They've got production from the 3B Bbs Nanpu field due around the corner so I suspect weakness will be fleeting if oil holds. Still may do a put trade here this morning. I'll let you know in comments.
    • Refiners: Something's gotta give with the crude / RBOB disconnect we discussed this weekend. I'm currently holding puts in (FTO) and (TSO) and I think that last week we saw the first cracks in the momentum that has seen money pile into this sector over the last half year.
    • (HAL) continues to inch higher as cheap continues to outperform and the OIH, which suffered from (BHI)'s warning continues to look strong on a chart. I've accumulated a size position here in the July $35s and will be rolling into August early this week.
    • (CLR) On Wednesday I was asked to give a target on Continental Resources. Here was my response in comments Wednesday night:

    If they hit the mid point of their guidance I’d say they’ll do $2.25 to $2.50 CFPS as long as commodity prices hold up (I went with a pretty conservative realized oil price of $60 for the year which they may beat with those hedges and higher production as the year goes by). You could easily put a 7.5x on that CFPS which gives you roughly $18 to $20. The multiple could be higher given their growth rate, tight control of op ex, and those nice new hedges but why push things, eh?

    CLR closed at $18.15, up 14% on the week.

    • (NFX) continues to move higher with no news. Looks like they’re starting to get a little more respect and perhaps there’s talk or at least speculation that recent divestment announcements (North Sea and Bohai Bay) are close to fruition. This is one of the three stocks I highlighted in our second Alwaysanoption Newsletter. Here’s a link to a complimentary download: july0711.pdf. Enjoy it while it’s free.

      Odds & Ends

      Analyst Watch: (BHI) cut to neutral from add at Calyon, (WTI) cut to hold at Lehman, (RDSA) cut to underperform at HSBC, (ESLR) cut to hold at Weisel.

      IAEA Confirms North Korean Nuke Shut Down. By the way of thanks the South sent the North a shipment of oil. Ultimately North Korea is to receive a total of 1 million tons (7.3 MM Barrels) in exchange for being less of nutbag a good neighbor and dismantling their nuclear program.

      112 Responses to “Monday Morning – Let’s Repeat Last Week’s Action”

      1. 1
        codydog Says:

        z–did you see the bloomberg article on how uranium buyers are on strike and the users are lending uranium to each other, to keep them from having to go to the mkt?

      2. 2
        zman Says:

        Cody – good morning. That’s a rich. Can’t be good for USEG, CCJ…

      3. 3
        zman Says:

        NBR is deflating as another merger mania Monday has left it alone at the altar.

      4. 4
        zman Says:

        If you missed SWN puts last week it’s floating about as if Friday’s move in natural gas were real and had not been more than erased by $0.25 decline there this morning.

      5. 5
        jsun14 Says:

        Still like HK with NG sloping southward?

      6. 6
        zman Says:

        Jan – It’s a long(ish) term play but clearly I don’t jump into short term calls as they will trade down with the group. They have a history of beating and guiding up so I’m in until at least earnings on 8/8.

      7. 7
        zman Says:

        HAL vs NBR: Nice.

      8. 8
        jsun14 Says:

        10-4. KCS was a great deal. In addition to the overhead, I really believe we are going to benefit from some synergies on the operating side.

        My next great hope is Vaalco (EGY.)

      9. 9
        Brian08 Says:

        Hey Z…Interesting take on CHK…I’ve been a long term holder of this since the summer of 2005…I agree that it would make a great acquisition target for a large major because it has low exposure to the Gulf (and the hurricanes that go with it)…I know every man has his price, but I’m just wondering if Aubrey would be so quick to sell it as he’s the one who built this company from the ground up…

      10. 10
        zman Says:

        jsun14 here was my take on EGY in May, do I need to update it?

        (EGY) Snapshot:

        * Interesting little E&P operating almost entirely in Gabon. Probably grows production 20+% this year based on recent new field hookup. They have just under a 30% interest in two fields
        o (Etame- established with current production of 15-16,000 bopd gross and
        o Avouma – just brought on line and ramping (6,000 bopd gross going to 10,000) on one block in Gabon and they operate.
        * My favorite Swiss E&P, AXC has a slightly larger interest than EGY in the Etame field.

        * Balance sheet looks good, lots of cash, little debt.

        * The stock is cheap, trading at under 4x TEV/EBITDA.

        * Reserve replacement has been negative which combined with 4Q down production probably is what has been pressuring the stock.

        * Production comes via tieback to an FPSO so you have some lift-timing risk which may provide good entries if they are late lifting for a quarter.

        * Next big growth doesn’t come until early 2008 (Ebouri discovery) but you may have some exploration catalyst off Gabon and Angola later this year.

        * It’s interesting, I plan to do more work on it and will listen to their 1Q call this week (May 10).

        * The company has a few wells along in Texas and in the GOM which I assume are legacy assets as there seems to be no plan for advancing activity in the states. I’d sell em but maybe they carry sentimental value or allow for some data access or some such.

      11. 11
        zman Says:

        Brian 08 – There’s A LOT of “hidden” value there. I don’t think he’ll be quick to sell but if someone as smart as Jim Hackett at APC paid a ~50% premium for KMG, I’d bet another smart guy out there could find a 30 to 40% premium for CHK. Aubrey can always fall back on his Ok real estate. lol.

      12. 12
        zman Says:

        SWN coming around now. UNG looks like DUNG.

      13. 13
        codydog Says:

        z–saw a tier 1 guy make the “this time its different” comment on COTs numbers. seems new entrants coupled with new money will ease any mkt moves….yipes!

      14. 14
        zman Says:

        N – I decreed it to be so this weekend. Seriously I did but I failed to mention distillates 😉

        Honestly I think crude is just running on old stories here and no news = down. Nobody noticed but for 2008 the IEA said they expect less tightness in gasoline, due to refinry upgrades, and in crude oil and supply should surpass demand. This was further down in the report that so enraged oil prices.

      15. 15
        T-Tupp Says:

        go tso!

      16. 16
        codydog Says:

        z–any view if the japanese nuclear reactor that is leaking radioactive water, has impact in energy prices?

      17. 17
        zman Says:

        Cody – That’s another arrow in the quiver for the Sierra Club types. The whole “do you want one of these dangerous leaking things down the street from your kid’s school?” argument. Another modest negative for the producers. I wouldn’t expect it to impact anything over here/ maybe a slight boost for nat gas longer term but you’ll never know if there’s a real impact. We should be building nukes but it’s this kind of thing that keeps them on the drawing board and away from greenfield construction in the U.S. Sad really.

      18. 18
        sane Says:


        Distallates is probably up d/t us sending HO to N. Korea. I am wondering if we were ready to ship it a couple of weeks ago. If you look at the EIA report it shows a huge jump of 300kbd demand for 1 week a couple of weeks ago.


      19. 19
        zman Says:

        Sane – good catch. All told that could come to 7.3 million barrels.

      20. 20
        zman Says:

        N re #15 – well “popular” wisdom is that we don’t have enough of the low sulfur stuff which combined with Korean delivery could be hyping them higher. I don’t think it should be higher. At all. But people have not bought your argument about reduced off road diesel demand yet.

        What do you think stops Brent? This CATS closure is old news.

      21. 21
        zman Says:

        Tupp you jinxed it! 🙁

      22. 22
        codydog Says:

        as an anecdotal story about how crazy the energy mkt has become – on Friday I had my boiler serviced for next winter. The service guy, who I’ve known for a while, nice guy, was only too happy to explain to me how the oil mkt works and how HO prices fluctuate, and how you make money in the energy mkt.

      23. 23
        jimbo Says:

        Latest from Crown Weather “….The long range GFS model continues to forecast increasing moisture and increasing activity in the tropics starting around July 23rd and continuing through at least July 31st. Based on the look of the GFS model and taking in account climatology, I suspect that this pattern of increased activity in the tropical Atlantic will continue through August and September….

      24. 24
        T-Tupp Says:

        rumors that sun will make a bid for TSO in the 75-80$ range… didnt they just buy a refinery of them?

      25. 25
        zman Says:

        Cody – Will you burn high sulfur oil this winter?

        Thanks Jimbo!

      26. 26
        zman Says:

        Tupp – did you see a story or is it going around?

      27. 27
        zman Says:

        TSO – big call buying. That deal seems hard to get past the FTC now but maybe the lack of geographic overlap makes it work.

      28. 28
        codydog Says:

        z–whatever they sell here, not much choice

      29. 29
        scoop006 Says:

        Z- I think the SU/TSO rumor is being floated by the same folks who said last Friday Buffett was buying HOV.

      30. 30
        zman Says:

        If it were true you’d think SUN would be off, not up.

        SWN starting to work again.

        HAL remains strong

      31. 31
        zman Says:

        Cody – have they given you any price sheets yet? Will you refill now or have you already. How many tanks do you go through (what size) in a usual winter? Can you participate in a co-op in your area? Why haven’t you switched to natural gas? Just curious on all but I’m in the south and oil is something we just don’t use for heat (or electricity much). tia.

      32. 32
        Brian08 Says:

        Z do you think buying the TSO PUTS are still a wise move here with all this speculation?

      33. 33
        zman Says:

        Brian – it’s very risky. I’m in already and the increased V is holding prices up options for now on both sides of the trade pretty despite this mornings mini rally. Just a word of caution to new comers. I think the refiners are overvalued. VLO the least so. WNR and HOC and FTO probably the most so. Even so, this is a risky bet. I’m not betting the ranch or anything like it here as these can burn you badly and quickly. I exercise extreme caution with these trades and alway scale in. Nicky can give you the levels on RBOB and distillates but the jury is still out on whether or not a drop in gasoline prices will really impact these stocks. The momentum appears to be shifting away, both on the earnings front and on the stocks themselves. Rumors like the TSO one are most likely a tactic used by cramer types to get out . I still think that chart looks like at delicious double top! But I’m not adding today.

      34. 34
        codydog Says:

        z–no NG here. electricity is a no-go to even think about

        I have capacity for about 600 gallons of HO, and look to average purchase to maintain some sort of rational budget. The price protection plans/co-op type deals all price at a real premium to futures so the premium simply isnt worth it. I’ve talked to the guy I buy from and asked if I bot some HO in NY harbor and swapped it here, if he would re-sell it for me. He looked at me like I was a Martian. The depot sells to distributors who re-sell it. They have zero interest in even talking about trying to du stuff better.

        I think the strictness of regs and their licenses create a disincentive for innovation.

      35. 35
        Brian08 Says:

        Yeah I’m being very careful in first starting out until I get my feet wet…Not risking the farm by any means…Talking with buddies of mine who are traders [He likes the NBR PUTS :)]…It seems like it was in 2005, a lot of “hot” money in there…

        Re: Post #25, when the service guys start talking about making money in the energy markets you know the market is really hot!!

      36. 36
        zman Says:

        Brian – no doubt. I had a friend refurbing an old house and his plumber was talking about getting a futures account to trade copper!

      37. 37
        zman Says:

        SWN succumbing to ng gravity.

        TSO looks like there’s less certainty of a deal in the stock action. Call volume still very strong but puts picking up nicely.

        Meanwhile FTO, far away from the ball just tripped on its face.

      38. 38
        zman Says:

        FYI: PXD pulling out of Nigeria after a duster. Not a big hit since they barely got started. Stock is getting weaker but I’m not playing. This is a fairly complex story and they didn’t need the distraction. Probably a wash money wise as they’ve already sold their interest in their other deepwater block.

      39. 39
        scoop006 Says:

        Z- Check volume on CHK Aug. 35c

      40. 40
        zman Says:

        Taking a hard look at the FTO August $45s.

      41. 41
        bill fraser Says:

        regarding backwardardation on ng

        significant dif in price for aug vs dec 2007 encourages inventory builds in summer and declines in the winter months.

        Should one discount current inventory builds due to this condition?

      42. 42
        zman Says:

        Bill – Long time no hear from you! We’re not backwardated in NG. I was speaking of oil.

        I think this week’s number is pretty important. Next week we need to cross back under 80 Bcf injection mark or I think gas gets hit, possibly to $6. It won’t stay down in that $5.75 to $6 range long however given the time of year and mongo short position.

      43. 43
        bill fraser Says:

        I believe its time to take profits in any tanker holdings

        sell or short nat.

        I believe nat will have a secondary offerring depressing prices 10 % with the stock falling below 40, imho

      44. 44
        zman Says:

        Scoop – Re CHK: that’s the boys at PSW loading up on shorter contracts than I like. lol. Thanks for point it out. I just really think gas goes lower and I get them cheaper later this weak. But obviously somebody else is thinking acq.

      45. 45
        bill fraser Says:

        z- i stand corrected

        but with ng over 8 for dec and current prices at 6.40, doesnt this encourage inventory builds (at cheap prices) to sell in the winter at 8 or higher.

        This should be discounted when we look at inventory builds

      46. 46
        zman Says:

        Thanks Bill. I’m with you for now. Been eyeing FRO and TK to the downside but I get mixed signals on prices like maybe charters are near the bottom of the seasonal cycle. NAT will check out.

        How do you like TGP long here? The LNG guys are extremely busy but it’s probably baked in.

      47. 47
        codydog Says:

        bill–there is a finite space to store ng. its not like gold where any basement will work.

      48. 48
        zman Says:

        Bill- To a certain extent yes. But I still think nat gas goes to those levels I mentioned. If we stay big (80+) we’ll chewing through that YoY surplus (we’re already down to a paltry 3% from 16% a couple of months ago). Like you say, jam in storage and sell it later does jade those numbers a bit but I think traders will take a pretty negative view if we go into record storage. Net net, imports are up despite the drop in Albertan volumes.

      49. 49
        zman Says:

        Cody – Non-coincident storage is over 3.6 Tcf. Can we add another T to current levels this year? Maybe. There’s also a lot of line looping that goes on where you can hide some Bs.

      50. 50
        zman Says:

        TRADE: FTO Aug $45 puts taken tiny at $1.20. Not for the feint of heart!

      51. 51
        codydog Says:

        z–you think fto will rollover?

      52. 52
        zman Says:

        Cody – I’m putting money that way, fwiw, I may be early. The group looks like it’s responding again falling crack spreads. But what makes this group go is a mystery up here.

      53. 53
        codydog Says:

        was that 50 at 1.25 in the aug you?

      54. 54
        SLM Says:

        Anyone notice BQI is up from $2.50 to $3.80 since they announced they have 10 billion barrels of oil in the ground. It will probably take years to develop, but that’s a lot of oil to still have a market cap under $1 billion.

      55. 55
        T-Tupp Says:

        z can you give me 3-5 tickers that correlate with front month NG and 3-5 that correlate with front month WTI?

        is swn no hedged at all? is this why you trade it when the underlying commodities move? or are certain issues more attached to the 12 moth strips of these commodities?

      56. 56
        zman Says:

        Cody – no got part fill @ $1.20

        SLM – I can’t keep up with that one! So frustrating as I keep missing them! Let me know when it drops again. tia.

        Tupp –
        OIL: XOM, EOG (trust me), SU, APA
        no particular order there

        TSO/FTO/and co getting shot.

      57. 57
        codydog Says:

        I have some at 1.30 z…

      58. 58
        T-Tupp Says:

        dont issues like su, cop, and xom get draged around by te broader market to have a pureplay here?

      59. 59
        T-Tupp Says:

        also too ive noticed that apa is 50/50 ng/oil, is just another one of those anomalies?

      60. 60
        T-Tupp Says:

        z- mulling selling puts on IOC, vurrrrry juicy. i liiiiike

      61. 61
        scoop006 Says:

        Z HELP I am suffering seller’s remorse re BHISQ. How about you?


      62. 62
        zman Says:

        Su is manipulated or at least constantly hyped. At these oil levels they have license to print money. Especially with weaker ng.

        APA yeah, it used to be oilier it should be the oiliest of the big cap E&P.

        Ya know you can always trade the USO too.

        NBR / SWN getting popped. HAL finally succumbed.

      63. 63
        zman Says:

        Scoop – I don’t beat myself up over the early sale over a 300% one day gainer. That’s a problem to have in my book! Plus I’m in the NBR for the same reasons as BHI warned and it’s starting to work for me.

      64. 64
        Joe Says:

        Z – have you shorted any WNR or are you still concerned about buyout rumors? It hasn’t moved as much as our other beloved refiners, but will be interesting to see what happens when she does.


      65. 65
        codydog Says:

        z–any view on OIH? if oih holds the current level, I’m going to scratch on the FTO

      66. 66
        zman Says:

        Cody – I’d ask Happy about it to confirm But I don’t see it taking out 170.

        Joe – no position there as I like the FTO a little better from the first newsletter story. WNR scares me b/c the move is so big and I just don’t get why it should be where it (and I thought that 3 months ago). When I start to give up on one like that it’s usually time to get short. I may add it if Nicky starts saying more stuff like, RBOB toast here, etc…

      67. 67
        T-Tupp Says:

        z- what do you think of my short ioc put idea, when do you think those dril results will come in ?

      68. 68
        zman Says:

        Cody – Happy to have you on board the FTO train. My $50s from last Thursday are working nicely. Note that I’ve got a wipeout on some July 35s and am pretty much killed in Aug 40s as well. The Aug $45s are working well though. I was in at #1.20, not $1.25 (got a whopping 2 contract fill).

      69. 69
        zman Says:

        Tupp – I thought they’d be out by now. Their cash burn is amazing (they’ve got about 4 months of cash left if the boys at Motley Fool are on their game). It’s a gamble as good news = +$5 or so and bad = -$5. The delay (or at least what seems like a delay in announcing) doesn’t tell you anything yet but if it goes on for another 2 or 3 weeks I’d say they have a problem.

      70. 70
        zman Says:

        Tupp- more on IOC. My plan is to wait and play the news. Two monday’s ago that gave me a one day gain of 119%.

      71. 71
        T-Tupp Says:

        problem = me keeping a very juicy premium, maybe a short straddle might be or iron butterfly might be a more mitigated for a risk standpoint

      72. 72
        zman Says:

        Phil at PSW is doing a condor on it.

      73. 73
        T-Tupp Says:

        yea ou like playing things long, but if that ~130% iv plunges back to 70, and you OTM a lil’, you could have your lunch eaten for you…. but i agree this might be fun any way you cut it

      74. 74
        T-Tupp Says:

        condor isnt a nice enough credit for my acct lol. plus im an idiot when it comes to taking risks

      75. 75
        codydog Says:

        z–I scratched on FTO, got GOOG 520s for a short pop….sold my TSO puts earlier from last week

      76. 76
        T-Tupp Says:

        are their any issues that respond diffeerenty to front month, say NG movements, raher that say 12 month strip mvmts?? and the same for WTI??

      77. 77
        Brian08 Says:

        Great call on SWN early this morning, Z…Didn’t get in, but it would been sweet…

      78. 78
        T-Tupp Says:

        woohoo just caught a 6 lb large mouth bass!

      79. 79
        T-Tupp Says:

        yea i coundent understand what you were saying about swn this am lol, z the verbose wordsmith jk 😉

      80. 80
        zman Says:

        TRADE: SWN Out July 45s @2. 74% gain.

      81. 81
        zman Says:

        Tupp! – CONGRATS!!! My best is 3.5 lbs. You wireless on a lake?

      82. 82
        zman Says:

        On oil I can’t think of any. On gas companies like LNG seem to pay a little more attention to the front month machinations than the others. Just a gut though, ask me again later and I’ll work something up with actual data.

        I just can’t get 6 lbs out of my head. My grandfather has a lake on his ranch and he said he’d mount one if he ever caught an 8 pounder. 84 years and so far his best is 7.5!!!

      83. 83
        zman Says:

        On oil I can’t think of any. On gas companies like LNG seem to pay a little more attention to the front month machinations than the others. Just a gut though, ask me again later and I’ll work something up with actual data.

        I just can’t get 6 lbs out of my head. My grandfather has a lake on his ranch and he said he’d mount one if he ever caught an 8 pounder. 84 years and so far his best is 7.5!!!

      84. 84
        T-Tupp Says:

        wireless yea. its a great day out here. gf on the bow tanning and im “working” hahahah

        yea. lake st clair– some of the best sport fishing in the world! next week move to lake erie (on the other shore of our most souther point of Canada peninsula) for rainbow trout! they are crazy!

        and aug 4- 11th, lake huron for lake salmon fishing too! but nothing beats my yearly trip to queen Charlotte island (accost from Alaska) for salmon (best=35lbs) and halibut (bust=73lbs!)

      85. 85
        T-Tupp Says:

        rbob getting raped!

      86. 86
        zman Says:

        Tupp – how do I get THAT fishing gig?!?!

        HAL rebounding like the little self buying company they are. Great downside protection as they’ll be buying every day, dip or no dip.

        hear ya on RBOB – not pretty. Stocks are really getting barely scratched if you consider their gains to date.

      87. 87
        Brian08 Says:

        As a very new chartist I can’t help but to observe that FTO’s chart looks really horrible now, which is good for those PUTS…I hope I’m right on my observation…Seems to be breaking down bigtime…

      88. 88
        zman Says:

        RBOB down 2200 points in 4 sessions. Flynn must hate that!

      89. 89
        T-Tupp Says:

        nicky- RBOB has a serous level at 21000 eh?

      90. 90
        T-Tupp Says:

        brian08, the fto chart s still extremely bullish

      91. 91
        zman Says:

        Thanks Nicky.

        Honestly getting the weeklies right in oil at least is pretty much dart throwing. You can have an idea but there’s so much timing and randomness to it that can kill you estimate with a delay in shipping that I don’t bother. I like to see what everyone comes up with and then set an over / under to gauge reactions to expectations. Lot more profitable than me trying to come with a number.

        Also, these weekly guys seem caught up in the importance of the weekly numbers. They say they’re not but they keep repeating the same stuff week after week.

        As for natural gas I do that out of habit.

      92. 92
        Brian08 Says:

        T-Tupp…Thanks for the correction, I’m still learning here…Figure if I learn from guys who have been in the game for a lot longer than I have been it’ll help me in the long run…If I say anything else stupid let me know…

      93. 93
        T-Tupp Says:

        that wasen’t a stupid q. pick up a book on technicnical analysis, maybe 2 because of opposing viewpoints, and you’ll get the hang of it– its not that hard… but always remember the fundamentals always overpower..\

        this blog is a great resource, with a lot of great minds with a vast array of trading expertise! its helped me greatly!

      94. 94
        codydog Says:

        nicky–in your analysis have you ever seen someone with a curvi-linear formula for guesstimating where OIH should be, versus products?

      95. 95
        Brian08 Says:

        T-Tupp…I have “Technical Analysis for Dummies” that I’m reading right now…I know it’s not gonna be mind breaking stuff, but from what I’ve read so far it seems really good for the basic fundamentals which is what I’m looking for…And after saying what I did on FTO, I think I see my mistake…

        Same thing with this blog…Everbody seems to be quite on the ball…

      96. 96
        zman Says:

        Re Flynn: WOW!

        Brian – ask away. We all make mistakes but we’re happy to help if we can. No question is a stupid question except the one that goes down the elevator shaft at the end of the day unasked.

      97. 97
        codydog Says:

        z–could it be all these players are long and wrong?

        have you heard of large otc puts being bot by hedgies?

      98. 98
        zman Says:

        Crude players? yes, very possible. I’ve seen it before. Oil up again. What’s up with that?

      99. 99
        codydog Says:

        z–is the sense it is to pick up the liquidity that spot gives you? are they also buying puts, selling calls so they can then crush the cash mkt with their spot month futures?

        there are probably lots of stops all the way down into the high 60s for crude..

      100. 100
        codydog Says:

        but if they’re shortening duration, eg, rolling everything into spot, it means they are net long the spot month, and unless some monster plans to take del’y, its gonna be raining crude shortly

      101. 101
        jimbo Says:

        yo Z…

        What’s you take on OPTI-Canada (OPC.TO/OPCPK.PK)? “OPTI Canada Inc. is a Calgary, Alberta-based company focused on developing the fourth and next major integrated oil sands project in Canada, the Long Lake Project, in a 50/50 joint venture with Nexen Inc. The first phase of the Project consists of 72,000 barrels per day of SAGD (steam assisted gravity drainage) oil production integrated with an OPTI-operated upgrading facility, using OPTI’s proprietary OrCrude(TM) process and commercially available hydrocracking and gasification. Through gasification, this configuration substantially reduces the exposure to and the need to purchase natural gas. The Project is expected to produce 58,500 bbl/d of products, primarily 39 degree API Premium Sweet Crude with low sulphur content, making it a highly desirable refinery feedstock.”

        I purchased a few months ago and it’s up almost 40%. OPTI is implementing a procress which should require less natural gas by using an intermediate product from refinement.

      102. 102
        Brian08 Says:

        I’ve been looking for the past hour or so (checking and re-checking to make sure I have everything straight), but it seems like NBR is holding tough at the $31.55 level (200 MA)…If we get a meaningful breach of this level, it looks like those $32.50 PUTS could be off to the races…

      103. 103
        zman Says:

        Jimbo – Great purchase! I’m not familiar them but NXY is a great partner to have.

        This is how I feel on all the oil sands guys right now: Given where I think oil is going they may be due for a little pull back, not a “rip off head” event but a little retrenchment as oil retraces to the $65-67 level. Again I don’t know management, balance sheet, burn rate etc but would be happy to do a quickie there post market. I don’t see a US list for it and as it’s development stage it’s hard to value on anything but reserves. SU and others have been talking about methods to use off-gas as well. Does it have options, don’t see any. Will take a closer look. Safer way to play is of course NXY and while it might be less potential bang for the buck you get NXY’s broad, active portfolio and the opening of this JV (lots going on at NXY and a good 2Q report last week which got completely ignored) and you’re not a one hit wonder.

      104. 104
        zman Says:

        Nicky – great quote. Hadn’t seen the $95 “prediction” LOL. I’ll use that anon quote in tomorrow’s post.

      105. 105
        jimbo Says:

        OPTI provides the tech, Nexen the Long Lake oil sand lease. 50/50. So if it hits, it hits hard. Process is underway, but initializing with NG. These guys are on the pink sheet, OPCDF.PK. Annual reports are pretty interesting.

      106. 106
        zman Says:

        J – Thanks – I’ll check it out. NXY must like the tech if they’re giving half eh?

        Out for a little bit. Great day everyone!

      107. 107
        bill fraser Says:

        Re tanker stocks

        OSG ceo was on Fast money at 830 pm est. Says they are in 4th inning of the cycle. Says good business conditions for next 3 to 5 years.

        OSG is at 88, could be at 100 within a year, imho

      108. 108
        bill fraser Says:

        tanker stocks starting to roll over, down about 3 % today. They tend to move with the price of oil. I would be out of these now. I covered my Nat puts with a nice gain but will buy them back with any price recovery

        nat down 3.8 %
        tk down 2.9 %
        gmr down 4.0 %
        fro down 2.7 %
        tnp down 3.5 %

        if you have a 3 year time horizon, i like tnp but i think we have a chance to buy these at lower prices

      109. 109
        Kevin Says:


        Regarding your oil sands comments… BQI is up over 40%… are all of these companies moving?

        Also, you mentioned something a while back about Coal stocks and how they sometimes tracked with NG… seems like that is happening right now (BTU, ACI) Do you think they will turn with NG as well.



      110. 110
        zman Says:

        Bill – hear ya lower prices.

        K – they have been moving nicely. BQI usually doesn’t but has caught some air recently. I don’t track them close enough to form an informed opinion but it seems obvious that high oil and low nat gas costs is a good thing for them. Is it this much of a good thing (40%)? Hard to say.

        Coal – yes that’s correct and yes, they’ll recover with gas. Their supply situation is a little tighter as it’s bottle necked by the rail roads and although supplies aren’t near lows, they aren’t as high as gas (2nd highest level of all time for this time of year). That being said, they’ll jump with gas or with hot weather. I like the stalwarts here: BTU, ACI and smaller ANR.

      111. 111
        dan Says:

        Coal stocks are an interesting pick because it still remains attractive for long-term play. Many factors continue to drive the demand for coal upwards, therefore, increasing coal stock as a whole. I recommend this report i found, it has been very valuable to me so far…



      112. 112
        Jessie Says:



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