Weekly Wrap – Week Ended 09/07/07

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Despite Friday's Broad Market Rout, The Energy Sectors Closed The Week Positive.  Oil, gassy, and service stocks all ended in the green last week. I spent the day Friday doing a little bottom fishing, establishing positions in a few names that I've neglected until recently.

Tuesday Evening: Chesapeake Curtails Production. (CHK) announced a 6% curtailment of production (about 200 Mmcfgpd gross) citing low gas prices.

In The Wake Of Chesapeake's Production Curtailment PR After The Close On Sept. 4 I Wrote:

Today (Wednesday Morning, Sept. 5) Gas Is Rebounding As You Would Expect. Gas is up $0.15 to $5.78 in early market trading this morning and I'd expect more short covering to show up in the CFTC numbers on Friday. Comment: Wrong but it was a silly statement to have made since the CFTC's data only runs through Tuesday and wouldn't have account for the rally subsequent to the press release).

I'm still a little leery of the upcoming headline "3 Tcf in storage reached at earliest point in the history of gas storage" which could happen this week but certainly by next week. Comment: Gas rallied from $5.63 at the close of trading Tuesday (just before (CHK)'s bombshell) to $6.01 at 10:30 Est Thursday (gas storage report time). Then it sold off hard for the rest of the week falling all the way back to a nice round $5.50 as natural gas storage did indeed cross the 3 Tcf barrier. The decline came despite  

When this happened last year the news was met with a sharp decline in prices (fell from $6 at the beginning of September to as low as $4.20 by the third week of the month). However, I'd also point that last year's curtailments, led by (CHK) put the floor in on gas. Comment: We shall see. Here's what last year's gas price and natural gas storage charts looked like. As you can see from the graph, despite an increasingly full and well forecast storage environment gas prices advanced into winter even as we entered "full-plus" storage.



Days of Supply, a measure of how much of a product we've got on hand vs demand trends, show low levels of gasoline and middle of the road distillate levels.


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17 Responses to “Weekly Wrap – Week Ended 09/07/07”

  1. 1
    TTupp Says:

    hope everyone is having great weekend, i am catching up on some work out her on the boat! beautiful day.

    anyways i found a useful link on the EIA website that some of you might find informative. its a map of the the 5 PADDS of the US… i thought it made more sense of things when i saw it…

    cheers! BTW Z- what does PADD stand for?

  2. 2
    TTupp Says:

    lol i fogot to include the link–


  3. 3
    coco Says:

    PADD stands for Petroleum administration for Defense Districts. Created during WWII for oil allocation

  4. 4
    zman Says:

    Thanks coco

    From TTupp on Friday’s posts: it would be interesting to see one made up for distillates… i think it would be a much more grim picture when you take into accont the demand surge and the neglect due to the rush to normalize RBOB inventories…. ??

    PS does distilates as a group include HO, jet fuel, and diesel??? im was unsure of this?

    Tupp: I’ll create one and stick it in the weekly wrap later. It’s not as dire as you’d think as distillate inventories are pretty middle of the road right now. But the real issue becomes where do we get all the needed heating oil for the winter. We’ve producing ULS (ultra low sulfur to meet new standards put in place last fall. We have much more high cost ULS in inventory than normal but much less regular HO for homes and other heating. I’ll get to the bottom of this week with a couple of phone calls.

    Distillates: diesel (75%), then heating oil , av-gas (jet fuel or kerosene), and industrial oils.

  5. 5
    zman Says:

    Tupp – if you refresh the page there are some “days of supply” graphs for distillates that have been added to the wrap post. Cheers.

  6. 6
    zman Says:

    Just when you thought a rate cut was in the bag…it’s not.


  7. 7
    jimbo Says:

    Zman….good to hear from you. I’m not a day trader, so it’s hard to justify subscribing. However, I always enjoy these notes.

    Any further thoughts on drybulk shippers?


  8. 8
    jimbo Says:

    Yeah…the rate cut. Remember a NYTimes editorial….”Capitalism without failure is kinkof a socialism for the rich.

    The rate cut would be inflationary and as has been discussed here, just another fix for the junkies.

  9. 9
    TTupp Says:

    check out the NYMEX open for NG, $0.25 gap down

  10. 10
    zman Says:

    T – not surprising. No tropical weather. Mild temp forecast. And a number of gas producers have come out and said they see low gas prices as a temporary thing and not worth cutting production over and CHK made their little announcement.

    Also oil is off as Saudi Arabia made some comment that it thinks the cartel should consider raising rates.

  11. 11
    zman Says:

    one more thing, two Japanese firms were just informed by the Saudis that the 9.5% production cuts relative to their contracts lifting volumes will remain in place through at least October.

  12. 12

    Here’s Bastardi’s 20:00 blog entry on hurricane development:

    I have five features I am watching, including Gabrielle which is a non-factor FROM TOMORROW ON. The Gulf of Mexico system is something that, although not alive, and not obvious, to me has the potential to be a problem in the western Gulf at midweek. The system east of Puerto Rico is getting thunderstorms now and will be player to watch later in the week. The wave at 10 north and 35 west is being ignored by models, but previously was supposed to develop and recurve (the last two that the models did that with were Dean and Felix) and we have a large system off the African coast coming west.

  13. 13
    zman Says:

    Q – thanks – I’ve learned not to doubt the Bastardi man’s comments.

  14. 14
    jimbo Says:

    Crownweather.com comments @ 0445 Monday…

    Invest 91-L – Eastern Atlantic Tropical Disturbance:
    Satellite imagery early this morning showed a broad area of low pressure, associated with a tropical wave, located about 1640 miles east of the Windward Islands and about 1980 miles east-southeast of San Juan, Puerto Rico. This tropical wave is producing a large area of shower and thunderstorm activity and the entire system has become better organized overnight and I anticipate that this system will develop into a tropical depression within the next 48 hours. Wind shear analysis early this morning showed 10 to 20 knots of shear over this system and all indications are that this disturbance will remain in a favorable environment for development for much of this week and development and intensification of this system seems likely.
    The global models and track model guidance continue to depict this system very well and they all continue to forecast tropical cyclone genesis and development. As for potential tracks:
    The GFS model forecasts this system to take a track that eventually brings it 300 to 400 miles northeast of the Leeward Islands by next Monday. After that, the long range GFS model forecasts this system will will track more westward from days 7 to 10, so that by day 10 (Wednesday, September 19th), the GFS model forecasts this system will be near 23 North Latitude, 66.5 West Longitude.
    The track model guidance envelope is pretty wide this morning with the BAMM and BAMD models the furthest south and keep this system below 12 North Latitude and the HWRF, Canadian and NOGAPS models the furthest north and east and forecast a track that moves this system northwest from days 3 to 5.
    As for model forecast intensity, the SHIPS model forecasts this disturbance to become a 80 mph hurricane in 5 days, while the GFDL model forecasts this system to become a 85 mph hurricane in 5 days and the HWRF model is the most aggressive and forecasts this system to become a 110 mph hurricane in 5 days.
    Based on the model forecast upper air pattern, it seems that the GFS, HWRF and GFDL models may have the best overall idea on forecast track. Basically the upper air pattern is for a couple of strong troughs of low pressure to move east over the central and eastern Atlantic this week, these troughs will pull this system to the north, however, by this weekend and into early next week a ridge of high pressure is forecast to build to the north of this system and turn it to the west. I do think that this system has a good shot of making it all the way across the Atlantic and possibly threatening the US coastline in about two weeks or so. In addition, I agree with the intensity models and do think that this system will intensify this week and very well may be a hurricane by the end of this week.

  15. 15
    zman’s Energy Brain ~ oil, gas, stocks, etc… » Blog Archive Says:

    […] Weekly Wrap – Week Ended 09/07/07 […]

  16. 16
    Fred Says:

    Z – Nice to hear from again. NG up nicely today!

  17. 17
    argent finances Says:

    argent finances

    Zman’s Energy Brain ~ oil, gas, stocks, etc… » Blog Archive » Weekly Wrap – Week Ended 09/07/07

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