Wrap – Week Ended 09/21/07



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Natural Gas Rigs: Starting to roll over as more curtailment / delayed drilling announcements. This will be natural gas price supportive if it it continues for long or more rigs come off the count. 


CFTC - Short Position Is Still Large. As the net short position fell away from a record, gas prices recovered.


Skud List: I had 5 issues go off the board Friday as complete losses:

  • (XLE) puts - a pre Opec hedge that got away from me faster than I thought.
  • (SWN) and (NFX) Calls- The were purchased in mid July and did well after earnings but were sub-primed beyond my belief. I held on to them sense they weren't really worth selling and both made efforts to recover but the distance was just too great.
  • (KWK) puts - this was a small early natural gas short that didn't work
  • (PTR) - this was a play on the horrible refining margins in China at present. Their third quarter will likely be horrible at least on the refining side but the proposed offering of 4 billion shares to mainland Chinese, something that on this side of the ocean would be a negative was viewed as a positive. Given this is the equivalent of Exxon in China I really didn't think the stock would drive a further 5.5% beyond the initial rally day on the announcement of a secondary. I was wrong. 

Other Options Going Off The Board Saturday:

(OII) September 60 Calls were up 390%. The spread remained too wide and the bid was below intrinsic for much of expiration week so I opted to exercise and will be selling some (OII) stock on Monday. 

Option Positions Remaining After Expiration



10 Responses to “Wrap – Week Ended 09/21/07”

  1. 1

    Hey Z.,

    Reflecting on the week, the most telling post was that London Telegraph article posted about the OPEC countries unwillingness to shadow the Fed to bolster the dollar… flight from USD to Euro, et.al.

    That and the Mattel CEO apologizing and kissing butt to the Chinese Commerce Minister.


    I’m interested in how to play petrocurrencies and petroleum to hedge the persistent risk in the dollar.

    Hope you’re enjoying a fine early fall weekend. My ACC boys Wake and Virginia, they pulled off big wins at home!


  2. 2
    Sambone Says:

    Z – Tropics exploding on first day of fall. We now have three “Invests” to watch. That would be 94L, 96L, and 97L. It will be an interesting week.

  3. 3
    Nicky Says:

    97L – looking less of a threat than yesterday as the convection’s intensity has weakened.

  4. 4
    zman Says:

    GOMEX thing was much ado about nothing. The one down by Honduras still very disorganized. Could see producers putting men back on rigs now and pulling them off later in the week though. A boon for the helicopter companies.

    MMS says eventually TD 10 shut in:
    58% of GOMEX oil and 28% of its gas production (closed to 2 Bcfgpd for 4-5 days probably) which won’t make much of a dent in storage numbers assuming they get it back up over the weekend and Mon/Tues this week.

    Post updated to include opening positions for Monday.

  5. 5
    kaman Says:

    Catching up on weekend reading among the various blogs and subscription sources I use…and now having second thoughts about USO puts I purchased last week. Seems like there are more things favoring sustenance of higher oil prices than not. I think Nicky noted Friday words to the effect that the “end is near” referring to recent surge in crude. I am perceiving that the devaluation of the dollar is going to be the overriding factor here….others’ thoughts?


  6. 6
    zman Says:

    K – little for for thought. You’re right about the increased impact of the dollar on oil as a supporting force. One offset will be OPEC and their near-promise to increase production if oil stay > $80 for 20 consecutive days plus. Many think they can’t do it…I think Saudi will want to do it very badly if for no other reason than to show they still are the swing factor and to burn the butts of those like Matt Simmons who keep hauling out peak oil every 5 minutes.

  7. 7
    Nicky Says:

    FWIW US dollar looks close to making an important low soon too.

  8. 8
    scoop006 Says:

    Hello Zman; Any thoughts on FSLR and last weeks $15 gain?

  9. 9
    zman Says:

    Hey Scoop,

    I missed it doing that but alternative always runs when there is a big spike in oil. I haven’t looked for news on it / was there any, b/c if not its probably overdone (as I think oil is). Still, it could run for awhile as oil won’t be tumbling soon, just probably backing a bit in the near future.

    FSLR got a couple of hold ratings mid week but then GE bought a solar co (primestar) so that didn’t hurt either. Valuation looks pretty high to me (> 40x 2009 EPS) but it’s out of my arena and so they all look high to me.

  10. 10
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