Friday – Wow Oil

Housekeeping Item: Welcome new subscribers! If you have any questions please feel free to join the active comment session at the bottom of the daily post.  

Commodities Watch:

  • Crude Oil: After rallying $2.58 to $82.88 yesterday in what can only be described as a hedge fund induced bout of "I'm long a lot of oil and if I buy more now I can get them new Benz on Saturday" end of quarter pumping, crude is trading +/- $0.20 on several occasions topping $83 on: 1) more of the same, 2) Nigerian trouble, and 3) storm mania. Anyone who says 4Q tightness in a news article today who didn't say it 3 days ago when oil was falling will make the flip flopper hall of shame.
  • Nigeria Watch: one worker killed, two missing after rebels attacked an ENI facility in the Niger delta.
  • Karen threatening to head more westerly and Lorenzo strengthened to a Cat 1 before coming ashore this morning.
  • Natural Gas: After trading off two dimes to a quarter all day yesterday, the November contract, managed a late session rally to close yesterday down just under $0.13 to 6.911. This morning gas is flat to up a nickel at $6.98. 

RBOB and Heating Oil: Heady times. Despite the crude rally, heat and RBOB cracks actually improved yesterday as products showed large gains. HO looks ready to put the pinch on consumer spending in the northeast this winter. As to gasoline, you might have noticed pump prices edging back towards $3 and yet it doesn't feel like summer. Contrary to the beliefs of the "spoon feed me my knowledge in sound effects laden 5 second snippets" of the Cramerica school of investing cracks are very healthy for this time of year. 

Refiner Analyst Watch: From a note yesterday ~ according to analyst Mark Flannery of Credit Suisse "U.S. refining margins in the third quarter fell from 30% to 55% from the previous quarter, the result of burgeoning gasoline supplies in June and energy traders' subsequent focus on sluggish demand during the peak summer driving months. Margins came under futher pressure as crude-oil prices rose and gasoline prices languished, blowing out the crack spread in the process. We have updated our U.S. refining earnings to reflect acutal commodity prices. Our [3Q07] for U.S. refiners fell by 19% on average."

Z Comments: Sheesh, where to begin?!

1) Have you ever heard of a thing called seasonality? 3Q margins have fallen from 2Q levels 66% of the time this decade. In 2006 the 2Q to 3Q decline rang in from 20 to 35%. It fell more this year but you fail to point out that 2Q07 was the highest average crack spread quarter on record. A thinking person might expect the magnitude of the seasonal pull back to increase especially as they sat at their desk watching the powers that be (OPEC, hedgies, etc) keep oil aloft.

2) "Sluggish demand during the peak summer driving months"? Which months would those be? Check out the blue line ...looks pretty strong to me pal.


....how about on an annual basis...nope, still strong!


3) "our estimates fell 19%" So whose fault is that? You got ahead of yourselves whipped up by the frenzy of those dizzyingly high cracks during the second quarter and now you're reigning in your 3Q levels. Sounds like a personal problem. 

4) stop investing by looking at the quarter that just past, or do you drive in reverse using your rearview mirror as a guide? That gas demand you decried remains strong and inventories are off or don't you read my Thursday wrap ups?

5) To be fair, this fellow is not alone. There is a lot of group think about right now and no one can afford to be the loan wolf saying, 3Q is history, how about the long term? Ah group think: one of the many reasons I left the Street.

6) The fact that the Street couldn't get enough of these stocks this summer when valuations were stretched and cracks were obviously not sustainable and, now two whole months later, the fact that they are shunning them says a lot about what's wrong with the Street. I may be early on VLO but when the CROWD comes back (I think in October or November) it'll be with its usual "I gotta get in now" grace. 

Gas Storage Summary Week Ended September 21, 2007: 74 Bcf Injection. My number was 70.

  • Storage as of September 21, 2007: 3,206 Bcf (updated September 27, 2007).
  • Max storage for this week in history: 3,243 Bcf (2006).
  • We are now 37 Bcf below (1.1%) year ago levels.
  • We are now 238 Bcf (8.0%) above the 5 year average which includes 2006's record levels (see third chart below). We were 28% above the five year average back in April and I know we're producing more gas now so you've got to ask yourself if we've seen a little industrial demand creation, either attributable to low prices or increased consumption from ethanol producers. 

Looking Ahead:Still On Track For Record Storage. There are roughly 2 months left in the traditional injection season. The Street is still for the most part modeling peak storage at a record smashing 3.6 Tcf. I think that's a stretch but we're in the shoulder season (that period where both cooling and heat related demand are slack). If go back and look at previous posts you'll note that the projected end of October numbers have been inching lower over the last several weeks. I think we'll land in the 3.4 to 3.5 Tcf range.



Tropics Watch:  

  • Karen - like bad language, you just can't get rid of her. Strong shear expected to weaken the storm over the next 2 to 3 days but models have her becoming a hurricane (if she survives the shear) in five days. karen-092807.jpg karen-092807aaa.jpgTracks are increasingly looking like a toss up between Bermuda and Florida.
  • Lorenzo came ashore as a Cat 1. It's a compact storm and so far I have seen no reports of Pemex offshore facility evacuations or production shutins although activities at several ports was suspended last Thursday.

Stocks We Care About

  • Chinese Oils: add (CHOLF5) to the list of CEO SNP and PTR, also known as the stocks the world can't get enough of. The latest entry, mentioned in yesterday's post is the Chinese Oilfield Services company and it jumped 160% on opening day.
  • (NFX). (UPL) flew out of the gate yesterday on it's Bohai Asset sale. NFX should get similar treatment in coming months. I'll bite bullet today and take some November or December calls there as the timing of the sale could be any time in the fourth quarter. I think expectations for its Bohai sale are too low plus I want to be in for earnings later in October when I think Newfield will once again have some nice news to share about the Woodford, the Rockies, progress on an 08 deepwater GOM field and the ramp in Malaysia production. They have been pretty tight lipped since late July except for the announcement of several nice oil and gas hedges.
  • (RIG) - Nice puff piece from market watch about why the Baron Fifth Avenue Growth Fund likes (RIG) (the manager is probably a friend of JC's - that loud red-faced guy on CNBC). The PM basically says its a good buy for the next five years until capacity comes into the deepwater rig market and swamps it which is what will happen although the stocks will lead the capacity by two years or so.

Holdings Watch

CALLS: semi busy day

  • (TLM) - entered April 2008 $20s for $1.90. Last bid $1.85.
  • (CHK) - Oct $35s for $0.90. I still hold the $32.50s and the January 08 37.50s. Last bid $1.10. I won't get attached to this position and will likely be out today with a little luck.
  • (DRYS) - Out on half of my Oct $85s for $10; a nice 3 day gain of 72% from my Monday purchase at $5.80. I am not greedy and though:
    • 1) the fundamentals for the dry bulks (especially for the major bulks of coal, iron ore, grains of which (DRYS) is well positioned to take advantage of) appear to be exceedingly stout in the near and medium term and
    • 2) (DRYS) is the cheap big kid on the block the industry is a little outside of my normal stomping grounds and as such I'll be covetous of quickly gotten gains. The stocks in this group are also exceedingly volatile so until I get comfortable trading the area, if ever, I'll be in and out from time to time.

PUTS: No Action

Odds & Ends

Analyst Watch: (GNK) price target raised from $70 to $81 at Cantor. This is a day after Genco executed a 3.6 million share secondary + 0.8 for a selling shareholder and was the worst performer for it in the shipping group yesterday.

(ECA) says to cut $1 Billion from 2008 Alberta investments if the proposed taxes are enacted. This equates to 30 to 40% of the currently proposed spending levels.  

207 Responses to “Friday – Wow Oil”

  1. 1
    Sambone Says:

    8:05 am EST (Part 1)

    Crude Down, Profits Booked After Brent Hits High

    By David Elliott

    LONDON — Crude oil futures were slightly lower Friday morning in London as investors booked profits after an early fund-led rally pushed Brent to a fresh all-time high.

    But weakness in the dollar and attacks against oil workers in Nigeria are all helping to encourage fresh investment in the market and a further push higher can’t be ruled out ahead of the weekend, traders said.

    “The bulls are taking all these factors into consideration and putting forward a pretty good case to keep buying,” said a trader in London.

    At 1140 GMT, the front-month November Brent contract on London’s ICE futures exchange was down 17 cents at $79.86 a barrel having earlier climbed to a fresh all-time high of $80.49 a barrel. Brent settled at an all-time high at $80.03 a barrel Thursday.

    The front-month November contract on the New York Mercantile Exchange was trading $0.32 lower at $82.56 a barrel.

    ICE’s gasoil contract for October delivery was unchanged at $705.50 a metric ton, while Nymex gasoline futures for October delivery were down 212 points at 207.27 cents a gallon.

    Consensus opinion points a finger at speculative funds as the main backers of the latest rally for both Brent and WTI, with a fall in the value of the dollar helping to make oil attractive to investors outside the U.S. The euro climbed to an all-time high of EUR1.4198 against the dollar Friday.

    “The ever-weakening dollar is probably the key driver of this (oil price rally), with non-commercial long interest being fueled by the view that the U.S. will sacrifice its currency to prop up growth,” said analyst James Neale at Citigroup in London.

    Suggestions have also been made that the approach of the end of the third quarter — marked by the end of September — may be helping to trigger some of these fund investments but most traders agree the bullish short-term technical picture is one of the main reasons proffering buy signals.

    While these technical factors are accounting for the latest price action, traders point out a bullish fundamental picture is the main foundation of the market’s strength.

  2. 2
    Sambone Says:

    Z – having problems posting the rest of the news.

  3. 3
    zman Says:

    test test test…what’s the trouble posting S?

  4. 4
    Sambone Says:

    Well, I try to put the second part up, and for some reason it won’t take. Oh well, I’ll just wait til the next update from Dow Jones.

  5. 5
    zman Says:

    oil is up $0.52 to 83.40…hopefully Nicky’s connection is down b/c this is going to ruin her day!

    HO is over 2.255

  6. 6
    Sambone Says:

    8:45 am EST

    Crude Rises Above $83 As Dollar Weakens

    [Dow Jones] Nymex crude hovers around $83 after, after dipping lower in overnight trade, then bouncing back as the dollar continues to weaken. The dollar hits an all-time low against the euro, which reaches $1.4198 in morning trade. The weak dollar makes “oil much more attractive to non-US players,” says Addison Armstrong of TFS Energy Futures. Although crude is higher, there isn’t a lot of momentum to break the record of $89.30 a barrel right now, he says. Nov crude +34c at $83.22/bbl. (elizabeth.landau@dowjones.com)

  7. 7
    jy Says:

    The gas price differentials between Henry Hub and Opal, WY have increased from ~$2/mcf in mid August to anywhere from $4-6 lately. Pipelines must be making a killing on what gas from the rockies they can carry. I suspect that the long heralded opening of the “Rockies Express” pipeline in early 2008? will help soften the differential. If you are a rockies gas producer that isn’t hedged-ouch!

  8. 8
    Sambone Says:

    Weather – Nothing of interest at this time.

  9. 9
    zman Says:

    jy – true. I tried to short BBG on that a couple of months ago but it refused to falter.

    Sambone – don’t care about the Karen westerly tracks?

  10. 10
    zman Says:

    DRYS bid up strong on open

  11. 11
    Sambone Says:

    Z – The only thing about Karen is that the East coast needs to keep an eye out. At this time I don’t see it affecting the GOMEX.

  12. 12
    jy Says:

    Not sure how much of rockies production is hedged by each public company. I suspect a large percentage, but have no hard numbers. Prices will be lamented often during 3Q conference calls.

  13. 13
    zman Says:

    jy – true and the hedging varies a lot as usual, mid and big caps more hedged as a % of expected volumes than the minnows for the most part.

    hear ya re 3Q calls. This is why EOG shut in 50 mm/d and I know some others have more quietly shut in all the way down to N Mex.

    Oil on fire up 80 to 83.65…bet they use those westerly Karen tracks as part of the reasoning along with rebels the dollar and that time of the quarter

  14. 14
    Nicky Says:

    Morning all – all losses in the complex early this morning now reversed and then some!

    First flip flop of the morning – John Kilduff on CNBC this morning saying oil is overdone and he expects us to move back sharply over the next quarter.

  15. 15
    zman Says:

    N – lol, now I know it tops/taps 85 pronto

  16. 16
    Nicky Says:

    It should test 84.10 but could top out any time now. By my count the move of this morning’s low is v and we are probably completing iii of v so have iv and v of v to come.

  17. 17
    calvino Says:

    Gmorn. Brilliant watch -Jimmiie Baboons Street dot com says only direction for amd is now up. Because all bad news is already finished. I was reading from intel devpr’s conference that the only directin for amd is morgue.

  18. 18
    Nicky Says:

    Trading below today’s 82.46 would be the first sign the top is in.

  19. 19
    Nicky Says:

    Nat gas really would have looked better with a move above 7.374 but it is starting to look less likely that we will get it. We may already have started the move down.

  20. 20
    Nicky Says:

    By my reckoning wti is now up 4.5 bucks in just over two sessions.

  21. 21
    Nicky Says:

    distillates looking toppy. spike up and down.

  22. 22

    Go VLO!

  23. 23

    Would this be a nice time for a momentum play on the VLO 67.5s with tight stops, Z.?

  24. 24
    zman Says:

    Q – Same conditions apply today but refiners couldn’t get around the misguided wishes of that bean counter I pointed out in today’s post. That’s not a bad play

    RIG – just broke out and could make a run on 120 soon.

    OII is closing on a break out

  25. 25
    zman Says:

    GNK now flavor of the day, DRYS could go heavily into profit taking mode if it breaks into red here.

  26. 26
    Nicky Says:

    distillates needs to break 22272 for confirmation of a top.

    rbob needs to break 20642.

  27. 27
    Nicky Says:

    WTI has support at 83.30 and 83.00

  28. 28
    apbd Says:

    Taking the wife away for the weekend.
    Thanks to all. I could’nt have done it without you.

  29. 29
    zman Says:


    Awesome. That’s what it’s all about.

  30. 30
    zman Says:

    TRADE: Out APA October $80 calls for $11.30. 3 weeks, 335%. Enough for me.

  31. 31
    zman Says:

    TSO getting whacked (down another 2%). gasoline weaker, ho still holding up. pressuring cracks today.

  32. 32
    Sambone Says:

    9:41 am EST

    Nymex Crude Rises Above $83, Brent Hits Record $81.05


    NEW YORK — Crude oil futures in New York bounced past $83 Friday as the dollar weakened against the euro and as Brent crude hit an all-time high of $81.05.

    In addition to the falling dollar, violence against oil workers in Nigeria contributed to the rise in prices.

    The front-month November light, sweet crude contract on the New York Mercantile Exchange was recently up 68 cents, or 0.8%, at $83.56 a barrel. Brent crude on the ICE futures exchange hit an all-time high of $81.05 barrel after settling at an all-time high of $80.03 on Thursday.

    “The weakening dollar is one of the main driving forces,” said Addison Armstrong of TFS Futures, “making oil much more attractive to non-U.S. players.”

    The euro reached an all-time high against the dollar of $1.4198 Friday morning.

    A weaker dollar also reduces the purchasing power of oil producers, Armstrong noted. This makes it less likely that the Organization of Petroleum Exporting Countries will increase production.

    “I don’t see any quick rescue of OPEC to do anything about $80 a barrel,” Armstrong said.

    Nymex front-month October reformulated gasoline blendstock, or RBOB, was down 36 points at $2.0903 a gallon. October heating oil was up 1.04 cents at $2.2625 a gallon. Both contracts expire Friday.

    Analysts expressed mixed opinions on the likelihood of crude maintaining its $83 edge. Tom Bentz, director and senior analyst at BNP Paribas Commodity Futures, said crude could surpass its all-time high of $83.90 in the coming days, “if not today.”

    Others do not see much momentum to break that record. “We could easily go down and test the $80 mark again,” Armstrong said.

    One worker was killed and two are missing at oil services company Saipem SpA (SPM.MI) following an armed attack at a site in southern Nigeria on Thursday, the Italian company Eni SpA (E) told Dow Jones Newswires. Eni, Italy’s biggest oil and natural gas company by revenue, controls Saipem with a 43% stake.

    “Traders were worried that this could mark the beginning of a new campaign of attacks by MEND on oil facilities in Nigeria,” said a report from energy risk management firm Cameron Hanover. MEND, the Movement for the Emancipation of the Niger Delta, began targeting Nigeria’s oil industry in late 2005.

    Weather concerns may also be a factor in the gains in crude futures, analysts noted. Hurricane Lorenzo weakened into a tropical storm after making landfall and weakening inland over eastern Mexico, the National Hurricane Center in Miami said early Friday. Tropical Storm Karen is moving toward the west-northwest, and is about 755 miles east of the Windward Islands.

    —By Elizabeth Landau, Dow Jones Newswires

  33. 33
    zman Says:

    broad market people…any thoughts, you’re starting to rain on my parade.

  34. 34
    scoop006 Says:

    ZMAN, After #30 HOW can anyone rain on your parade?

  35. 35
    zman Says:

    Scoop – wellllll…I’m not complaining…just don’t want to get sideswiped by some stupid sub prime type issue.

    I had RIG finally popping technically (it’s been popping fundamentally) and that $2 gain today vanished.

    CHK is flat to down now

    DRYS is off a couple…

  36. 36
    Denise Says:

    Z-the technician I follow says her oscillator is overbought-H Meisler
    were due for a pullback-also lots of commentary by “smart” money about overfrothyness in China markets-another
    wave technician I subscribe to went short China index yesterday.

  37. 37
    zman Says:

    Denise – thanks for that. I agree re China. It’s internet bubble city in their markets right now driven purely by loads of readily investable cash. Their oils have gotten out of sync with growth rates and valuations. That being said, I’d rather step on the third rail than be the first guying saying short them as my money flow compared to theirs is something like 1 to a google x.

  38. 38
    Nicky Says:

    Z – upside doesn’t quite look done to me but I agree with Denise. Top is getting closer.

  39. 39
    zman Says:

    GO CHK – don’t call it a comeback!

    NG – if it hits $8 before $4 Nicky should have to eat a hat.

  40. 40
    drdavis124 Says:

    Bought DBA Calls 04/08 $30 @2.25

    Hey Guys & Gals its time to expand your horizions. IHO The time spent on
    GOM weather is looney considering that you don’t seem you be able to trade off the information. We are running out of
    1-Food (DBA) 2-Water 3-All Metals
    4-Energy is not the only area to invest.
    2007 has been my worst year because I am to overweight chk & other NG co’s.
    Najerian Is on CNBC now with CHK DVN> He is really sharp.

  41. 41
    Sambone Says:

    I’m bearish, but I have been. Ready to put my hedges back on in a moments notice. I believe a “Black swan” will happen or the Crowd will finally wake up to what’s going in the economy and the world.

  42. 42
    Sambone Says:

    Drdavis –

  43. 43
    Nicky Says:

    Z – a little late to change the hat eating bet now! Especially as we are currently much closer to 8 than 4!

  44. 44
    drdavis124 Says:

    Sambone: I am short with leaps. The MKT will crash “WHEN”???? Tomorrow?-January? Who knows.

  45. 45
    zman Says:

    Dr D – with all due respect, talking about the weather is a long standing past time around here and if you think I don’t make $ off of the hurricane trade you can have my OII calls.

    I have very few rules for the site: no flaming, foul language, sharing of what goes on inside the site and lastly and perhaps most importantly promoting the restriction of idea sharing.

    Please refrain from telling people what not to chat about. Someone I’m sure finds it of use. I certainly do as I get a lot out of Sambone’s, Redjack’s and others weather expertise and would never want them to feel like their input is a nuisance. This winter we’ll be talking about the movement of arctic air masses so be prepared to see a lot of that kind of banter as well.

    Finally, we do get outside the energy box (dry bulks for example) but this is an Energy site (hence the name) and that’s going to be the primary focus. There’s other stuff to trade and to talk about but energy rules here. I own GOOG in the IRA and I’m listening to my IPOD now but I’m not about to talk about them here. If someone else wants to that’s fine. But energy is a pretty broad topic and it rules this roost.

  46. 46
    scoop006 Says:

    Anyone have an opinion on these two names
    RIO and NAT Thanks

  47. 47
    Popeye Says:

    As of this am I’m now all cash. It took all week but I sold my last holding, a local tiny biomed for a four bagger. The time just seemed right to lock in profits.

  48. 48
    Dman Says:

    Q for Z:

    number crunch on RIG vs GSF: is there any value in GSF over RIG, assuming the deal goes thru?

  49. 49
    Sambone Says:

    Scoop – RIO = momentum

  50. 50
    Sambone Says:

    Z – My wife saids I’m a “PAIN”!!! lol

  51. 51
    Sambone Says:

    Dollar getting spanked again.

  52. 52
    drdavis124 Says:

    Please accept my humble apology. I was clearly “out of line”.


  53. 53
    redjack Says:

    re RIG & GSF…the tax consequences of owning RIG when the merger consumates is something to consider. They both trade in lockstep.

  54. 54
    zman Says:

    GSF is trading at a small discount to the done deal but I like the bigger share value of RIG for trading options (that makes no mathematical sense I know but the swings are bigger and the option spacing is the same and it works kind of like the reaction to stock splits…weird but true). The deal will go through in the 4Q. No feds to hold it up now and the shareholders like it.

    Dr D – don’t apologize, it’s not necessary, I just want to promote the free share of ideas, never inhibit it. One man’s garbage is another man’s gold.

  55. 55
    zman Says:

    RJ – can you elaborate, is it the higher cash component going to the RIG shareholders you’re thinking of?

  56. 56
    zman Says:

    OII – now that’s more like it. All time high.

  57. 57
    Nicky Says:

    Dow Jones is reporting that France is saying any agreement on a third round of sanctions against Iran will be delayed until November.

    Interesting that US is backing down the pressure a touch.

  58. 58
    Popeye Says:

    FCEL getting cheaper, I got stopped out last fri.

  59. 59
    zman Says:

    Nicky – my spin, and that’s all it is, is that if the US backs off Iran at the diplomacy table it means Israel has already made its decision.

    Need to do some work on the alt energy ETFs. If oil does back off soon that thing will get clocked. Anybody remember the tickers of those?

  60. 60
    Nicky Says:

    Maybe the US doesn’t want oil at higher levels at this moment in time.

  61. 61
    redjack Says:

    Z..I wish i could find the article that discussed the possible tax however it pointed out that the GSF shareholders have to treat the transaction as a sell whereas the RIG shareholders may not have to treat it that way.

  62. 62
    Nicky Says:

    But may give us the impetus for the next leg up in a month or so….

  63. 63
    Nicky Says:

    Unless WTI and HO break down soon then this consolidation means higher levels to come yet.

  64. 64
    Dman Says:

    Z: since you mention the options on RIG/GSF…

    I have a LEAP spread in GSF: long 60s short 70s. Haven’t figured out what becomes of it when the deal closes. Do the cash bits just cancel out & I end up with a LEAP spread in RIG?

  65. 65
    zman Says:

    RJ — ohhhh, that’s a good point. I thought you were looking at it from a negative standpoint for RIG, but you are saying GSF neg tax view. I will look for that. I thought was merger of equals as there are 2 distinct payouts.

  66. 66
    Sambone Says:

    Dr Davis – Zman takes no prisoners. lol

  67. 67
    zman Says:

    Dman – it gets complicated.

    Check out this site:

    Sambone, in the immortal words of Bono, “Did I bug ya? I didn’t mean ta bug ya”

  68. 68
    Sambone Says:

    Nah, I’m just messin around. It’s Friday.

  69. 69
    rammastr Says:

    ZMAN – What’s flaming?

  70. 70
    calvino Says:

    Popeye, saw the FCEL slide, started nibbling and averaged in at 9.54

  71. 71
    zman Says:

    flaming = verbal abuse on the internet.

    Sam – I know, I just wanted to get a Bono quote in sense he got the Liberty Medal for his work in Africa.

    Beer thirty swiftly approaching

  72. 72
    calvino Says:

    Jimmie Jimbo the Magic Talking Baboon watch – just as the street said there was no place at all for amd to travel downwards, Barron’s sends us this today:
    American Technology Research analyst Doug Freedman this morning cut his estimates on Advanced Micro Devices (AMD) for the third quarter and for 2007 and 2008. In particular, he has concerns about Barcelona, the company’s much discussed new server processor.

    Z – it’s your and Nicky’s faults for starting me on the magic talking monkey, but I will stop if you instruct me.

  73. 73
    zman Says:

    Cal – no I rather enjoy it. The magic talking monkey deserves to be somewhat flamed.

  74. 74
    rammastr Says:

    ZMAN – Thanks. Are you still keeping an eye on TLM? It snuck upo close to $20 this week.

  75. 75
    zman Says:

    crude negative

  76. 76
    zman Says:

    Ram – took some leaps their yesterday as BigJim kept reminding me. April ’08 $20 CALLS

  77. 77
    zman Says:

    Crude = unwinding the trade

  78. 78
    Nicky Says:


  79. 79
    zman Says:

    TRADE: Out OII Oct $75 CALLs at $3.50, up 108% in 11 days.

  80. 80
    Sambone Says:

    Cal – Since I don’t watch talking heads, who is Jimmie Jimbo the Magic Talking Baboon?

  81. 81
    Nicky Says:

    WTI – support at 81.75, 81.00 and 80.50

  82. 82
    Sambone Says:

    What I find funny is the WSJ had a huge write up on grain today, and DBA is down. Oh silly me, it’s the market, that’s right!

  83. 83
    Nicky Says:

    Distillates now sitting on support.

  84. 84
    calvino Says:

    You can watch his leaping antics on CNBC everyday, he goes by the human name of Jimmie Cramer, when they let him out of the cage and put on a suit.

  85. 85
    Nicky Says:

    Samborne lol! Crop report was out today wasn’t it. I believe corn was a shocker with way more than needed. Wheat the opposite although now of course everyone will rush out and plant it and so prices should work lower over the next year.

  86. 86
    drdavis124 Says:

    Alt energy GEX Other Interesting ETF’s SLX NRL GDX

    DBA looks good.
    PowerShares DB Agriculture Fund Commodity Index – Optimum Yield Agriculture index is composed of futures contracts on some of the most liquid and widely traded agricultural commodities – corn, wheat, soy beans and sugar. The index is intended to reflect the performance of the agricultural sector.

  87. 87
    redjack Says:

    Z…were you aware that as an option holder of RIG or GSF that one would receive the cash and your option contract is adjusted for the percentages of ownership?

  88. 88
    Nicky Says:

    Next support level for distillates is 22080.

  89. 89
    calvino Says:

    Fuel Cell – could all the people shorting them be thinking it’s a hydrogen car engine, as opposed to a stationary, NG, utility scale power plant?

  90. 90
    calvino Says:

    Ahh yes corn – the collusion trade of the year – long corn, short ethanol producers. The open volume on the CBOT maxed out at 250,000 contracts, at one point.

  91. 91
    Sambone Says:

    #14 just formed over the Cape Verdes Islands, but it will be another fish storm.
    Nothing else of interest

  92. 92
    Sambone Says:

    Cal – I thought I was the only one that takes him for entertainment value only.

  93. 93
    zman Says:

    RJ – yes, if the options are out of the money after the adjustment they become worhtless…but you have the cash you received from the deal.

  94. 94
    drdavis124 Says:

    Nicky: The World Grain storage carry-over was the “lowest in history” last spring, Do you have info on what crop situation is in other parts of the world? We have 4.5 Billion people in Asia & the FSU that eating better.


  95. 95
    drdavis124 Says:

    The price of corn will not drop much here. It will be exported to asia.


  96. 96
    Nicky Says:

    Dr D – everything I am reading says wheat should top out anytime now and then move much much lower.
    All I heard this morning was that we are now awash with corn. It will be the same with wheat next year – its easy to grow and at this price there is huge incentive for them to rush out and plant it everywhere – its extremely easy to cultivate.

  97. 97
    drdavis124 Says:

    Barry Ritholtz on inflation


  98. 98
    Dman Says:

    Now that crude’s fallen off a cliff…in a kind of falling upward sort of way… 😉

    There’s a chart of US driving miles here:


    (scroll down or search for “Expect more of this in the future”)

    showing that in July 2006, for the first time in 27 years Americans were driving less than the previous year.

    Anyone know where a more recent chart might live?

    (not that it matters for crude, I guess, given all the new Chinese cars on the road. But interesting to see if the trend reversed this year …. )

  99. 99
    drdavis124 Says:

    Nicky: Thanks:


  100. 100

    I like SLX the Market Vectors Steel ETF.

    I’ll buy that as a quasi-hedge when doing a large construction project that involves steel.


  101. 101

    Is drdavis124 (Phil) the PSW Phil?

  102. 102
    zman Says:

    Q – no he’s not

    Crude almost back to even

  103. 103
    rammastr Says:

    Anybody have an opinion on DRYS upper resistance since it’s at highs?

  104. 104
    Nicky Says:

    Another huge bounce – thanks goodness for TD14!

  105. 105
    Nicky Says:

    Apparently EIA have come out with a statement saying they don’t expect price to effect demand because of China – no doubt adding a lift to prices.

  106. 106
    Sambone Says:

    TD14 is a fish storm

  107. 107
    zman Says:

    I’ll bite, what is a fish storm?

  108. 108
    rammastr Says:

    DRYS is skating right above it’s BB’s. Does anybody feel it will push upward?

  109. 109
    TTupp Says:

    ram- you cant pick tops like bottoms… i know that dosent help.

  110. 110
    Nicky Says:

    You have to question the timing of such a statement by the EIA – first real sell off that looks like it could do technical damage and they step in!

  111. 111
    Sambone Says:

    Fish storm = Ocean only

  112. 112
    zman Says:

    Karen tracks aren’t just east coast, they’re Cuba bound.

  113. 113
    TTupp Says:

    ram- bb?

  114. 114
    zman Says:

    bb=bollinger bands

  115. 115
    zman Says:

    Karen + TD 14 = OII up 3.4%.

    Watch CAM and FTI fly up into the close

  116. 116
    rammastr Says:

    The reason why I am fishing is because I did not participate in the recent move. I was trying to get in now.

  117. 117
    Nicky Says:

    I think they already have a few tropical storms priced into crude!

  118. 118
    zman Says:

    Nicky – that was OII, not Oil and yes, I agree.

    Ram – tough call, these shippers are very volatile, I like buying them on weakness I think.

  119. 119
    Nicky Says:

    That said it looks very likely them are going to ramp it into the close again. Charts still look pretty bullish after that bounce.

  120. 120
    rammastr Says:

    ZMAN – Thanks. I will hold out for possible weakness.

  121. 121
    zman Says:

    Nicky is a much better TA person than I…maybe she would be so kind as to look at DRYS. Fundamentally I like. Technically, it’s a volatile beastie.

  122. 122
    rammastr Says:

    ZMAN – Is TLM unscathed by the Cnadian crackdown for more money?

  123. 123
    zman Says:

    RAM – re TLM I wouldn’t say unscathed although I don’t recall them having an oil sands component (which is part of the new sev taxes) and they are fairly diversified (as I recall) across Canada although they do have quite a bit of Albertan production. They’re cheap and the international arena is seen driving the growth.

    ECA gave the bird to the Albertan powers that be this am with the very really threat of hacking capex there if they go through with their royalty and severance tax suggestions. A Hugo by any other name smells just as bad.

  124. 124
    Nicky Says:

    Groan…. Addison Armstrong now being wheeled out on CNBC having been quoted all day long. Lets close it at all time highs folks and it can stay up here forever according to him!

  125. 125
    calvino Says:

    Of I was the PM in Alberta, Encana would not be on the top of my list of people to piss off. One out of three jobs tied into energy, and more like two out of three if you include the multipliers.

  126. 126
    Nicky Says:

    Oops sorry now covering himself and saying we are overdue a correction and expects to see us trade down to 75 when we do. Two opposite statements – go figure or should I say Flip Flop!

  127. 127
    Nicky Says:

    November rbob off 200 and October rbob off 20. They are now at the same price.

  128. 128
    calvino Says:

    amd watch – someone doesn’t want to get marked to book end of quarter below 13, and everyone else is running out the door on the downgrade. wonder who will win that one.

  129. 129
    zman Says:

    Nicky and CalV – agreed!

    TRADE: Entered BTU November $50 calls at $2.25.

  130. 130
    zman Says:

    Beer Thirty: T-minus 1 hour and counting.

  131. 131
    TTupp Says:

    whats btu all about? and the trade too

  132. 132
    TTupp Says:

    jeez Z werent you saying drys was a day traders dream?

  133. 133
    zman Says:

    BTU – peabody coal, I’ve been musing about the coals for awhile now. Decided to dip a toe as they look ready to run. Call volumes interesting as well there and ACI.

    Nicky owns Armstrong! Nice call for a turn!

    DRYS, yes I’d say daytrader’s dream there.

  134. 134
    rammastr Says:

    ZMAN – Coal?

  135. 135
    zman Says:

    coal = softish rock like substance, generally black, sometimes greenish, burns when thrown in a fire.

  136. 136
    Sambone Says:

    Karen – Fish storm

    Hit forward

  137. 137
    rammastr Says:

    O.K. Thanks. No more questions without specifics.

  138. 138


    If you’re perusing the coals, Walter (WLT) took a nice dip today.

    One of these days, people will realize that WLT is not (just) another sub-prime mortgage influenced home builder…

    BUT a company with a fine metallurgical coal division– one that mines cash.

    But not a pure coal play. Sure looks cheap: P/E 9 AH of 52 currently 27

    Hmmm, may have talked myself into the Jan 25s (WLTAE) at 4.00


  139. 139
    Sambone Says:

    Z – Coal, “Your a funny guy”!

  140. 140
    Magadan Says:


    I take it oil is back in technical damage zone?

  141. 141
    Sambone Says:

    OIl, is my quote right? 81.61?

  142. 142

    Coal – The Other Black Gold

    Which reminds me of an old W.Va. joke:

    “What do you call 32 WV women in the same room?”

  143. 143
    Nicky Says:

    Distillates tanks straight to the aforementioned level of support and through it! 22080.

  144. 144
    rammastr Says:

    OII = 76.40

  145. 145

    Punch line:

    … a full set of teeth!

  146. 146
    Nicky Says:

    Very much so Magadan.

  147. 147


    I’m going home. May my absence help you prosper.

    Have a great weekend, get out and take a hike in the woods or something.

    I’m trailering my horses down for a ride in the SNP.



  148. 148
    calvino Says:

    btu is last year;s trade, imho

  149. 149
    rammastr Says:

    Hey ZMAN – #135 – Were you flaming?

  150. 150
    zman Says:

    Q – have a great weekend and that’s good advice. I’ll be in the woods this weekend as well. I’ve been remiss in doing some homework though so I’ll be taking some WLT reading with me.

    TSO – tempting, down 2%+

    Funny DJIA not reacting to the oil sale.

  151. 151
    Magadan Says:


    Which way would you expect DJIA to react?

  152. 152
    Nicky Says:

    It was a little touch and go though Mag -that bounce looked too much. But it did what it had to and rolled over hard.

    There was always going to come the day when they did the opposite to what everyone expected. ie for days they have bought it up into the close. With 30 minutes to go it looked as if they were going to do exactly the same.

  153. 153
    zman Says:

    Ram – no way, never, not me.

    Cal – help me out on the last year’s trade comment. So coal can’t recover a bit this year? 1) it trades with NG and 2) I mainly trade options so the concept of years only applies to a very few, near and dear to my heart E&P companies and little else. Oh yes, and it applies to GOOG.

  154. 154
    Popeye Says:

    I think TLM sold all their oil sands componets.

  155. 155
    zman Says:

    Thanks Popeye.

  156. 156
    calvino Says:

    fcel down 8% on news -guess noone heard sac and mack decide to go on a bear raid and get the margin boys hurt before the quarter is up. unless there was some news in the mongolian press about FCEL that i did not hear.

  157. 157
    Nicky Says:

    Taking a long look at the Hang Seng Index. Up from 19000 to over 27000 in around 4 weeks. It really is a vertical move. RSI needless to say is very overbought.

  158. 158
    zman Says:

    N – see PTR, SNP, CEO re overbought

  159. 159
    rammastr Says:

    NICKY – I have been looking at the FXI puts, but there are so many mainland Chinese still pumping money into everything!

  160. 160
    Nicky Says:

    Aye Ram its going to be a question of timing but its on my radar.

  161. 161
    calvino Says:

    Z – you are fighting the entire environmental lobby, as well as the mood of the country, which has picked coal to be their bad guy. well me i don’t like mercury burning up chimney stacks either, but ours is a heck lot better than the stuff the lignite burning in ussr and in chicom factories. btu is a well run, they might make money off the australia deal to sell to the chicoms. but if i was thinking utilities fuel, i’m thinking nukes now – nrg is about to go up two reactors.

  162. 162
    rammastr Says:

    FXI 160 and 145 puts have unusual high volume today.

  163. 163
    rammastr Says:


  164. 164
    zman Says:

    Soonest you could have a nuke online in the US is 7 to 10 years

    I’m totally for them but you want to talk about tree-spiking enviro whack jobs coming out against coal and then talk nukes, aw come on!

    NFX up at all is miracle today. NFX up almost 1% is odd.

  165. 165
    calvino Says:

    Ok fine, but I heard Charlie Christ yester saying nukes are a clean fuel and he welcomes them to FLA, along with wind farms and solar concentrators. I know that nukes take years , however, I was talking about shareprices movements.

  166. 166
    zman Says:

    Cal – hear ya share price movements, point taken.

    The enviros will get you on wind too though, giant bird ginsus in the sky and solar-covers up too much area that they might want to stare at as they drive by in their priusi.

  167. 167
    zman Says:

    ESV trying to roll over. would make my Friday.

  168. 168
    calvino Says:

    FCEL – down almost 10%. Still waiting on the outer Mongolian news network to tell me Brdar was cheating with his secretary’s husband and explain this. 10% even the NASDAQ office boys should be scratching their heads on this one – just not real cool.

  169. 169
    Sambone Says:

    Cal – Coal goes with Ngas. So if Ngas goes down, coal prices will also.

  170. 170
    Sambone Says:

    Cal – Nukes take years to build, NIMBY, and are expensive. Last one built in Us was 36 years ago? China has what three being built? Nukes are the cheapest energy source know to man.

  171. 171
    rammastr Says:

    ESV and RIG roling over.

  172. 172
    calvino Says:

    FCEL down 11% -the NADAQ doing its best to live up to the reputation of the Pink sheets.

  173. 173
    TTupp Says:

    btu getting raped into the close

  174. 174
    zman Says:

    BTU – my bad timing with oil, will probably double up early next week.

  175. 175
    rammastr Says:

    I finally got into something quick and now it’s bad timing. What the heck is going on?

  176. 176
    TTupp Says:

    yea, as a momentum play, it looks to breeaing out… what correlation do you speak of with oil and btu?

  177. 177
    zman Says:

    Coal price correlation is with natural gas.

  178. 178
    calvino Says:

    i got into something quick, and it’s getting mauled in a bear raid. you want to see un UUUOOOGLY chart – look at FCEL. so you sit and wait for it to end and take some gains to cover this one.

  179. 179
    rammastr Says:

    NICKY – It seems relativley quiet for an end of the quarter day for the general market. Quiet before the storm?

  180. 180
    calvino Says:

    keep playing boys. oct 18 interbroker short delivery rules get born. gonna have to learn to pick stocks instead of gaming long funds. friggin rats.

  181. 181
    zman Says:

    eyes off the minute charts guys, it’ll drive you to drink early

  182. 182
    Sambone Says:

    Cal – oct 18 interbroker short delivery rules get born?

  183. 183
    calvino Says:

    just coffee for now. i’m gonna hold long. selling some dividend paying gainers – stuff i eat from – so i can hold this.

  184. 184
    Sambone Says:

    2:11 pm EST

    Nymex Crude Back Up Above $83 After Brief Dip

    [Dow Jones] Nymex crude bounces back up above $83 a barrel, after a temporary downturn due to profit-taking and sluggishness on the back of weak prices for gasoline and heating oil ahead of Oct product contracts expiration. No specific news is driving the crude market either way, says Tom Bentz, director and senior analyst at BNP Paribas Commodity Futures. “It’s just the flow of the market,” he says. “All of a sudden prices start to stabilize, buyers come back in and we could potentially make another run at the highs.” Nov crude +52c at $83.40/bbl, after hitting a low of $82.10. Oct RBOB gasoline -1.39c at $2.0800/gal. Oct. heating oil +9 points at $2.253/gal. (cassandra.sweet@dowjones.com)

    [Dow Jones] A sell-off by Nymex crude traders to avoid losing too much money in the current price fall is feeding into the drop-off, says Tony Rosado of IAG Energy Brokers. “A lot of people have bought, making bets we’d rally higher,” he says. Although prices rose to a high of $83.76, “people who can’t sustain a drop have to get out if they’re bullish,” he says. He says most news has been “bullish,” only “bearish” news is in a Dow Jones Newswires article that says Saudi Arabia will be primarily responsible for bringing new barrels to the market amid questions about how much spare capacity OPEC has and fears of a supply crunch. Nov crude -14c at $82.74/bbl. (cassandra.sweet@dowjones.com)

    [Dow Jones] Nymex crude futures fall below $83 and venture into negative territory on indications from Saudi Arabia that it would be able to supply barrels in a tight market, says Tony Rosado of IAG Energy Brokers. Nov crude -69c at $82.19 after trading all morning above $83. (cassandra.sweet@dowjones.com)

    [Dow Jones] Nymex crude holds steady above $83, but still well below the all-time high of $83.90 a barrel. Sagging gasoline prices ahead of Oct contract expiry are making it difficult for crude to gain much, says Andy Lebow senior vice president at MF Global. “I think it’s going to be tough for crude to sustain a big rally under that kind of pressure,” he says. If crude loses some of its gains, “I don’t think anyone would be shocked,” he says. Nov crude +52c at $83.40/bbl. Oct RBOB gasoline -1.86c at $2.0753. (elizabeth.landau@dowjones.com)

  185. 185
    calvino Says:

    yea, sam, no more passing short positions around for thirteen days at a time.

  186. 186
    Nicky Says:

    Ram – could get volatile next week with non farm payrolls.

  187. 187
    TTupp Says:

    Z- if vlo breaks 66.75 it might mot be good..

  188. 188
    TTupp Says:

    i hate this broad in cnbc chirping about refining exposure, re your post today

  189. 189
    zman Says:

    VLO – yes, true from back on 9/12

    what is she saying?

  190. 190
    TTupp Says:

    i love when she makes reco’s on fast money , and they flash on the bottom of the screen that she isnt qualified to make reco’s hahhaha. biggest joke in the league.

  191. 191
    TTupp Says:

    saying someting about cop’s refining exposure… HELLO! MCFLY! ALL INTEGRATEDS HAVE A FRIGGIN REFINER OR TWO

  192. 192
    calvino Says:

    I love Erin on there. I grab my coffee, turn off the volume and watch the show. She really speaks volumes to me.

  193. 193
    zman Says:

    anything specific about COP’s refining exposure…did she make a geographically specific comment? Europe has taken a big 2q to 3q drop some I’m wondering if she’s trying to get at that?

  194. 194
    calvino Says:

    the saga continues fcel down 11.5%, while i’m still waiting for the news. i should of been buying equities in venezuela, safer markets there.

    Good weekend to all!

  195. 195
    Sambone Says:

    Tini time, see ya next week.

  196. 196
    Popeye Says:

    Have a good weekend all. I’m headed to the brewpub to celebrate my flush with cash position and that stop on FCEL.

  197. 197
    calvino Says:

    25% short interest on the shares, and no one wanted to mark to market the 30% walk up this quarter. could that explain it or am i just in the land of chocolate?

  198. 198
    zman Says:

    see you cats later, have a good one!

  199. 199
    calvino Says:

    ok popeye, cheerio

  200. 200
    calvino Says:

    have a good one Z!

  201. 201
    zman Says:

    Have a good one Cal – better luck next week with the FCEL!

  202. 202
    zman Says:

    oh yes, and to NICKY, nice crude call. Got some levels for next week for us.

    I’m off for awhile, feels like a Red Stripe kind of afternoon. See ya!

  203. 203
    Nicky Says:

    Have a great weekend everyone – see you on the flip side or should that be flop side???

  204. 204
    Nicky Says:

    Will check levels and get back to you over the weekend Z.

  205. 205
    rammastr Says:

    Great weekend to all, even you COALMAN!

  206. 206
    zman Says:

    even me? but I prefer GASMAN.

  207. 207
    TTupp Says:

    assman like cramer!

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