Wednesday – Oil Inventory Day + A Little PQ Report

After yet another day in which oil surged into new territory surrounded by seemingly more and more sketchy explanations which I myself could no longer believe the people of the press were buying ie ...

The Turks are coming! The Turks are coming! (even though they hinted they're not coming en masse),

Winter is coming (those good old reliable seasons),

A hurricane could form in the southern GOMex (canceled on account of good weather)

A weak dollar (can't dispute that one) 

The U.S. accidental hit a farm in Qatar with a spare missile upsetting 3 cows, 4 goats, and over 200 oil traders, and

Simply because wave after wave of CNBC guests say so, etc...

Anyway, after all that I had to do something this morning I don't recommend you try at home. I had to thump one of my LCD monitors. CL/X7, the November 2007 light crude contract, was...well...it was red. That couldn't be right. thump. Still red. thump Thump. Still red, hmmm. thump, Thump, THUMP. 

~ an excerpt from How Me & My Buddies Made $100 Oil A Reality, authors Flynn and Kilduff. 

Commodity Watch:

  • Crude Oil: Crude closed yesterday up $1.48 at $87.61. This morning the pull of gravity is exerting itself and oil is off a whopping nickel in the early morning session.
  • Turkey is beefing up security aroud the much fretted over Baku-Tbilisi-Ceyhan pipeline
  • Angola said yesterday production ins set to reach 2 mm bopd by December (see chart bottom of post). That's at least 150,000 bopd over Angola's last known production high set for November delivery. About 97% of Angola's production is exported.
  • OPEC Watch: Opec said it has done its part to reign in oil prices via its recently announced 500,000 production increase and that prices are dominated by speculators. They don't seem to be inclined to raise production despite further cries from Bodman that the U.S. needs more Opec oil now.
  • Natural Gas: closed yesterday down 7.8 cents to $7.37 which is not much of a retrenchment in light of the 6+% move it made on Friday. The winter strip (Nov - Mar) looks exceedingly strong currently averaging $8 even for all you E&Ps still needing to put in some floors. This morning gas is trading flat.

Oil Inventory Expectations (from a variety of sources). Journalist were very busy reporting on the prospect of $100 oil and all they reasons they believed oil was on the run. So busy in fact that they neglected to report on expectations for today's inventory report. I scrambled about the web in search of numbers and all I found were crude and distillate expectations. 

  • Crude: Up 1.5 million barrels.
  • Gasoline: ??? - not available
  • Distillates: Down 300,000 barrels. 

Z Comments:

  • Crude: Up 1.5 million barrels. This would almost completely reverse last week's 1.7 million barrel surprise draw. The build is predicated on the belief that last week's rally in refinery utilization will be reversed thus putting the kibosh on demand. That sounds a bit fishy to me and in the line of setting the expectation bar too high so that if another draw 
  • Gasoline: We should be drifting slowly lower this time of year as refiners focus on building distillate.
  • Distillates: CNBC did do one thing useful yesterday. They aired an interview with a heating oil delivery service owner. His comment was that due to high prices homeowners on his route who would normally take 200 gallons for their first pre Winter fill up were only taking 100 gallons.

Now, I'm not a conspiracy theorist but I sometimes play one on the internet. Here's some food for thought.

  • Item 1. Speculators have been jamming skads of cash into crude, but have been basically ignoring crude products. For instance, just taking a look at the last 20 days of commodities trading, November crude is up a little over 9%, while gasoline is up roughly half that amount while heating oil has barely notched a 3% gain.


  • Item 2: Look at the inventories of crude and products vs their year ago and five year averages. Seems strange that crude is the one making the big run...


Item #3. But the hedgies are not getting short the refiners which is odd. If I were one of these big hedgies pumping oil but not products into the stratosphere, I might be tempted to short the refiners now, as I, along with my bazillion hedge fund friends, crack the back of the crack spread. I mean, these are smart guys, right? But short interest continues to fall in the major names...here are a few examples (the thin blue line is short interest):

refiner-short-interest-101607.jpgclick to expand this view of TSO, VLO and XOM declining short interest.

My sense is that in the near future the spread between product and crude performance will tighten. I think it will occur with a greater weakening of crude than product prices as a certain recently added group of speculators take their $5 bucks and run off in search of something else to run up. 

Report Watch: Published a piece on PQ last night. I plan on being long prior to 3Q earnings on November 6.


Holdings Watch


  • COP - Exited the October COP $85 CALLS for $2.86 average for a 33% gain since 10/2 and held through the “3Q warning”. I think the stock has further to run which is why I still hold the November $85 calls.
  • HK - entered January $15s for $4.00. Last bid $4.10.

PUTS: No action

Odds & Ends

Analyst Watch: drybulk shipper (QMAR) cut to sell at Oppenheimer.

Angola Watch: Production expected to 2 mm bopd by December.


Housekeeping Item: I'll be out of pocket Thursday after the gas number and Friday I'll be in intermittent contact via crackberry as I fulfill my role as the family chauffeur.  



154 Responses to “Wednesday – Oil Inventory Day + A Little PQ Report”

  1. 1
    Sambone Says:

    7:48 am EST

    Crude Below $87, Oil Data May End Record Streak

    By Nick Heath

    LONDON — Crude oil futures Wednesday retreated further from the historical highs recorded Tuesday, with the market anticipating the U.S. Department of Energy’s weekly inventory report and a Turkish parliamentary vote permitting troops to enter Northern Iraq.

    The slight drop in prices was driven primarily by mild profit-taking ahead of the inventory data, traders said, but with the strong upwards trend in crude prices remaining firmly intact, few would rule out further rises.

    “We’ve come up so far, so quickly, there’s been a little bit of profit-taking ahead of the stats,” one broker said.

    “But you get the feeling that if the stats are bearish, the market won’t react — and we’ll go higher with bullish ones.”

    At 1120 GMT, the front-month December Brent contract on London’s ICE futures exchange was down $0.27 at $83.28 a barrel, more than $1 off Tuesday’s record high of $84.49 a barrel.

    The front-month November contract on the New York Mercantile Exchange was trading $0.06 lower at $87.55 a barrel, having hit a high of $88.20 a barrel Tuesday.

    The ICE’s gasoil contract for November delivery was down $1 at $721.75 a metric ton, while Nymex gasoline for November delivery was down 35 points at 217.02 cents a gallon.

    Despite facing scrutiny over whether a military confrontation between Turkish armed forces and Kurdish militants in Northern Iraq would pose severe implications for physical oil flows, crude oil markets continued to closely monitor developments in the dispute Wednesday, notably a Turkish parliamentary vote deciding whether to endorse military action.

    The parliamentary debate on the motion is due to begin at 1200 GMT Wednesday, with a decision not expected until some hours later.

    “While the direct impact of any conflict in Northern Iraq on oil exports is potentially quite limited, the markets are pricing in a wider scale disruption to the region, including some key pipeline routes through Turkey,” said Standard Chartered analyst Helen Henton.

    Iraqi crude flows from Kirkuk would likely face disruption during any armed conflict, but a threat to the larger Baku-Tbilisi-Ceyhan, or BTC, pipeline which flows through Turkish territory, concerns more significant volumes.

    Quizzed by Dow Jones Newswires Tuesday if the People’s Defense Force, the armed wing of the Kurdistan Workers’ Party, or PKK, would retaliate if they are chased in Iraq, a spokesman for the group said: “The (BTC) oil pipeline will be our objective and action area.”

    An estimated 600,000 to 700,000 barrels a day of Azerbaijani crude currently flows through the pipeline, and a Turkish military strike on Iraqi Kurdistan could jeopardize a planned increase to 1.2 million barrels a day next year, analysts said.

    Crude prices broke out of their previous trading range in the wake of last week’s U.S. inventory data, after a surprise drop in crude oil stocks added to concerns of a potential supply squeeze in the fourth quarter of this year.

    The market was watchful for a similar reaction to Wednesday’s Department of Energy report, although crude stocks are expected to build again.

    According to a Dow Jones Newswires survey of analysts, U.S. crude oil stocks are expected to grow by 1 million barrels. Gasoline inventories are also due to rise by 1 million barrels, according to the mean of the eight analysts’ forecasts, while distillate stockpiles — which include heating oil and diesel fuel — are seen falling by 400,000 barrels.

    Despite question marks hovering over the role of imports in last week’s crude oil inventory data, and expectations pointing to a build this week, with bullish momentum firmly in the box seat at the moment, bearish data are likely to elicit less of a strong response relative to anything bullish, market participants said.

    “Even the slightest bullish signal seems to be enough to add another $1 a barrel to prices,” analysts at Citigroup said.

    With the market currently on such a footing, a Nymex WTI run at $90 a barrel seems “more than reasonable,” they said.

    But having climbed nearly $9 during six consecutive days of higher closes, and during which time prices have hit a record $88.21 a barrel, signs of weakening may be starting to appear in Nymex WTI, warned Olivier Jakob of Petromatrix.

    “The Monday surge and break of the range happened through a reduction of open interest on Nymex WTI, while volume was also off the recent high,” he said. The pattern was an indication that steep gains at the start of the week “had more to do with short covering than with fresh buying,” he added.

    But others suggested that it will require a significant development to shake the current market trend off its upwards path.

    “We cannot see much that could break crude’s upside spiral in the short-term despite the fact that we are severely overbought technically,” said analysts at MF Global.

    “The market is still gripped by a variety of supply fears; some are real and many are perceived, but until some news item or data reading changes the market’s mindset here, players will be content to keep buying the dips.”

    Largely obscured by geopolitical developments and fourth quarter supply concerns, the Atlantic hurricane season is nearing its close. But amid the recent sharp price rises, a reversal of any hurricane risk premium is hardly discernible. The National Hurricane Center warned of a broad area of low pressure in the western Gulf of Mexico Wednesday, but conditions for tropical cyclone development remained unfavorable as it heads northwards, it said.

    —By Nick Heath; Dow Jones Newswires

  2. 2
    zman Says:

    Sam – thanks that’s the first story I’ve seen that had the full Dow Jones survey in it:

    crude exp up 1 mm
    gaso exp up 1 mm
    dist exp down 0.4 mm

    T Boone on CNBC now

  3. 3
    zman Says:

    Check out that PQ report here:


  4. 4
    Sambone Says:

    Weather – Nothing

  5. 5
    Nicky Says:

    Morning all – Z glad you thumped your computer – that was a very worrying anomaly to see crude down and obviously a complete glitch!

    Expectations for inventories seem all over. CNBC just said a build of 1.8 in crude and a draw of 1.1 in distillates.

  6. 6
    Sambone Says:

    8:47 am EST

    Nymex Crude Steady As Turkey Votes On Iraq Action

    [Dow Jones] Nymex crude is steady near Tue record settlement of $87.61. A debate in the Turkish parliament on a cross-border incursion at Kurdish rebels in northern Iraq was set to begin at 8 am EDT. Traders also await US petroleum inventory data from the Department of Energy, which is expected to show a 1-million-barrel build in crude stocks, according to a Dow Jones Newswires survey. Nymex Nov crude -11c at $87.50. (elizabeth.landau@dowjones.com)

  7. 7
    bill Says:

    It doesnt pay to store oil and we are working off inventories. Sooner or later the inventory needs to be replaced.

    I shorted oil today and went long ho in a paired trade.

    Its getting chilly here in the northeast and i dont like the supply chart

    So far im losing, lol

  8. 8
    Sambone Says:

    What did T. Boone have to say?

  9. 9
    Nicky Says:

    That Turkish vote was an hour or so ago -I haven’t seen anything on it though.

    Just fwiw the nearest the pipeline passes to the Iraq border is 250 miles inside Turkey and is amongst the best protected in the world.

  10. 10
    Nicky Says:

    Boone said 100 sometime in the next year.

  11. 11
    Nicky Says:

    Charts look up in energy – you would have to think we are nearing a top but…

  12. 12
    zman Says:

    T Boone: up 21% ytd, looking for a good 4Q.
    missed his prediction on oil, he was bullish on the OSU Tigers

    N – not including the pipeline that cross the border, eh?

  13. 13
    aitrader Says:

    Boone said he sees $100 oil within a year. When asked about Q4 2007 he squirmed a bit but said $100 is a possibility.

    He’s put his mad-money into natural gas and wind. One of his big side bets is his “Clean Energy Fuels” (symbol CLNE) startup. CLNE is a soup-to-nuts natural gas infrastructure company for truck transport using NG instead of diesel.

    He also said he owns no public solar companies though it sounded like he does own bits of private solar.

    His BP fund was up 104% in 2005, 26% in 2006, and 21% so far in 2007.

  14. 14
    aitrader Says:

    Addendum: Boone said BP is 10-20% commodities and 80-90% equities.

  15. 15
    Nicky Says:

    Z – that is THE pipeline which is why this you cannot justify this as a serious threat to oil disruption.

  16. 16
    scoop006 Says:

    Z-#12 SU up 40% ytd. seems TB ‘s fund should be up more

  17. 17
    zman Says:

    Thanks AI

    Bill – the bid on DRYS should make you feel better. I was surprised to see Opco go to sell on QMAR, any thoughts?

    BTU and the coals were off a bit on yesterday’s announcement that the new incarnation of TXU canned 8 planned coal fired plants. Those had been on the edge for awhile. With gas up here, and I agree with T Boone on the LT prospects of NG, the coals will recover quickly.

    N – how can a pipeline that crosses the border be 250 away from the border? or are you saying 250 miles away from where the border is hot?

    S – he may be biggest holder of SU but it’s probably less than 2.5% of his fund.

  18. 18
    Nicky Says:

    Anyone see what happened to the Indian Market last night? Up day after day for 18 days. They then say they are going to limit foreign investors and it tanks 10% and they have to close it!

  19. 19
    aitrader Says:

    Nov 2007 CL just nudged 88 before the report.

  20. 20
    aitrader Says:

    FWIW – agree with Bill. Short on Mar2008 CL with my mad money. Also agree it’s quite risky in light of current trends.

    OPEC published new numbers yesterday and underscored their view the current price levels are speculator driven. Hard to divine if their numbers are fact-based or wishful thinking.


    Thoughts Z?

  21. 21
    zman Says:

    still looking for 90. I think the 1.8 million barrel “expectation” is a setup.

    Nothing means anything until numbers but you have to like the guy’s comment from this morning in Sam’s comment that he doubts crude will fall even on a bearish report.

    AItrader – hard to disagree with their statement.

    SU – getting a Boone bounce

    COP rocking, again means litte pre #, except that the direction for the majors, even COP is up and that the hold the through the warnings was my favorite call of the month. Note the volume in my November 85 calls

  22. 22
    Sambone Says:

    US dollar getting spanked again.

  23. 23
    zman Says:

    AI trader – I saw a small synopsis on their monthly and their comment that prices were beyond their control. Was there anything specific you were asking about re #s?

    Sam – thank uncle bennie

  24. 24
    Sambone Says:

    9:34 am EST

    Crude Moves Higher On Exxon Refinery Explosion

    1328 GMT [Dow Jones] Crude oil futures nudge higher on news of an explosion at ExxonMobil’s refinery in Montana at around 0619 local time, says a broker. No injuries were reported, and the impact on production has not yet been heard. “But I think it is only 60K b/d (output) potentially affected maximum,” the broker says.”I don’t think this market needs any more bullish news, no matter how small,” says an oil products trader. ICE December Brent +7c at $83.62/bbl, Nymex November WTI +20c at $87.81/bbl. (LAN)

  25. 25
    aitrader Says:

    Nothing specific – more if this report seemed to have more “fluff” than previous reports.

    The Angola numbers looked interesting. I also saw that the Saudis are already shipping +350k bopd to Asia. It looked like the 500k increase is already met. Wonder if November is going to see a “500k for everybody” type increase…?

    Also found your comment that a heating oil salesman said oil orders were down 50% due to cost concerns quite interesting.

  26. 26
    zman Says:

    VLO – I’ll be going long the Novembers if this report appears products bullish. Especially if we see the same kind of misinterpreted action amongst the refiners we’ve seen on several recent Wednesdays.

    Sam – of course an explosion at a refinery would be bearish for crude, not bullish but whatever.

    AI trader – I’d say weekend reading but it’ll be next week. 500k for Nov for everybody…could be for a few more than Saudi….cheat, cheat , cheat, hey I would too with oil pushing 90

    RE: HO yeah, it might give heat a little break on demand and allow them to play catchup. People aren’t exactly in winter mode yet so we could see lackluster demand from the suppliers as well until they start to see their order book fill.

  27. 27
    zman Says:

    I bet you they play softball with Angola for another year or so. Note to chavez: they couldn’t be growing that way without the expertise of and investment by Big Oil.

  28. 28
    Nicky Says:

    Dow and SPX looking very weak considering the strong futures.

  29. 29
    Brian08 Says:

    Nicky RE: #28, keep giving me that good news!!!

  30. 30
    bill Says:

    re qmar nice 10 % up move yesterday- downgrade probably due to fairly priced absent a deal. Their ships are tied up on charters for the next 2 years.

    This bubble “in rates” is expected to only last a year an half

  31. 31
    texana Says:

    hk finally broke 19 jan 15 @4.40

  32. 32
    zman Says:

    TLM = nice move.

    COP = ditto

    HK pushing 19

    On a bullish oil report looking at the November and longer 100 and 105 APA calls.

    Bill – Thanks. I was thinking I read a presentation the other day saying they were going to have a significant % of their charters re up in 4Q but it’s not them. need to track that down

  33. 33
    zman Says:

    Texana – didn’t get to your ? from last night. Do I think NG catches up with crude? Not in the near or medium term. 3 to 5 years out get used to $10+ though. You know my favorites in the gassy arena APC, CHK, EOG, SWN, KWK, COP etc….by no means all that will go up but you can’t kiss all the girls or so my wife tells me.

    CHK gunning for $38

  34. 34
    Nicky Says:

    Brian – can’t remember whether you were long or short??

    Z – the pipeline you are referring to only (kirkuk) only carries 100 kbd. The one they keep going on about carries 700kbd and that is the one that is 250 miles from the Iraq border.

  35. 35
    Brian08 Says:

    Nicky, I’m short via PUTS on the DIA at 136 and 135 for NOV…Thanks to Uncle Ben I got blown outta the water on my OCTs…

    I think I’ll be right eventually, hopefully my capital will be in tact by time I become right…

  36. 36
    Sambone Says:

    10:05 am EST

    Nymex Crude Ticks Up After Refinery Explosion


    NEW YORK — Crude-oil futures on Wednesday were slightly higher, above $88 a barrel, as traders awaited U.S. inventory data and a decision from the Turkish parliament on approving a cross-border military strike on Kurdish rebels in northern Iraq.

    The front-month November light, sweet crude contract on the New York Mercantile Exchange was recently up 44 cents, or 0.5%, at $88.05 a barrel and touched the all-time intraday high of $88.20, set Tuesday.

    Petroleum futures were flat in early morning trading and then ticked up following reports that an explosion occurred at Exxon Mobil Corp.’s (XOM) 60,000-barrel-a-day refinery in Billings, Mont. The plant’s operating status is unknown. No injuries have been reported.

    Analysts expect a one-million-barrel build in crude stockpiles for the week ended Oct. 12 in a report from the the Department of Energy’s Energy Information Administration at 10:30 a.m. EDT, according to a Dow Jones Newswires survey. Gasoline stockpiles were expected to rise by one million barrels, and distillates were expected to fall by 400,000 barrels.

    “Given the emotional state of the market, we would look for a draw in total crude stocks regardless of size to have an exaggerated price impact capable of forcing a run to new record highs within the next couple of sessions,” Ritterbusch & Associates said in a note.

    As the Turkish parliament debates whether to approve a military operation into Iraq, analysts say authorization of an incursion is likely.

    “This is just a resolution that allows the government to make the decision that it chooses,” said Addison Armstrong of TFS Energy Futures.

    Tensions between Iraq and Turkey are helping prices, but even if the Turkish incursion isn’t approved, the market won’t fall, said Tom Bentz, director and senior analyst at BNP Paribas Commodity Futures. If the conflict is “taken away” as a factor, “I don’t think we’ll see a drop in prices.”

    Market participants are concerned about the Kirkuk pipeline, which runs between Iraq and Turkey. A Mediterranean crude trader said Wednesday that oil inventories at Turkey’s Ceyhan export terminal had been steady the past few days, which suggested that oil flows through the Kirkuk pipeline had halted because there was no more room to store crude at the terminal.

    Wednesday is also the expiration of November crude options, and analysts noted that there are many more options to buy at the $88-$90 level than to sell at that price. This means that it is in many market participants’ interests to see the market go above that range so they can exercise those options and make a profit.

    Option expiration days usually are volatile, but the bias is toward higher prices based on the large number of calls — or options to buy — around $90 compared with puts — or options to sell.

    Oil at $100 a barrel is possible but a major oil-stopping event would be necessary to trigger it, Armstrong said.

    “We’d need to see oil stop flowing from somewhere in the world,” he said.

    Billionaire oil investor and BP Capital Management LP Chief Executive Boone Pickens said he sees oil hitting $100 a barrel within a year.

    “I’m not going to say it’s going to occur in the fourth quarter, but I still believe that 85 million barrels is all that the supply is and you’re going to have a demand of 88 million barrels and it’s going to get very very dicey,” Pickens said in a CNBC interview Wednesday.

    Front-month November reformulated-gasoline blendstock, or RBOB, was up 28 points, or 0.1%, to $2.1765 a gallon. November heating oil fell 21 points or 1% to 2.3366 a gallon.

    —By Elizabeth Landau, Dow Jones Newswires

  37. 37
    zman Says:

    N – something crosses from Northern Iraq into Turkey with the capacity to care 500,000 bopd. Unfortunately my daughter’s Leapfrog globe is not annotated with oil pipelines. I’ll try and dig up a map

    Inventories in 5

    NBR toying with breaking back down through 30

  38. 38
    Popeye Says:


  39. 39
    bill Says:

    are you on mn1.. i see they changed the schedule

  40. 40
    zman Says:

    crude up 1.8
    gasol up 2.8
    dist up 1

    that’s bearish

  41. 41
    Nicky Says:

    very bearish but you know they are going to step in and buy it.

  42. 42
    Nicky Says:

    87.3 utilization

  43. 43
    Nicky Says:

    rbob straight into support at the 21500 area

  44. 44
    Nicky Says:

    wti has support at 86.85 and 86.32

  45. 45
    Sambone Says:

    Boy, I can hardly wait to see what Zman has to say avout this!


  46. 46
    Nicky Says:

    distillates bounced off support in the 23100 area.

  47. 47
    zman Says:

    MN1 gig is done until further notice. Host quit.

    gasoline saw big jump in blending component stocks.

    equity reaction is red, but not a big move so far.

  48. 48
    Nicky Says:

    wti now positive – you have to love it!

    Sam – can’t get the link.

  49. 49
    Sambone Says:

    Working on it

  50. 50
    Nicky Says:

    Brian both spx and dow sitting on little uptrend lines right now but they look like they are going to go.

  51. 51
    zman Says:

    Sambone – my heart doctor is mad at you. Those guys are morons.

    N – copy and past the whole link.

  52. 52
    Sambone Says:

    This was quoted in the NY Times today


  53. 53
    Nicky Says:

    The bulls need Turkey to the rescue now and will probably get it.

  54. 54
    Brian08 Says:

    RE:#48…Scares the hell outta me Nicky…You know that’s not good…The same “not good” as oil outpacing gas and distillates like Z pointed out…

  55. 55
    Nicky Says:

    Brian it was my sarcastic english sense of humor. You know I think it sucks!

  56. 56
    Nicky Says:

    Yesterdays lows remain key.

  57. 57
    zman Says:

    check out NG up a dime to 7.48…

    SU just can’t believe the storage numbers.

    Bet the talking heads will described this as a blip.

  58. 58
    Nicky Says:

    are crude options expiring today or tomorrow?

  59. 59
    Nicky Says:

    If this market were about fundamentals we would be tanking now.

  60. 60
    Sambone Says:

    N- Today I believe.

    Oil is now up, I guess Phil is talking again.

  61. 61
    zman Says:

    good thing its not., lol…I’m still mostly long although the exposure is gas weighted

    sat on my hands through little bout of weakness…now back to the Flynn, Kilduff show…

  62. 62
    Nicky Says:

    Bush talking Turkey now. Says they are talking to the Turks.

  63. 63
    zman Says:

    anyone notice PTR is up $24 to $254

    at this rate it will suprass XOM as the world’s largest company in 2.5 days

  64. 64
    zman Says:

    N – they’ve been talking to Turkey. People believe he has little swing.

  65. 65
    Nicky Says:

    The Turkish parliament has now approved incursions into Iraq.

  66. 66
    TTupp Says:

    i want to stab my ears when i hear epperson yelling with her list out of the pits

  67. 67
    Nicky Says:

    Jesus look at crude again.

  68. 68
    Sambone Says:

    N – “I’m gonna party like it’s 1999” Prince

  69. 69
    Sambone Says:

    90 here we come

  70. 70
    Nicky Says:

    Would be nice to see crude spike up and come straight back down again but not happening.

  71. 71
    zman Says:

    #65 …and there goes oil!

    Tupp – I think we need to start the Lispy award for CNBC anchors and guests. Hey, I wouldn’t be so mean if they weren’t so biased.

  72. 72
    Sambone Says:

    Z – Your mean?

  73. 73
    drdavis124 Says:

    Brian: I have been short the market indexes as a hedge since 2002 and lost money every year. “You can’t fight the trend” unless you are a day trade. I have index puts going dead this week.

  74. 74
    TTupp Says:

    she said the crued data was bullish

  75. 75
    TTupp Says:

    everone on that show is a piece of garbage. i watch the foodnetwork to calm my nerves, but when i switch to cnbc i want to punch the screen- everones a tool besides Faber

  76. 76
    zman Says:

    Sam – not really unless there’s tequila around.

    Tupp – in what universe would that data be bullish? Stocks certainly don’t see it that way. They’re drop kicking VLO and co, the OIH is off a %

    Joe Kernon is pretty smart too. Called Kusinich a socialist on air…almost busted a gut at the guy’s little girly man “no I’m not!” reaction.

  77. 77
    Nicky Says:

    T-Tupp you cannot be serious she said the data was bullish?

  78. 78
    sane Says:

    No API data as of yet, my source sha been unreliabale as of the past few weeks.

    How can anyone say the crude data was bullish. Factor in the economic data out today, and I would say the only thing pumping oil is turkey and the speculators.

  79. 79
    Nicky Says:

    This thrust is typical of a v. Blow off, fear induced.

  80. 80
    zman Says:

    still sitting on hands.

    tempted to buy a little VLO with it stabilizing here although the chart looks like it could easily shed another buck or so, maybe go to 70. Production declined slightly and demand is patterning last year which means more demand before winter weather hits.

  81. 81
    Nicky Says:

    This looks classic blow off top now. Watching closely.

  82. 82
    Nicky Says:

    If this is the case we should see a very weak close.

  83. 83
    zman Says:

    TLM = $21

    Looking at the numbers the build in gasoline was all blending components, finish gas stocks were flat. Not nearly as bearish for refiners as the number would be at first blush. Given the fact that crude should probably trade off I’m passing on taking some VLO or additional TSO today.

  84. 84
    rammastr Says:

    ZMAN – TLM still looks good at $21?

  85. 85
    Popeye Says:

    CHK taking a run @ 38. I’m a little nervous on my chkkr.

  86. 86
    zman Says:

    Ram – yeah I like that chart here and the stock is extremely cheap. rumors abound …

    Popeye – when in doubt sell half.

  87. 87
    zman Says:

    If Nicky is right both of those come in a bit by the close.

  88. 88
    zman Says:

    oil up 10% in the last 7 days. SU up 7.5%, getting a little pricey on fwd eps, fwd

    TRADE: SU DEC $95 PUTS for $2.95

  89. 89
    Nicky Says:

    Samborne are you sure expiry is today. Someone else is saying tomorrow. Its pretty relevant as they will only hold this up into expiry I think.

  90. 90
    Brian08 Says:

    Dr. D RE: #73…I hear ya…Getting in the way of momentum is not the correct thing to do…But I’m still stupid not to have learned my lesson…Hopefully by Novemeber I’ll see a little tank job…

  91. 91
    zman Says:

    N – have you seen consensus # for gas report?

  92. 92
    zman Says:

    Brinan – I’m doing the same thing with my SU put trade right now

  93. 93
    apbd Says:

    Anyone have any thoughts on shorting DRYS

  94. 94
    Sambone Says:

    12:22 pm EST

    Nymex Crude Hits $89 A Barrel, New Record High


    NEW YORK — Crude-oil futures touched a new record intraday high of $89 a barrel as traders engaged in a fresh round of buying following Turkey’s ap roval of a military operation against Kurdish rebels in northern Iraq.

    “Everyone expected it to be passed, but official news of the passage gives justification for building in risk premium,” said Brad Samples, an analyst at Summit Energy Services Inc.

    Crude futures pared gains slightly after the spike. The front-month November light, sweet crude contract on the New York Mercantile Exchange was recently up 66 cents, or 0.8%, at $88.27 a barrel. Brent crude on the ICE futures exchange rose 32 cents to $93.87 a barrel.

    Crude futures have skyrocketed 11% over the last six trading sessions, driven by Turkey’s signals that it wants to take a more aggressive stance against Kurds in Iraq. A conflict could interrupt Iraq’s oil production and expose the vulnerability of pipeline networks that criss-cross the region in shipments to Western consumers.

    Surging prices also have led many analysts to revise upward their outlook for prices in the longer term, which has raised fears that rising energy prices will be a drag on the global economy.

    The November gasoline benchmark contract, reformulated-gasoline blendstock, was down 63 points, or 0.3%, to $2.1674 a gallon. November heating oil was down 28 points, or 0.1%, to $2.3359 a gallon.

    Turkey’s concerns lie with a Kurdish rebel group, fighting for autonomy in southern Turkey, that has bases in northern Iraq.

    Turkey’s parliament voted 507-19 in favor of empowering the government to order the military to cross into Iraq over a one-year period, Parliament Speaker Koksal Toptan said Wednesday. However, Turkish officials have stressed that an incursion isn’t imminent.

    Crude-oil options expiry also is adding to the volatility, Samples said. Many traders are holding options to buy crude oil at $88-$90 a barrel, and stand to quickly profit by exercising those contracts if crude surpasses those levels Wednesday.

    —By Elizabeth Landau, Dow Jones Newswires

  95. 95
    Sambone Says:

    N – Options, see #36 half way down. Also #94

  96. 96
    redjack Says:

    this trade looks good…APA Nov 90c

  97. 97
    Nicky Says:

    S – Thanks.

  98. 98
    zman Says:

    Oil red

  99. 99
    Nicky Says:

    Crude really needs to move below 8708 for confirmation this is done.

  100. 100
    Nicky Says:

    Broader markets finally waking up to a reality check I wonder. SPX has support at 1526 – 1528.

  101. 101
    zman Says:

    APBD – re DRYS – I hate shorting good / cheap companies and especially momentum names. I thought about it for a trade, like SU but the premiums you have to pay to get anywhere close to the money are to steep for me.

  102. 102
    zman Says:

    RJ – – I like the APA a lot but I’m a little concerned about oil way up here and that stock has been nuttin but up since last expiry…still I just saw a picture of a column of Turks ostensibly marching south.

  103. 103
    zman Says:

    N – did you see #91? thanks.

    PTR up $25 even to $255 – wow do I feel stupid.

  104. 104
    Nicky Says:

    Z – I haven’t seen anything yet.

  105. 105
    Nicky Says:

    The volatility is staggering.

  106. 106
    zman Says:

    yep, both commodities and equities

  107. 107
    Brian08 Says:

    Z, I know WNR and HOC aren’t your favs because of their limited trading…Is it too “risky” to play WNR given the fundies that came out today? WNR seems to be pretty beaten down at these levels (on a P/E basis) for a trade)…

  108. 108
    Nicky Says:

    Will they attempt to rally it to 90 into expiry I wonder.

  109. 109
    Nicky Says:

    There is also open interest at 85 and 88.

  110. 110
    Sambone Says:

    1:20 pm EST

    Nymex Crude Hits $89 A Barrel, New Record High


    1:03 (Dow Jones) Nymex crude pares gains after it can’t rise any higher than $89/bbl, falling quickly to near $88. Nov crude recently up 39c at $88.00 after hitting an all-time high of $89.00 about an hour ago. Prices were pushed higher after Turkey’s parliament approved an incursion into northern Iraq to target Kurdish rebels. The IEA has since said the vote poses no imminent threat to oil supplies. (MCE)

  111. 111
    zman Says:

    Brian – I like FTO better but WNR works too.

    Definitely still like the group long rather than short although it’ll trade off crude manages to go red which always amazes me, espcially if cracks expand. Anyway, if you look at FINISHED GASOLINE STOCKS and not total which is one of the big three numbers reported but contains blending comps. you’ll see gasoline was flat week to week which is the only way the numbers make sense (lower production and imports and higher demand = a build in stocks ) Anyway, they are woodshedding VLO and it won’t stop until at least 70. then I think it and a couple of others are worth a look on the long side.

  112. 112
    cattleman Says:

    Any thoughts on BJS here, Oct 30 earnings announcement. 2000+ Nov 25 puts traded today.

  113. 113
    zman Says:

    Cattleman – That’s not a bad idea. I’m not a fan of that business right now and it seems pricey for the lack of growth in comparison to some names like HAL and SLB. Chart looks weak too.

  114. 114
    Nicky Says:

    Beige book showing the economy slowing. Will this be their catalyst to finally let oil fall?

  115. 115
    Sambone Says:

    N – Maybe the market, but the crowd is at the oil window, so I don’t think so.

  116. 116
    Nicky Says:

    Distillates back at support.

  117. 117
    zman Says:

    N – plus I keep thumping my monitor.

  118. 118
    Nicky Says:

    Sam they had an oil trader on CNBC earlier who said the day they see a 20 point move down in the spx will be the day to start selling oil. As if on cue the spx started to fall! He of course was super bullish on oil.

  119. 119
    kyleandy Says:

    z u still have esv puts? just bot some oct 60 at 4.90 as hedge against my long rig and nfx

  120. 120
    rammastr Says:

    ZMAN – Almost anything related to energy getting hurt exc a few Canadians and those loveable Chinese. What’s the deal?

  121. 121
    zman Says:

    Ky – yes, my 50s are worthless and my 55s are pretty borderline…I was early there. NBR short also. ESV’s buyback is pretty evident on days like today.

    Ram – Chinese are up on PTR A share IPO soon. It’s gotten really out of control. Canadian…I think there is more doubt out there that Alberta is going to go through with the tax proposal.

    Oil confirming top by your levels from earlier Nicky

  122. 122
    rammastr Says:

    ZMAN – PTR’s. This run is non-Chinese driven assuming the Chinese will throw evrything at PTR when they can?

  123. 123
    Sambone Says:


  124. 124
    aitrader Says:

    I’m not superstitious but that SU trade lists as “SUXS”.

    Probably a misnomer 🙂

  125. 125
    TTupp Says:

    APBD – re DRYS, i sold oct 130 calls a little over a week ago, that qualifies as short i guess. but it was done under the assumption that it would retrace its huge rally until there, which it has, and consolidate a bit. i dont think this is too far fetched seeing that i only have 2 days left, and im still feeling pretty comfortable.

    Z- whats with all the canadian co’s (PCZ,SU,TLM, NXY, IMO) all being up today in light of the us names being down? weird.

  126. 126
    zman Says:

    Ram – search me why it would be up this much… has to be the upcoming deal as there is no fundamental discovery you could make to drive an overpriced stock up this much in a day (in terms of market cap)

    Thanks Sam

    Still think SU is up too far too fast as it didn’t really fall when the tax new hit in the first place.

    AITRADER – we’ll just refer to it as the suxs trade or the sucky trade from now on, lol.

  127. 127
    zman Says:

    T – see #123…guess we’ll know more about what’s up on Oct 24.

  128. 128
    TTupp Says:

    i bet there is some information creep going on here re: ALTA oil patch.

    there was a information leak from the finance minister’s office to bay street last year during the whole income trust taxation issue. i wouldent be surprised if this was the same– the liberal federal government is notorious for being corrupt, although this new royaly issue is provincial vs federal and this particular province is ran by the progressive conservative party.

  129. 129
    Sambone Says:

    T – “progressive conservative party” raising taxes? Who would have thunk it?

  130. 130
    TTupp Says:

    i dont think they will

  131. 131
    TTupp Says:

    who was telling me to read “october surprise” to compare the two situations… its apples and oranges.

  132. 132
    Sambone Says:

    BQI’s annual shareholder meeting today at 5 pm est. They may announce the independent lab results, we’ll see.

  133. 133
    Sambone Says:

    T – I’m just pickin

  134. 134
    apbd Says:

    Drive safely this weekend and wear your seat belt. My wife doesn’t want anything to happen to you. She knows I can’t do it alone. She’s even thinking of taking an insurance policy out on you.

  135. 135
    TTupp Says:

    i know 😉

    i just couldent remember who was citing the situation…

  136. 136
    sane Says:

    API ( Day late dollar short and incomplete _

    Crude Build 4.4M
    Gasoline Draw 3.0M

  137. 137
    zman Says:

    Sane – thanks. that’s very confusing data vs the EIA.

    apbd. Thanks! Just make sure the policy covers falling down after standing up from kneeling at a full Catholic mass for 2 hours.

  138. 138
    zman Says:

    PTR up $35 (15%) on the day.

  139. 139
    Sambone Says:

    T – Probably me

  140. 140
    zman Says:

    SNP up $22 (also 15%)
    CEO up only $13.60, (up a paltry 7.5%)

  141. 141
    zman Says:

    PTR was at 125 exactly 2 months ago, now 260…very tempting

  142. 142
    rammastr Says:

    SAMB – Tests for the oilsands content?

  143. 143
    TTupp Says:

    Z- re 127, i think that article is the reason for su’s move because they are one of the select few that has a long-term agreement allong with syncrude (i think until 2010 or so).

    im taking cnq and pcz nov calls here,the market will take out the tax fears slowly until the report (which will squash the situation IMHO), and properly price in 90$ oil which hasent been done so far because of the aforementioned fars and evidenced but the charts of the big 4 or 5 canuck majors.

  144. 144
    rammastr Says:

    ZMAN – No No No. Imagine millions and millions of Chinese proud to say they own the largest Cap stock in the world. It’s probably psycological now.

  145. 145
    rammastr Says:

    ZMAN – Maybe you should look at the NOV 350 calls. Close to $6, but you might get there by Monday. – Just a certifiable crazy thought.

  146. 146
    zman Says:

    Thanks RAM …I’m working up a piece on the chicoms

  147. 147
    TTupp Says:

    PTR’s chart is so obserd it looks like it was drawn by my 3yo niece at daycare with a crayon (est considering the size of the company). this is far more ridiculous than anything from back in the NASDAQ days…..

  148. 148
    aitrader Says:

    Petrohawk Energy (HK) Target Raised To $21 From $19 At Tristone

    Dow Jones Newswires

  149. 149
    TTupp Says:

    yea imagine you would have bought calls 2 months ago that were like 50$ otm! that would have turned 10K into at least $1m

    whats with the only otm strike avail in calls is $100 OTM , WTF, i think Stallin, Mao, and Fidel are all twirling their mustaches in a dimly lit room somewhere laughing evilly

  150. 150
    apbd Says:

    # 125
    Thanks, apbd

  151. 151
    rammastr Says:

    SAMBONE – The 10+ billion bbls noted in the shareholders meeting – is this good news for BQI?

  152. 152
    Webloner Says:

    sambone thanks for the Alberta link. I have PDS dec. 22.50 and I think I’m going to run out of time before this socialist castro immitators get their head straight.

  153. 153
    TTupp Says:

    cramer is pushing dry bulk guys! drys is down in a dip, this move could be big, after the retracement, but it may start to take place after octies expire fri/ sat

  154. 154
    zman Says:


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