01
Nov
Red Thursday As Refiners Tee Up Misses
Exxon missed by a nickel which is just a rounding error when the problem is that you only made $9.5 B instead of $10, Sunoco missed the mark a little wider margin, and Tesoro completely fell out of the boat. Expect red early amongst the majors and independent refiner patch. The question becomes why did the analysts miss on the independent refiner estimates so badly and what does the future hold.
Commodity Watch
- Crude Oil: Rallied hard yesterday on another large draw down in inventories. December crude closed up $4.15 to $94.53, another nominal record which outpaced the prior days, Goldman related sell off by a buck. Crude has traded higher still overnight reaching as high as $96.24 and is currently up another $1.10 putting into the mid $95's in quite active trading.
- Fed Rate Cut: The 25 basis point rate cut served up by Bernanke and Co. served to send the dollar lower and exacerbating crude's rally. Click to expand the Euro Chart
- Cushing Inventories Hit 2 year low. Traders attach enormous importance to this tiny sliver of U.S. storage capacity. We may be well above average inventory levels in aggregate but if Cushing is low, watch out $100.
- Perma Bull Watch: CNBC had John Kilduff on early this morning who said that he absolutely believed $96 oil was justified, especially given the dollar, that he'd never seen so many supply risks, that China demand is running 6-10% per month YOY, and that he'd never seen demand outstripping supply by so much. Comment: Gotta hand it to him, he knows how to talk his book and he's been calling for $100 oil by year end for some time now. I could argue that his China growth is inflated and I would certainly argue with him on price relative to current supply and the potential threats to supply being at record levels comment but what's the point. Oil is headed to $100. As I was saying last week, $95 or bust, then a dip to $90 and then a rally back through $95. And here we are. Could be today, could be tomorrow but $100 is in the cards. I suspect we'll see a pretty share round of profit taking once we hit triple digits. I also suspect that we see another large draw next week as Mexico's GOMex was shut-in for at least 2 days if not 3 to the tune of 600,000 bopd this week. Another big draw and your trip digits no problem.
- $300 Oil Watch. Never mindful of examining both sides of the coin, CNBC then ran a story reviewing "what if oil hits $300 per barrel" scenarios. They covered possible causes and included graphics of exploding ship graphics and simulated news casts (I guess so we could see how concerned the actor/reporter would look in the event of an actual emergency) and potential effects but left out the fact that I would retire.
- Nigeria Watch: Growing Tired of the Majors. The country has said it wished to favor smaller players in the oil lease bidding process in the future. The head of Nigeria energy department said, "We are getting tired of the Shells and Exxons and companies like that. We want the small independents," They also indicated they want a "small improvement" in the royalty rate. Comment: bye, bye production.
- The pile on action of speculators in crude drove it higher relative to products over the last 30 trading days, however this pattern has shifted in the last week or so and products are now holding there own quite nice.
Click to expand 30 day comp chart
click to expand 10 day comp chart
- Natural Gas: Closed up $0.31 to $8.33.
- NEB says Canada has enough gas stored even if winter is cold, long.
- Snow Flurry Watch: both NYC and Chicago. In all seriousness, cold traders on their way to work is supportive of gas prices.
- Snow Storm Watch: Nov 11/12 Accuweather.
- Tropics Watch: Tropical Storm Noel is over Cuba and still expected to make a U turn to the northeast and into the Atlantic. Some strengthening is expected but it will be no threat to GOMex production unless they've got it's course very wrong which is unlikely.
EIA Inventory Review:
Crude:
- Refinery utilization fell at a time when it should be rising. Utilization hit 86.2%, the lowest level since March. Crude demanded by refineries eased off slightly.
- Import: Averaged nearly 9.4 mm bopd, an almost 300,000 bopd recover from last week's low levels.
Crude Stocks Continue Their Slide. Despite some "lumpiness" in stocks caused primarily by fluctuations in imports the near term supply / demand imbalance continues to evidence itself via tumbling inventories. While we are still well stocked to average levels for this time of the year the deficit to last year's levels is rapidly growing while the surplus to the five average is rapidly shrinking. It is the velocity of this move which has been somewhat startling and while I don't believe it does anything like support current prices, it is making it a lot easier for the "crowd" to get to $100 oil.
Gasoline: Imports drive stock build as production slips and demand remains robust.
- Production Still Near Record Level: Although production slipped slightly week to week, this past week's level of 8.971 mm bpd was just off a record for this time of year.
- Imports: at 1.2 mm bpd this was a 0.4 mm bpd increase causing the surprise build.
- Demand: off just slightly week to week but still healthy for this time of year at 9.335 mm bpd. We may be seeing some demand elasticity relative to price as this level of demand is 1.5% lower than last year while prices for the last week in October remained 29% above those of last year's comparable week.
- Gasoline Stocks Are Popping Into The Bottom End Of The Fairway. As can be seen in the table at the beginning of today's post, gasoline storage remains about 5% off year ago levels.
Distillates: We remain fairly well supplied in aggregate although certain areas in the Northeast are running well off normal heating oil inventories and it is showing up in heating oil prices.
Natural Gas Storage Preview:
- My number: 50 Bcf.
- Imports: were off another 0.5 Bcfgpd versus last week and are down 0.6 Bcfgpd from the year ago week.
- Weather:
- CDDs have left the building
- HDDs continue to build.
- Consensus Number: mid 50s Bcf injection. This will push us into record territory for this time of year but for the near term gas is likely to continue to trade in sympathy with crude with an eye on the more winter like weather forecast next weak.
Holdings Watch: (I'll post updated positions this morning to the holdings tab).
Calls:
- (HAL) - Added to the November $40 Call position for $1.00, average price now $1.10; last bid $0.90.
- (EOG) - Half out of the November $85s picked up just prior to earnings for $4.00, a 122% two day gain. Last bid here $4.80.
- (CHK) - out November $37.50 calls for $2.40; 60% gain. Still hold the Jan -08 $37.50 and $40 strike calls.
Puts: No action.
Earnings Watch / Stocks We Care About Today:
- (GSF) (soon to be part of (RIG)) reported EPS of $2.02 vs consensus of $1.89. The top line exceeded expectations as well coming in at $1.19 B vs an expected $1.16.
- Cited strength across all segments, in particular contract drilling which produced a 70% YoY increase in operating income as it it kept costs below projections.
- Average daily rate: $185Kpd vs $130 in 3Q06, and up nicely from the 177 seen last quarter.
- utilization 96%, down 1% from year ago levels but up strongly from last quarter's 90% rate. These results should go along way toward alleviating fears among RIG shareholders that the large number of Jack Ups in GSF's fleet is going to hinder the combined entity (at least in the short term this does not appear to be the case although longer term, there is a lot of JU capacity on order).
- Conference call at 11:00 EST
- (SUN) Reported $1.81 vs $2.14 expected and sales of $11.5 vs expected of $9.5 B. Weaker margins cited. No kidding. Somebody wake up the analysts that follow this. No guidance in the pr.
- (TSO) Reported $0.34 vs $0.85 expected. Again, wake up the analysts. The Tricenda offer will backstop losses to a certain extent but estimates will be coming down for the fourth quarter as well.
- Conference call at 10:30 EST
- (XOM) Reported $1.70 vs $1.75 expected. So they ony made $9.5 billion this quarter.
- Conference call at 10:00 EST
- (SWN)
- Reported EPS of $0.30 vs estimate of $0.27; CFPS looked a little light at $0.91
- Total production up 56% vs year ago quarter to 30 Bcfe
- Fayetteville Shale gross operated production rises to 260 MM/d from 200 MM/d in July. Net production 194 mm/d as of last week.
- They announced some monster wells in new pilots coming on in excess of 5 mm/d (pretty monster for the Fayetteville) and said that production from three new pilots were responsible for 28% of the incremental 60 mm/d between quarters. That's big as the pilots were in the east part of the play and could be seen as expanding the core.
- This above paragraph will see the stock continue to make record all time highs and if it does not I will be taking down some calls prior to or during the conference call.
- They did not put forth any guidance in the pr.
- They also picked up 70,000 acres in a new potential shale play in Pennsylvania.
- Conference call at 10:00 EST
- (CAM) reported $1.31 vs first call estimate of $1.09.
- (OII) reports after the bell. They need a beat, not a meet.
Odds & Ends
Analyst Watch: (VLO), (SUN) and (HOC) cut from buy to hold at Soleil, FBR upping price targets for (RIG) from $135 to $140, for (SWN) from $49 to $60
Asleep At The Wheel Watch: RBC raised gold miner (NEM) from underperform to sector perform this morning. With gold breaching $800 an ounce you've got to wonder what tipped the analyst off.
Oil going negative…don’t see the news
November 1st, 2007 at 8:02 amI think CNBC said Citi will have to cut Dividend
November 1st, 2007 at 8:08 amlots of red out there
November 1st, 2007 at 8:19 amWith the Citibank and Exxon news seems logical the market will correct and the refiners will be hit hard. Good idea to buy refiner puts off the open…?
November 1st, 2007 at 8:21 amI want to see how they open…generally the stock will open down and the options open minutes later …still don’t the oil thing…think it’s may Citi/economy?
November 1st, 2007 at 8:28 amSite slow to anyone else? Need to report it as soon as possible.
November 1st, 2007 at 8:31 amtest
November 1st, 2007 at 8:33 amYes, not refreashing. Had to log off and start over.
November 1st, 2007 at 8:35 ama little..
November 1st, 2007 at 8:35 amscratch that: site is majorly slow again.. let’s take it over to the backup site
November 1st, 2007 at 8:36 amtook two minutes to refresh
November 1st, 2007 at 8:36 amZ – taking 2x – 5x page refreshes to load.
November 1st, 2007 at 8:38 amvery slow
November 1st, 2007 at 8:40 ambeen on phone with host, should be fixed momentarily.
Dow down 185; oil stocks getting slammed; everything looks like it did on Tuesday.
November 1st, 2007 at 8:41 amguys, shift to backup, email blast just sent
November 1st, 2007 at 8:43 amtest 2
November 1st, 2007 at 8:43 amsite working great now
November 1st, 2007 at 8:44 amThey rebooted the server…stay here.
Wow is it red out there. Dow off 202
November 1st, 2007 at 8:45 amOil just seems to be profit taking after the overnight bump. Can’t see any change in fundamentals, though I just saw some pundit on CNBC claiming lower refiner numbers were due to lower US demand. Still seems a technical correction in crude tho.
November 1st, 2007 at 8:47 amIf he’s talking about the 3Q numbers EIA demand figures do not bear him out. The problem comes from skyrocketing oil relative to products prices which is driven the kind of people they have as guests on CNBC.
Current mentality is head over heals buy the dips so I won’t be surprised if oil is back up by the close. Now off $1.80.
November 1st, 2007 at 8:52 amloaded up on some RIG at the open.. up 20 cents now, hope it holds
November 1st, 2007 at 8:53 amSWN the only green stock on my board
TLM calls climbing despite a falling stock which is pretty odd…
OW – re RIG – those GSF numbers looked very good to me.
November 1st, 2007 at 8:55 amXOM call in 5 minutes…I’ll probably listen for a bit and then drop off…they go for a long time and should not contain any surprises. I’ll be on the SWN call instead.
November 1st, 2007 at 8:59 amSWN Conf Call:
Fayetteville:
longer hz, larger fracs resulting in better production and EURs there.
Guidance: 111 Bcfe 2007 (previously 107-110 Bcfe)
Oil down $2.25
XOM steady as conf call begins
November 1st, 2007 at 9:08 am10:04 am EST
Nymex Crude Pauses Post Rally, Falls On Stronger Dollar
By Gregory Meyer
Of DOW JONES NEWSWIRES
NEW YORK — Crude oil futures were down early Thursday, as the market took a breather after a strong rally into record territory and the dollar gained slightly.
Light, sweet crude for December delivery on the New York Mercantile Exchange was recently down $1.80 cents at $92.73 a barrel, down sharply from a high of $96.24 hit in overnight trade. Brent crude on the ICE futures exchange fell $1.44 cents to $89.21 a barrel.
Nymex futures remain near record territory, driven up Wednesday by an unexpected depletion in U.S. crude stocks and the Federal Reserve’s quarter-point cut in its chief lending rate. With a lingering imbalance between global demand and supply, many observers still believe the ingredients are in place for prices to climb higher.
“This could be profit-taking,” said Jim Ritterbusch, president of Ritterbusch & Associates, a Galena, Ill.-based oil advisory firm. “We’re just going through the usual backing and filling process as we gravitate higher toward that big round number, the $100 mark.”
The dollar rose slightly after the Fed’s rate cut, potentially pressuring dollar-denominated crude futures. But the currency’s longer-term downward trend continues to support crude, Ritterbusch said.
On Thursday morning in New York, the euro was at $1.4416 from $1.4487 late Tuesday, while the dollar was stronger against the yen, trading at Y115.18 from Y115.31.
Ongoing uncertainty over Middle East oil supplies has also been pushing up prices. Turkey’s foreign minister Thursday indicated growing frustration with the government of the semiautonomous Kurdish region of northern Iraq, accusing it of inaction against rebels staging attacks on Turkey. Turkish Prime Minister Recep Tayyip Erdogan is scheduled to discuss the matter with U.S. President George W. Bush on Nov. 5.
“The drumbeat in the markets for $100.00 crude oil keeps getting stronger with each passing dollar and it appears that a small spark in one of the troubled oil producing areas of the world could catapult prices to that level,” said Addison Armstrong, an analyst at TFS Energy Futures in Stamford, Conn., in a note.
Also keeping price aloft is pinched U.S. oil supplies.
The U.S. Energy Information Administration on Wednesday reported a surprise draw in U.S. crude stocks, including a big drop in supplies at Cushing, Okla., the delivery point for Nymex crude futures. “The driver is Cushing,” said Nauman Barakat, senior vice president at Macquarie Futures USA in New York.
Front-month December reformulated gasoline blendstock, or RBOB, rose 6 cents, or 0.03%, to $2.3376 a gallon. December heating oil fell 1.97 cents, or 0.78%, to $2.5096 a gallon. Thursday is the first day of trading for both contracts.
—By Gregory Meyer, Dow Jones Newswires
November 1st, 2007 at 9:13 amSWN shaved drilled time in the Fayetteville to 16 days from 18 days despite adding 200 feet to the avg lateral length.
doing all fracs as slickwater fracs.
good results so far on the longer laterals and have another test that will test even longer laterals
Pennsylvania – will start pilot in 2008
Performing well in other conventional areas.
November 1st, 2007 at 9:14 ammay add a little COP soon.
this market may pull SWN back, call all good so far (just shaved $1). If so I buy.
NG in 10 minutes and I suspect no one cares.
November 1st, 2007 at 9:18 amBTU is down 12% today and no options listed on my quote screen. Is this because of the PCX spinoff?
November 1st, 2007 at 9:21 amGasoline and HO not seeing the fall oil is.
VLO/TSO not off as much as you’d think on the day now. We knew VLO was a throw away quarter as they already pre-announced. I’ll be on the TSO call at 10:30 est and they will hopefully comment on Tricenda…they have 10 days so maybe not yet decided but the stock is climbing like people expect it.
Hopefully this will give a boost to the sector and let me recover some on WNR and FTO
November 1st, 2007 at 9:23 amI show BTU down 4.5% which is more or less in line with a lot of energy today but yes, the spin off is effective today. I don’t show any options traded which must mean they are resetting them for the special dividend.
Bulk shippers looking to go green.
November 1st, 2007 at 9:27 amHAL / SLB /
oil down $2 now.
November 1st, 2007 at 9:29 am66 Bcf – that a big gas number and swings us back into YoY surplus and thus a record high for this week of the year.
November 1st, 2007 at 9:31 amZ,
Does that get us to 3.5T ?
November 1st, 2007 at 9:38 am3509 Bcf…and gas went from down a nickel to up $0.03 since.
sector looks like it wants to rally
November 1st, 2007 at 9:40 am40 % on my RIG in 1 hr. not too bad ..I’m cashing out
November 1st, 2007 at 9:40 amOW re RIG you are fast! Nice. If this market improves you will see 121 here today.
November 1st, 2007 at 9:42 amShippers coming back online – DRYS re-entering its old 120/2-128/9 trading range.
November 1st, 2007 at 9:42 amZ: Any views on FTI here?
November 1st, 2007 at 9:44 amRIG taking out 120
For a trade KWK likely to bounce in sympathy with the SWN results. Everyone is shrugging off the gas storage numbers and is eyeing a midwest snow or cold rain storm next week.
Oil recovered 50% so far….green by days end.
November 1st, 2007 at 9:44 amDman – their earnings were good yesterday if my memory goes back that far right now. I have to say I like them in the FTI/OII/CAM long term rock solid line of thinking.
RIG at $120.60
Days like today are the reason why I never panic sell.
November 1st, 2007 at 9:47 amDays like today are the reason why I always panic buy 😉
November 1st, 2007 at 9:50 amc’mon RIG, you gotta hold those new 52 week highs of yours.. HAL recovering
November 1st, 2007 at 9:53 amOW – you’re funny guy 😉
Cannot to save my life get admitted to the now 20 minute TSO call. My email address is probably blacklisted because of all the short comments last summer.
Mogas and HO flat now, oil down $0.90
November 1st, 2007 at 9:55 amCNBC talking peak now. Why do I listen?
November 1st, 2007 at 10:05 amPopeye…I’m an early riser by nature and I’ve found that I have a much better day if I just read the sites I travel and not flick them on at all. This morning I watched Kilduff say, with a straight face, that oil should be 96 or higher, and then the whole run through on the $300 what if scenarios.
Are you saying they are now saying it has peaked?
November 1st, 2007 at 10:07 amThey were asking the question, kind of like a push poll. The network news was driving me mad so I switched over there.
November 1st, 2007 at 10:11 amZ I should clarify that was “peak oil” not a price peak.
November 1st, 2007 at 10:15 amP – I thought you meant price peak! Thought that sounded strange . Peak oil is the one topic around here I refuse to discuss.
RIG: 121.50! Somebody tell this market its ok to recover and you’ll be looking at some serious move there into the 125 to 130 land by year end. Still cheap ya know.
November 1st, 2007 at 10:19 amRIg over 123, $4…guess they thought those GSF numbers were pretty good too.
November 1st, 2007 at 10:28 amZ, nice call on RIG. You’re going to get my $100K that I lost on tech stocks earlier this year before the end of this year. Keep up the great work!!
Jazz
November 1st, 2007 at 10:34 amThanks Jazz (tell your friends, lol). Came close to punting some of the $120 calls on that spike, think $5.50 and hold the second half which would be mostly house money and the $115s for a further move up in the stock on a more equity friendly day.
TSO obviously didn’t comment yet on Tricenda
market looking a little uglier
November 1st, 2007 at 10:39 am5.50 coming up again on the RIG 120’s .. you punting half, Z ?
November 1st, 2007 at 11:04 amHAL breaking $40…
November 1st, 2007 at 11:07 amOW – I’m going to try somewhere closer to $6, was busy reading and glancing over at the quote line simply will not do. Noticing the strength coming in HAL / SLB
November 1st, 2007 at 11:07 amHAL breaking 40. Glad I doubled up this AM 🙂
November 1st, 2007 at 11:07 amZman – what’s your read on the Nov 37.50 CHK calls?
November 1st, 2007 at 11:09 amCHK I was mulling buying them back this morning but at this point I’ll either do nothing or maybe take 40s. Still own the Jans.
Also want to be long APC 60s for the call.
Look at VLO
November 1st, 2007 at 11:13 amNFX about to go positive and then it will run to $55
November 1st, 2007 at 11:14 amYou just can keep a cheap COP down.
If oil does manage to go green, now down 70 APA probably reverses the $2 loss to a $2 gain on the day for you day trader types.
November 1st, 2007 at 11:16 amCHK $40!!!!
November 1st, 2007 at 11:16 amB – yeah, it certainly doesn’t feel like a 200 pt down day around here.
HAL up 25% on yesterdays 40 calls, I’m holding out for a move to $42 plus but it could go a lot higher…still very cheap and with SLB bouncing, hey, all the better.
November 1st, 2007 at 11:18 amZ – APC, any brief background info for the long position?
November 1st, 2007 at 11:20 amI’m sensing a ZEB Blast any moment now!
November 1st, 2007 at 11:22 amAPC – biggest E&P (basically a mini major), gassy but less than it used to be so oil is going to help their bottom line this q and current at least, diverse, very smart guys, that Independence hub in the GOMex that just opened up with 1 Bcfgpd of capacity (largest gas prod in the gulf in a single facility) that’s theirs, bought Kerr-McGee and Western Gas last year and then sold off non core assets to retire debt…been hitting on all cylinders and is cheap to the group, lengthening reserve life and its run by a guy you would want to marry your daughter, Jim Hackett who used to steer Ocean Energy…very smart, very well liked by the Street. People thought he overpaid for the assets with what were at the time big premiums…now those guys probably can’t believe they helped him double his company up in assets so cheaply. Given their mix they are unlikely to disappoint, only worry would be cautious tone to gas prices but right now they must be ecstatic with where gas is and they have said they won’t curtail but will ride out almost any weakness in the near term as they see gas only going higher longer term.
Their natural gas forecasting gurus are kept in a cold room with lots of computing power and that was 6 years ago when I went in there. Their supply / demand modeling on NG was something to behold.
November 1st, 2007 at 11:28 amTherefore ……..
November 1st, 2007 at 11:29 am(Note to self – why I joined Zman. The guy actually ate lunch at most of the companies he trades. Wow.)
November 1st, 2007 at 11:31 amMorning Ram… if you’re asking why I just wrote that AItrader wanted a little background on APC. We made good money on this one a few months back in the 40s and since then I’ve been watching it rise, and stupidly waiting for the pullback which never came. I’m mulling $60 calls front month for a trade on earnings.
November 1st, 2007 at 11:31 amAitrader: Only in the E&P realm. Refining, oil service…um…drybulk, that’s all an ongoing project for me.
November 1st, 2007 at 11:33 amZ Bought CHKKR on Oct 22 2.95 just sold @.2.80. Did I do right. ha ha. U Z BEST
November 1st, 2007 at 11:36 amRe # 69 Bought @.95
November 1st, 2007 at 11:42 amZ Dec APC calls currently below theoretical value, IV around 35, and it trades, what are the odds?
November 1st, 2007 at 11:42 amShould have noted “at the money”.
November 1st, 2007 at 11:43 amThank you.
November 1st, 2007 at 11:44 amCattle – that’s the strike I like too!
November 1st, 2007 at 11:44 amToo quiet around here without Nicki
check out NG up $0.20. Who cares about storage, everyone is thinking winter hits next week.
Sam – any chance Noel keeps heading west instead of the predicted bend?
November 1st, 2007 at 11:46 amNoel – He’s heading to tha Bahamas man
November 1st, 2007 at 11:54 amBTW – Lovin my BQI
November 1st, 2007 at 11:54 amThanks Sam:
BQI aaarrrgggg. can’t kiss em all.
November 1st, 2007 at 11:56 amInfo. on NIKI’S buddy public post, it seems he wants to be the modern day Joe Granville.
November 1st, 2007 at 12:04 pmZMAN,
Hey, where do I find the ‘Holdings’ tab?
Q.
November 1st, 2007 at 12:10 pmzman do you follow BQI at all?
November 1st, 2007 at 12:11 pmQ – under subscriber data, zeb holdings at upper left of screen. I will update tonight, was going to do this morning but had some issues my option last bid quotes.
Anyway, what’s in there now is from 10/26 and the only changes are listed in today’s holdings watch section of the post.
Mimster – only out of curiousity…that’s a little more NAV work than I get into plus I’m mostly a south of the border guy. The plan seems to be prove it up and sell it before every a grain tar cover sand is refined.
November 1st, 2007 at 12:14 pmsorry, I posted #81 without refreshing thus I didn’t see #77, 78
November 1st, 2007 at 12:16 pmGood opportunity on HK for those not in. Stock got off on the wrong foot with everything else this morning, then gets left behind when the bigger gassy names start to rally (NG up $0.24 now). Sounds like a recommendation but you know it’s not.
November 1st, 2007 at 12:20 pmFYI: China (Asia) – drybulks, steel, iron ore
November 1st, 2007 at 12:21 pmhttp://www.reuters.com/article/marketsNews/idLTAHKG9520820071101?rpc=44
Afternoon all!
November 1st, 2007 at 12:23 pmAlhambra,
That reminds me I got your email and but failed to put it in today’s post due to pilot error. Thanks for the headsup on FRO’s potential move to convert tankers to drybulks…there will come a time (probably late in 2008 from what I understand) where the tide turns for the tankers and against the drybulks caused by a shift in capacity.
November 1st, 2007 at 12:24 pmReading your comments on Kilduff Z – he is despicable! And now CNBC have him as a regular presenter so he is on every 5 minutes.
Did you see that other guy (can’t remember his name now) say the whole oil thing was a load of B! He said the Iran thing was ridiculous and if they blocked the Straits of Hormuz the USA would have it unblocked in a heartbeat! Kilduff when the color of a tomato and looked a complete twit!
November 1st, 2007 at 12:26 pmEnergy looks like it has another leg lower to me. Cycles are pointing to a high for wti between 5th and 9th November. Distillates may come later in the month.
November 1st, 2007 at 12:27 pmNICKY…they are rallying oil for you, lol.
Alhambra…you know there’s probably a play on increased demand for drier coals (as they weigh less per ton). The western coals are often very wet…might even be a play in their for tiny EEE that dries coal out in its K-Fuel process
November 1st, 2007 at 12:28 pmYou thrown the hat away Z?
November 1st, 2007 at 12:29 pmI’m sending it to you for consumption at $9 😉
November 1st, 2007 at 12:30 pmI would be surprised if the don’t take oil over 100 but that said we have a fib level at 98.20.
November 1st, 2007 at 12:31 pmHello,
Zman, I’am a new member. should I buy your open picks?
Thx.
November 1st, 2007 at 12:31 pmLol! Looks like my $4 is delayed but its still out there!
November 1st, 2007 at 12:31 pm9050 or higher looks doable Z before the top is in.
November 1st, 2007 at 12:32 pmThe open interest is what is gonna hold wti up short term methinks. As expiry gets closer they are gonna have to make their minds up though…..
November 1st, 2007 at 12:33 pmSeems incredible that $2 moves a day have become the norm (in each direction twice!).
November 1st, 2007 at 12:34 pmbroad market whacking everything again.
sheenka welcome!
While I don’t make recommendations (no longer licensed to do that) I do tell you what I’m doing and right this second I’m holding off on further purchases. You’ll get a notice both here in the comment section and an email blast if you would like when I actually do a trade. If you’re look over the holdings list and want to get a quick feel for what’s more front burner in my mind right now you want to take a look at the cheap plays like HAL, CHK, NFX (cheaper than people think and I will add more soon) HK (ditto), COP (cheapest major), PQ (which isn’t on there but is likely to be soon), RIG (although again not right this second as it finally put in a new all time high for us this morning and I hate to chase). Not SU as that’s just not working out although it does have the virtue of time and may fall if oil suddenly calls in sick one day). OII I’m holding through earnings I’ve decided but am not adding pre earnings. That leaves BTU and TLM which again, I’m just holding for the moment.
Thanks for subscribing and please ask questions
November 1st, 2007 at 12:42 pmBroader markets have potential for a bit more upside in the next couple of weeks but ONLY if 1492.60 holds in the SPZ.
November 1st, 2007 at 12:43 pmEither way they should roll over after that.
blue horseshoe love Annacott steel
November 1st, 2007 at 12:44 pmRe-read what I wrote this morning on SWN and I’m an idiot for not buying at the open, red day or not. I’m not doing it now but if this market will give us one more ugly look and drop it below a $3 gain today I’m in again. The big wells in the east of the play are driving analysts to the assumption that reserves are bigger. Add the longer laterals and the better completions they are getting and you get even more reserves. Suddenly this expensive, almost entirely gas name is less expensive.
November 1st, 2007 at 12:45 pmDollar getting close to an intermediate low and then should rally into the middle of next year. It could see a blow off low as far down as 75.40 but it is not essential.
November 1st, 2007 at 12:47 pmNIKI – Imagine I am also holding up little RAM in front of you while I am asking this question – Didn’t the TA also say this was going to roll over before and money just keeps driving the S&P higher? Not a challenge and holding up little RAM in front.
November 1st, 2007 at 12:48 pmxom holding down cop, what was the chatter to adding to the cop calls Z? what do you think about rolling the exm’s to december since we need like 20 in like a week and a half to B/E
November 1st, 2007 at 12:52 pmTSO looking to break to the downside of 58 – most of the volume is in the downside moves today.
November 1st, 2007 at 12:54 pmRam – we haven’t taken out the highs and if you look at the charts this has been nothing more than a corrective move higher. That said I am not discounting a move to 1605 on the spx. But yes it has been slow. Tops always take much longer to form than bottoms and this one is no different! I have absolutely no doubt that this IS going to roll over.
November 1st, 2007 at 12:55 pmHow is the gorgeous little one?
As I thought energy needs another leg down. It would have to take out 88.92 before we questionned a top of more significance.
November 1st, 2007 at 12:56 pmWelcome back Nicky, missed ya.
Welcome aboard Sheenka. You’ll have fun here and learn a bunch.
November 1st, 2007 at 12:57 pmThe famous talking head!!!!
http://www.321energy.com/reports/flynn/current.html
November 1st, 2007 at 12:59 pm12:27 pm EST
Crude Down As Mkt Recovers From ‘Hangover’
DOW JONES NEWSWIRES
From MARKET TALK:
[Dow Jones] Nymex crude continues trading slightly lower as traders assess Wed’s inventory report and Fed rate cut. “The market has just got a little hangover from yesterday,” says Andy Lebow, senior vice president at MF Global. The market is “just trying to find its bearings today.” Dec crude -33c at $94.20/bbl. (greg.meyer@dowjones.com)
[Dow Jones] As oil slumps about $3 from its $96.24/bbl intraday high, one broker says volatility should be expected despite factors such as declining inventories, a weakening dollar and Middle East tensions, that are supportive of prices. “I think the market is going to be vulnerable,” says Tony Rosado of IAG Energy Brokers. “You almost have to give yourself a guideline of a $5 range when the market gets up to these levels.” Dec crude -$1.27 at $93.26/bbl. (greg.meyer@dowjones.com)
November 1st, 2007 at 12:59 pmTell me he’s talking $110 at least. I laughed as when I last read him despite all the ramping he didn’t appear to even be in a long position. Kept missing it.
November 1st, 2007 at 1:02 pmAfternoon Tupp – COP …it almost came positive but that was probably 100 dow point ago. Thinking about the Nov 85s to add to my current and punting my 80s.
November 1st, 2007 at 1:02 pmPF – sounding more and more like a politician, he seems to swing from bullish to bearish between sentences in his posts now. He said he had just started trading option a month or two ago…wonder how he’s doing matching that with the schizophrenia.
November 1st, 2007 at 1:09 pmoh i have the 85’s, ACB of$265
November 1st, 2007 at 1:12 pmthose cop 85s are pretty sensitive, tried to pull trigger at 1.90 now we’re 2.05 x 2.10
November 1st, 2007 at 1:12 pmkida big poition, but not looking to add out of economics not out of strategy since i went in big all at once. one of my fatal flaws; nevertheless, im up a few bucks over costs
November 1st, 2007 at 1:13 pmNICKY – Thank you. Dominic got his 6mo. yesterday, shots etc. He is 31″ and 17lbs., cute as ever and wondering when he is going to back off on growing so fast! His 12 mo. stuff barely fits!
P.F. was even more negative about everything in his public post. I think he is ready to call the end of the world.
November 1st, 2007 at 1:13 pmT – yup, mine are a little higher than yours…think I’ll wait until we get a little close to the close to decide but nothing has changed here except that cracks are improving for them and they sell a ton of gas on a percent of production basis relative to their peers so $8.66 can’t be making them sad.
November 1st, 2007 at 1:14 pmZman, Sambone
Thank you guys.
November 1st, 2007 at 1:15 pmthats true forgot about gazzz. gartman was touting NG on fast money. what a sell-out, i used to get his weeklys at BMO, funny stuff, but smart guy- kinda a jack of al trades type tho
November 1st, 2007 at 1:17 pmSheenka – one other thing. I sometimes talk in strings of acronyms. If you’re an energy head that’s cool but it can be frustrating if you’re not. There is an acronym link (Z’s Dictionary) at upper left that should be of use to you.
Everyone here (at least the ones that speak) are very helpful types. On any given day only about 15% comment but the others are out there and the information runs deep so feel to ask questions.
November 1st, 2007 at 1:21 pmQuestion – If OPEC goes to a mixed currency basket that will be proposed at their upcoming meeting, what will it do to oil? Up, because it’s traded here in the states with the US$?
November 1st, 2007 at 1:22 pmFrench government released 250,000 metric tons of crude oil from it’s strategic reserve on Monday because of shortages.
November 1st, 2007 at 1:25 pmZ looking @ APALT=Dec. $100C @ $5.80.Do you think the premium is to rich?
November 1st, 2007 at 1:25 pmSambone,
Short term I think it means a continued rally as OPEC, which has massive $ stores, dumps them at an even greater pace than they have been of late. After that, I dunno.
November 1st, 2007 at 1:26 pmZ – If SA delinks with the US$, watch out below.
November 1st, 2007 at 1:31 pmScoop – that’s another one we did well on a couple of months ago and then missed the after party run from the 80s to current in lockstep with oil. Premium is pretty hefty on that inflated IV and after such a run but at the same time I’ve got to say, $90+ oil, CFPS of $18.50 next year and that’s predicated on a oil price of $65 to $70 and a gas deck around $6.50 to $7.00.
I’ll get back with you on that estimate once I confirm the average price decks the Street is using at present but what I’m getting at is holy cow, Apache is trading sub 6x cashflow and discounting nowhere near the current 12 month oil or gas strips. The same can be said for most E&P companies from a valuation standpoint at present…that the historical valuation norms would see the stocks higher than present given commodity prices but few of the have the linkage to oil that this oily one does. They recover when oil does so if oil is up a buck or two tomorrow, today’s loss gets erased.
November 1st, 2007 at 1:36 pmSam – are you talking watch out below for the $ or oil?
November 1st, 2007 at 1:37 pmN – I would say $ down, oil flys at first.
November 1st, 2007 at 1:37 pm130 agreed. US$ will go into freefall.
November 1st, 2007 at 1:38 pmNicky I have been waiting for your T/A on the broad market. Thanks!
November 1st, 2007 at 1:40 pmNot even thinking about selling my RIG now. Got to wait on the Broker comments in the morning on both GSF and RIG and also the Cramer I told you so.
My wife looked at some Italian print wallpaper the other day that I’m pretty sure worked out to more $/square inch than papering with greenbacks. Thankfully it was for a doll house.
November 1st, 2007 at 1:41 pmSAMB – that goes back to the inquiry about which currency would appreciate more. AUS, CAN, JAPAN, EURO, etc. AUS has been on a tear, they have alot of natural resources per capita. CAN also.
November 1st, 2007 at 1:42 pmZ Thanks for reply #128. Please don’t do any extra work on my behalf. Thought you could just look at premium and determine if there was value to it. I will enter with a small position. Thanks
November 1st, 2007 at 1:43 pmZMAN -Which energy company’s would get the additional boost from not being tied to the $?
November 1st, 2007 at 1:45 pmRam – Here’s your answer.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a7Yy4VHfagTQ
November 1st, 2007 at 1:45 pmZ I have some really beautiful S&L stock certificates circa 1989 that Mrs.Z could paper the wall with
November 1st, 2007 at 1:47 pmyuan / PTR
November 1st, 2007 at 1:49 pmSAMB – Thanks. I also own Chinese stocks in my 401k that have given it an additional boost. The same subscription also rec a dry bulk stock as well that I purchased the stock and call options today. I do not want to upset ZMAN’s esquire by being more specific.
November 1st, 2007 at 1:52 pmThanks ZMAN!
November 1st, 2007 at 1:53 pmz i know u don’t follow dnr but their co2 projects are tremendous and they have the only natural source east of the mississippi and they are building a pipeline to texas where they are going to buy more co2 fields take a look thx tex
November 1st, 2007 at 1:56 pmstill can’t keep a cheap, good COP down.
Ram – you’re a funny guy.
Funny how the cheap ones are doing well in down 225 point dow and down $1.08 oil session.
HAL, RIG, CHK, – not just cheap but also very liquid.
VLO should be on that list but is feeling the pull of TSO despite the fact that cracks had yet another good day today.
November 1st, 2007 at 1:56 pmtexana – I have a bottle of wine, something like eua de crude on my mantle from I think the french concern that is a partial owner them. I remember you asking before, and I will look tonight. They still oily and doing lots tertiary floods…they sell the excess co2 right, how’s that price these days?
November 1st, 2007 at 1:59 pmmy streamers bleeding, plus i havent been out of the house in 2 days…… im out. hopefully tomorrow will bring a sea of green
November 1st, 2007 at 2:01 pmZMAN – Is CHK running again?
November 1st, 2007 at 2:08 pmz from erngs report today: est prod for 2008 47,500boepd a projected organic growth rate of 25%. I don’t find anything about the french wine co anywhere there is a canadian co that trades under dnr symbol that may be assoc with the frenchman. I think they use all the co2 they produce and have a deal to buy coal emmission co2 in the future from new coal plants
November 1st, 2007 at 2:09 pmPopeye
Looking for a 3 wave bounce off whatever low we make here (1515 would look nice) but we may have already bottomed – target area is 1540 to short.
November 1st, 2007 at 2:14 pmtexana – it was Beringer which I think is California, not France, and they owned some Denbury stock back in the 1990s a printed up some DNR labels. I never opened it because I thought the bottle looked cool but I’m sure it didn’t have the structure to make it 10 years being a low end 1997 Cabernet.
label is Premier Cru De; Chateau Denbury. You can google meridian vineyards denbury and see they owned
Anyway, will look
November 1st, 2007 at 2:14 pmNon Farm could even take us a low as 1500 tomorrow.
November 1st, 2007 at 2:17 pmTSO fighting valiantly to stay above 58.
November 1st, 2007 at 2:19 pmBeringer – is in Napa, CA. Bought out by Nestle in 1972.
November 1st, 2007 at 2:19 pmTSO. yeah, its the broad red tape and not the stock itself. everything is starting to get pantsed.
November 1st, 2007 at 2:22 pmTRIN just jumped. She’s (DOW) roiling over.
November 1st, 2007 at 2:22 pmTSO – look out belowwwwww…
November 1st, 2007 at 2:23 pmOIH going down with the market.
November 1st, 2007 at 2:24 pmGulf states follow suit and cut rates:
November 1st, 2007 at 2:32 pmhttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=anhyaVpPVi_Y
Alhambra – I guess its not just Bernanke that is relatively unconcerned about inflation.
November 1st, 2007 at 2:41 pmInflation? What’s that? I thought that it’s all about saving Wallstreet. See “Cramer meltdown”.
November 1st, 2007 at 2:44 pmHelicopter Ben cranking up his printing presses.
November 1st, 2007 at 2:47 pmhttp://biz.yahoo.com/ap/071101/fed_markets.html?.v=2
Volume on this day is relatively low compared to what you’d think…
November 1st, 2007 at 2:50 pmIs this a head and shoulders top we see on the OIH, is it time to be looking on the other side of these trades? Inflation – hmmm $8.00 wheat, $10 soy beans, and the fertilizer (oil derived) used to grow all this stuff cost twice what it did 5 years ago.
November 1st, 2007 at 2:50 pmThey’re forced to at this point.
November 1st, 2007 at 2:50 pmhttp://www.sama-ksa.org/en/news/2004-10/3.pdf
5 minutes to go and it looks like the DOW will be down 400, IMO.
November 1st, 2007 at 2:55 pmDon’t forget your economic history: the Plaza Accord in 1985 and the Louvre Accord in ’87
November 1st, 2007 at 2:57 pmFundamentals don’t bear out a put trade on the OIH…everything continues to get better for a majority of the makeup of the index.
A – rock and a hard place
November 1st, 2007 at 2:58 pmwhat usually happens after a big down day – more red or a bounce?
November 1st, 2007 at 3:10 pmmore red… I’m so happy I have 60% cash…
November 1st, 2007 at 3:13 pmZ – one more red day and time to punt SUxs or will you hold off a bit longer?
November 1st, 2007 at 3:17 pmFF – I’m not a TA guy but in general if you close at the low, you open lower. If you have a big down day with a recovery near the close, you can go either way. And a full or near full reversal is bullish. However, we have more data in the morning that could help recover some of the day’s loss or exacerbate theme.
November 1st, 2007 at 3:17 pmProbably bail in another week or two. First, oil now looks to me at least more likely to recover and get to new highs before falling back into the 80s and second, it’s full of hot money and people talking about how Alberta’s tax regime doesn’t hurt them when I wanted to be short not just for down oil but also b/c the thing is not exactly cheap when you consider it’s a refining operation, with no upside other than price (growth comes slowly in lumpy increments) and long term costs continue to climb there. I won’t hang on to it forever just because I think I’m right.
November 1st, 2007 at 3:24 pmTSO – finally got into the replay.
thoughts:
q4 earnings to look like q3 earnings which means #s are coming down 4q by about half unless crude falls and products rise or at least crude falls and products maintain. That’s not surprising since cracks so far only up slightly from 3Q averages on the west coast and pac nw
Tricenda has not yet formalized the offer, but once they do TSO has 10 days to respond. They had no comment. I’m going to hold a little longer and see if what has begun to look like a crude / product convergence catches on.
November 1st, 2007 at 3:33 pmout for a bit
November 1st, 2007 at 3:34 pmZ (or anyone) – ? on IV. Folks talk about “low” IV versus “high”. Where does IV seem “low” vs. “high”?
November 1st, 2007 at 3:41 pmal trader: spend a few hours on this site: http://www.ivolatility.com punch in tickers at the top and select “basic options” in the drop down menu to the right of where you type n the ticker.
November 1st, 2007 at 4:01 pmclick on the chart of the contract index on the right after it loads your company’s screen and look at the charting over the year of the index of the implide volatility of that particular stock.
November 1st, 2007 at 4:02 pmdidnt exm report today?
November 1st, 2007 at 5:24 pmT : Nov 13th – after close
November 1st, 2007 at 7:08 pmOII reported today.
November 1st, 2007 at 7:12 pmOW, re:178- in Z’s earnings calendar it says they repot today, and DRYS reports the 13th
November 1st, 2007 at 7:40 pmT – EXM was last shown to be tonight on Yhoo but it does not show up any longer and Thomson is not saying either. Still show DYRS as 13th
OII beat pants off estimates tonight. Guidance is up for 2007, 2008 mid point of range is in line with current ’08 consensus.
November 1st, 2007 at 7:59 pmoh, i hope they arent going to stall the date that is never good….
November 1st, 2007 at 8:14 pmT – agreed, rarely good unless there’s a deal in the works that they want in the pr. Don’t think that’s the case here or that they have delayed…think its a squirrelly original report. I don’t find a PR for them saying when they are going to announce.
November 1st, 2007 at 8:16 pmZMAN, My understanding is when the RIG/GSF merger is completed RIG stockholders receive $33 cash dividend and shares in the new entity.How does this affect the value of RIG calls.
November 1st, 2007 at 11:54 pmScoop,
Here’s the latest memo I have on that.
http://www.optionsclearing.com/market/infomemos/2007/oct/23704.pdf
Shareholders meet on 11/9 plus they need a Caymen court’s approval. They still expect to close before year end but it may not happen in November.
According to the deal, if approved RIG holders will get .6996 X RIG + $33. The parity on that trade is about $109. At the current price of $121.47, you would get $118 the next day. I personally plan on taking a vacation from the stock from the day before the shareholders meeting to just after it closes as it can get a bit messy and there are often delays in your ability to sell an option that is having it’s symbol changed.
November 2nd, 2007 at 12:46 amZman – just saw BB TV reporting “Baltic Dry” on their rolling ticker. I assume they are now reporting this just like other indexes.
November 2nd, 2007 at 7:21 amZman – sorry to pepper you with early morning ?’s.
If you have time, what do you think of Helix Energy? They beat Q3 earnings and expectations but production declined slightly due to delays in field startups. The street punished them with a 5.6% drop yesterday. Seems their might be worth a look for a rebound..? Dec 2007 45 calls are $2, which on a pure “IV” numbers basis is 77.78% – still their 52 wk high is 47.35 and energy is on a tear so my gut says watch them for a day and buy on further weakness.
??
November 2nd, 2007 at 8:07 amAitrader- HLX that’s run by Robert Murphy, the ex head of exploration from Remington Oil and Gas. Very smart, very good gas finding guy on the GOMex Shelf. Delays are a fact of life anywhere and especially offshore and Street is often unreasonable.
Thanks for the headsup will have a look.
Good to see Bloomie has a BDI feed, I wonder if their website will have delayed access to it?
November 2nd, 2007 at 8:11 amshould have said that Robert runs the oil and gas side of the business, not the servicee (ex Caldive part)
November 2nd, 2007 at 8:14 amScoop – did you see my thoughts re RIG and the deal?
Also, BTU pricing got interesting yesterday with their spin out.
reading the HLX transcript now.
stocks looking for pretty good open;
November 2nd, 2007 at 8:17 amHLX – Ok, good on the service side, as you said a bit softer than expected on the E&P side. Will look at more over the weekend but the responses of management were spot on with accepting responsibility for setting the bar a bit too high for the division which goess a long way in my book, will look at more over weekend as have not run valuations here in awhile but they are solid guys and it looks to have been an overreaction.,
November 2nd, 2007 at 8:33 am