Thursday – Oil Review and Gas Preview and HK Beats

Posted on by zman

Commodity Watch: 

  • Crude Oil: Yet another multi dollar swing day with crude closing off just $0.33 to $96.37 per barrel. This morning crude is trading up just enough to reverse yesterday's small loss
    • The differential (spread) between WTI and heavy Canadian goo is now close to 50%. Good news for the likes of (FTO) and (VLO) who have the capability to run on it as well as more expensive sweet blends. FTO commented on their call that they had never seen this much of a differential between the two and that it was attributable to a glut of oil sand oil north of the border lacking enough pipeline capacity to get it to the states.
  • Natural Gas: traded down $0.24 to nearly $7.62 yesterday ahead of inventories today. NG is trading flat this morning and I would say that weather and inventory reports will drive price at this point. The large amount of storage will dampen spikes until we get a serious blast of lasting cold. Forecasters still do not see when this will occur.
    • TCPL is converting one of their large cross border natural gas pipelines to oil.

Technical Analysis Watch: Time for an update.

  • XOI - recent moves failed to break highs set back in July. We tied them but didn't break through as weak refining segments tapped the majors and pricing gains from the upstream segment, were not enough to offset. Current support looks to be strongest about 30 points or 2% below current levels. 
  • XNG - The gassy stocks are at support now having just eked out a new high and then backed with the market malaise of yesterday. Many of the stocks that drive this index are reporting increased production growth if not record revenues and with winter on its way (sort of),  the chart could go either way. Support is very strong between 1480 (current level) and 1,420 and I don't see it falling out of that range.
  • OIH - probably three-quarters of the index enjoying banner conditions. The index has good support at current levels of 191 down to about 181. I don't expect it to fall below the bottom end of that range.

Earnings Watch:

  • (HK) Nice Solid Beat! Initiates 20% Growth Target for 2008.
    • reported EPS of $0.18 (after excluding items) vs expectations of $0.13.
    • CFPS were $0.87 vs expected of $0.80.
    • 3Q production was right in the middle of guidance at 327 MMcfepd (322 to 332 expected)
    • 4Q production guidance: 295 to 305....not a problem, a divestiture of the Gulf Coast division which produces about 100 Mmcfepd.
    • 2008 guidance 20% growth
    • Op costs continue to fall and this will only get better with Gulf Coast divestiture.
    • Fayetteville Shale: will have 8 pilot areas by 2007 year end. Plans to double rigs to 8 there for 2008 and will drill 115 wells.
    • Conference call: 10:30 EST...like everything I'm reading so far today.

Earnings Wrap Up Watch:

(DRYS): got bashed on a small beat yesterday which you might say is not surprising given its run this year. You might say that unless you knew the stock was: 1) cheap and 2) effectively guiding the Street higher on '08 numbers.

  • Company is projecting '08 EBITDA of $800 million, the Street is down at $676 million.
  • As such, the 2008 Consensus number of $15.18 (which yields a forward multiple of 7x) should be coming up as well.
  • DRYS is using rate assumptions for 2008 that are on a weighted average basis well below current levels.
  • Chinese are playing games with demand as many here and in the media have speculated. According to management China's threat to dip into their own iron ore stockpiles in lieu of shipping foreign ore is rather empty since they only have a 4 to 5 week supply at present.
  • The December $125 calls I picked up on Tuesday are down 33% so far and these stocks will not recover until the market stabilizes.

What Was I Thinking Watch:

  • (OII) - good quarter but cautious tone and weak market castrated this bull's run.
  • (DRYS) - its a little early to be in this category just yet given the options are for December but I did want to point out the silver lining, if one can be found having bought a call one day only to have the underlying stock drop 8.5% the next. And that lining would be that the November $125 which at the time seemed like more bang for the buck on upside are closed down 70% on the day and now only have 7 days of life left in them and $19 points to recover just to get to intrinsic value land. EXM still has earnings ahead but again will not be able to run without a broad market recovery.
  • (WNR) - bad quarter and will sell for whatever I can get for it at this point.

Natural Gas Preview: We're exiting the shoulder season and should begin reporting withdrawals from storage next week. Until the we see some more Winter-like weather I would not expect prices to mount much of a resurgence from the mid $7s although they may feel the pull of oil if it makes a run on $100.

My Number: An injection of 30 to 40 Bcf.

Street Consensus: ??? Bcf. Unknown at press time but we'll have it in comments before the report.

  • Imports Flat with prior week at 9.7 Bcfgpd. This is off 0.7 Bcfgpd from year ago levels largely due to a halving of the LNG import volumes.
  • Heating Degree Days up almost doubled week to week.
    • Natural gas population weighted HDD's increased to 93 last week versus 58 in the prior week. HDDs were 115 in the year ago period when we saw a withdrawal of 7 Bcf. 

Last Three Years Change In Storage vs Heating Degree Days: This time of year, as we exit the shoulder season, the correlation between change in storage and degrees starts to pick up. The table shows swings in storage brought about by temperatures in the first reporting period in November. As you can see my withdrawal number of 35 Bcf on the graph, the mid point of my range is just slightly below that seen in 1994 when temps were similar. The smaller number for today is attributable to a lower import level this year than in 2004.

 degree-day-vs-storage-110707.jpg

    • This week's degree day forecast calls for a further boost to 114. Normal for this week would be about 118 but this is some 20 HDDs higher than the comparable week last year when we recorded an injection of 3 Bcf.

A Crude Review: In a nutshell bullish for products and not too shabby for crude. Products are falling behind and when demand picks up for heating, and it will at some point, refineries are going to have to work extra hard to catch up. I would note that the extended period of mid 80% refinery utilization is no accident. I'd be in no hurry to get back to work if I was processing sweet at these prices and getting paid less than what I was just three months ago when oil was $20 lower too! Retail prices are approaching records for gasoline and are at record levels for heating oil.

exp-vs-act-110707.jpg

Crude Stocks: May not have been "bullish" per se to the expectations listed in the table above but take a look at the following two charts and you will see evidence of the expected tightness materializing. Imports actually recovered a bit but week to week so the decline does appear to be demand tightness related. Refinery utilization remained at very low levels (86.2%) but it should recover soon which should increase this said tightness.

crude-stocks-110707.jpg

 

Gasoline: Production runs near record, demand exceeds record and imports are the swing factor. 

gasoline-production-110707.jpg

 

Demand - up 0.8% vs year ago levels to record level for this time of year.

gasoline-demand-110707.jpg

Prices At Record Levels for this Time of Year.----

gasoline-retail-cost-110707.jpg

Distillates: Overall stocks may remain high but heating oil is trading near the lows of the historic band for this time of year. As products narrow the gap to crude, several categories of distillates are at historic high prices for this time of year. 

dist-stocks-110707.jpg

Better Not Get A Cold Winter. Heating oil retail prices are already at historic highs. Hate to say I told you so  but ....there you have it.

 heating-oil-prices-110707.jpg

Odds & Ends

Analyst Watch: Calyon raises price target for CHK by $5 to $45.

202 thoughts on “Thursday – Oil Review and Gas Preview and HK Beats”

  1. 8:40 am EST

    Nymex Crude Loses Momentum Early

    DOW JONES NEWSWIRES

    [Dow Jones] Nymex crude trades up slightly Thurs after falling as low as $94.93 in electronic trading. “Despite fresh record highs during the past two sessions, the market appears to be losing some upward momentum as much of the overnight trade developed in the area of last Friday’s close of around $96.00,” says Jim Ritterbusch of Ritterbusch and Associates in a note, which he says is related to the U.S. stock market plunge Wed. Nymex Dec crude +32c at $96.69/bbl. (greg.meyer@dowjones.com)

    Reported Earlier:
    LONDON — Crude oil futures traded higher in London trade Thursday morning, boosted by news of North Sea production outages and ongoing concerns over global supply balances.

    ConocoPhillips and BP confirmed they had shut production at North Sea facilities due to the onset of severe weather Thursday, and the news helped futures recover from a slow start after Wednesday’s lower closes prompted early profit taking.

    Further weakness in the dollar and general unease over winter supplies helped fuel the gains, while the prospect of $100 a barrel crude remained a lure for buyers.

    “It got very close to $100 yesterday but is that close enough?,” said Kevin Blemkin of MF Global. “I think overall we have to remain cautious to the move up again.”

    At 1202 GMT, the front-month December Brent contract on London’s ICE futures exchange was up $0.79 at $94.03 a barrel.

    The front-month December crude contract on the New York Mercantile Exchange was trading $0.53 higher at $96.90 a barrel.

    The ICE’s gasoil contract for November delivery was down $2.25 at $829.75 a metric ton, while Nymex gasoline for December delivery was up 164 points at 245.70 cents a gallon.

    ConocoPhillips and BP said Thursday they were moving personnel off Norwegian North Sea platforms and shutting in production totaling more than 200,000 barrels of oil a day equivalent, with storm force winds and high seas set to lash the region.

    StatoilHydro also said it had evacuated some staff from a platform in the Norwegian sector, and was closely monitoring weather developments, although no production had been affected, it said.

    Despite the likelihood production shutdowns will be short-lived, the news helped lift crude prices.

    “It’s not going to be a big shut-in but it’s definitely giving the Brent market a bit of a boost,” said a London-based trader.

    Weather forecasts suggest the worst of the weather could pass by the start of the weekend.

    Trading of crude oil futures in the first half of the week had been conducted in the shadow of Wednesday’s inventory data, with speculation a third week of surprise crude stock draws — and a steep climb in crude prices to match — was possible, offering the potential for a final thrust to $100 a barrel crude.

    But crude stocks fell less than expected and the report was viewed as largely benign in terms of its influence on crude prices, with the bullish signal of drops in stocks at Cushing, Okl., the delivery point for Nymex crude futures, counterbalanced by signs of weakening U.S. product demand.

    Nonetheless, the $100 target remains a focus for the crude markets, and after recent intense volatility and a string of record highs, some consolidation could be expected before a resumption of the trend higher, analysts said, with expectations of tight supply-demand balances in the fourth quarter prevailing.

    “Oil prices are holding up well as they ride the rocket to $100 a barrel,” said technical analysts at Barclays Capital, but they warned “the one-way nature of trading” was becoming a concern and a period of consolidation is “long overdue”.

    “We believe the markets are still capable of taking out the $100 mark imminently,” said Ed Meir, analyst at MF Global. “Although there are signs that higher energy prices are starting to crimp demand, we are perhaps only on the fringes of such a pullback.

    “Demand variables at this stage are not yet ready to derail the market from pushing higher,” he said.

    A selloff across equity markets provided some resistance to crude prices Thursday but the softer dollar continued to shore up support for oil futures, as it extended its weakness against the euro.

    Existing market unease about growing demand and lagging supply was stoked further by Wednesday’s International Energy Agency report, predicting demand surges in booming emerging economies.

    In its annual outlook for energy through 2030, the agency said the next 10 years are critical for governments globally to address these challenges as energy demand surges in China and India.

    It said annual energy demand in China is set to grow by 3.2% to 2030, up from 2.9% in the previous report, and in India by 3.6%, up from 2.3%.

    “I still think those IEA numbers were quite impressive yesterday in terms of China and India,” said Robert Montefusco of Sucden. “We haven’t seen them coming into the oil markets yet — but if these numbers are correct, going forward there’s not too much spare capacity around.”

    —By Nick Heath, Dow Jones Newswires

  2. Z – not to add too much to your workload but have you thought of tracking solar energy companies? These guys trade in sync with oil and are up YTD in similar scale to the dry shippers.

    First Solar just reported a massive beat and is driving up its competitors share prices in sympathy in overnight trading.

  3. re solar: not until I get my intern up to speed, lol. I watch them and I will share one concern and that’s the rapid expansion of BP’s production capacity in the group could ultimately shatter pricing.

  7. see the preemarket action on pbr? i picked up some calls on the pullback early in the week. nice options market too

  8. ff – yes

    morning T – yes and he’s made at the dry bulks now b/c of DSX with the group trade at 10 or less P/E

  11. 8:53 (Dow Jones) Shares of Brazilian state-run energy giant Petrobras (PBR)
    surge after the company estimated recoverable light oil and gas at its
    ultra-deep Santos Basin Tupi field at between 5 billion and 8 billion barrels
    of oil equivalent (BOE). PBR recently up 6% at 74.47 Brazilian reals ($42.95)
    on the Sao Paulo Stock Exchange. In NY, PBR up 6.8% at $99.00 premarket. (JAF)

  13. was just reading Tupi field, those are monster reserves compared to existing reserves….could run for days on that size. note partner gave it a smaller range but still mega discovery.

    nice one for you T!

  15. we should have a pretty good day on the long side as long as the market doesn’t die on us. Crude up $1.20 and looking for 98 now and then 100…this could be it and they can do it on the Cushing inventories and continued gasoline and looming distillate demand.

  18. Z- How best to profit (as an investor/trader) from higher heating oil prices? I think i posed this once before earlier in fall….answer was essentially VLO and SU…but refiners are bleeding with current crack apreads. More direct route with HO futures?

    thanks K

  19. Petrobras partner in Tupi, BG, said in February the field could contain between 1.7 billion and 10 billion barrels of in-place reserves. BG has a 25 percent stake in the Tupi project and Portugal’s Petrogal has 10 percent.

  20. re-read says that’s old and PBR just narrowed the range. The point is Tupi is not new news and part of it is in the stock.

  27. Well CNBC said it was huge Z – take that as you wish of course!

    Do you have the gas no expectation for today?

  28. Broader market – 1466 is on my radar and if that goes we have 1459. The latter is key as if that goes we could see 1415 very quickly. I favor that the 1459 level will hold this drop.

  29. CNBC has a time until Bernanke ticker up so you can see the exact number of hundredths of a second until he speaks tomorrow. Brick through TV.

    K – I stand by that although it should be SUN, not SU. The crack spread bleeding you refer to is rapidly ending as products are catching up to high crude but still have a long way to go. I don’t know of a stock or option to trade on an equity that directly benefits from higher heating oil. Like a marketer or something. They would just be passing the price through to customers so that doesn’t work. I’m open to ideas but I don’t know of any direct play.

    HK reaction makes no sense.

  30. More good news:

    Statoil have announced shut-ins in the N Sea of around 300kbd and Rotterdam is closing this evening in anticipation of the storm.

  32. VLO fire: see one story saying explosion, one unit engulfed in flames.

    This could be a turning point event for products. That is a big refinery. If there is significant damage and a long term outage you could be looking at much higher prices for the refining group.

  34. HK – looks like it’s being hit because of a miss in YoY revenue consensus. Consensus was $233 million vs. $213.3 million actual.

  36. i don’t now why i didn’t buy a straddle on that piece of garbage at 250 when i was saying the chart looked like a train wreck waiting to happen ….

  37. N – their ticker this morning read 23:10:12:35 or some such…but thanks

    T – in rough volumes yes

    Aitrader – re HK I don’t think that’s it… missing something. The stock should be launching. Maybe just not well follow enough to understand the 4Q guide, maybe the 20% 08 number was not enough. Think it runs once the call starts in 30 minutes.

  39. refining…the only time in investing when you run towards a fire.

    FTO got some favorable analyst comments …don’t know who said it but they were happy.

    Irish – yes I am

  42. 6 minutes ago:

    “We got the call at 7:26 this morning to assist Valero,” said a spokesman for the Fire Department. He said they were working to contain the fire.

    The fire occurred in an unspecified unit, the spokesman said.

    But traders said they heard a crude unit and and hydrotreater were affected by the fire.

    Bill Day, a spokesman for Valero, said the company would be issuing a statement regarding Port Arthur as soon as it had details. (Reporting by Janet McGurty; Editing by John Picinich)

  44. Doc : re ECA: because there are over 300 energy stocks and it splipped through. I do the best I can to keep on top of it but this is a huge sector. This is my trading journal, not a board. Do you have something to add re ECA.

  47. Bernanke sure making the market volatile. Apparently the market now thinks he will cut again in December.

  48. talk about a nice chart, EOG all time high, break out of a base started in late 2005.

    ECA – looks like I missed the run already. What’s up doc? anything there new?

  49. NG stoarage: up 36 Bcf. Another record level obviously at 3,545…need to get a draw down next week. Don’t know where the Street was but I straddled it with my 30 to 40 estimate.

  54. HK conference call:

    LOE was at the loe end of guidance
    workovers were at loe end of guidance

    all costs were at or below guidance.

    Operational highlights:

    3D set met or exceeded goals in Terryville. Big wedge of Bossier seen and they are geared up to drill. not laminated like the stuff they have seen before..they are going to drill in 4Q start, not 08 as the press release say, pretty exciting.

    Fayetteville: continue driling exploratory tests, installing gathering and will see sales in December, big ramp in 2008 with 115 wells, good econ

    this is a hidden gem…Q&A coming

  55. HK Q&A :

    Terryville: Bossier not deep, gray just Re under.

    Fayetteville: constrained by gather and pipeleine on, 13 mm/d (now 16 to 18)

    should be a big boost when the pipeline is installed.

    Jefferies spending a lot of time on the call, sounds like an updated report coming their, the analyst Chandra is a good analyst and he is definitely not up to speed on the metrics here. He sounded pleased and ready to sharpen his pencil on getting out a new report.

  56. HK Q&A:

    they keep saying thnk Bossier wedge, just said 6 or 8 sections. this is brand new, not in PR.

    ZTRADE: : I’m buying shares of HK at $18.28

  57. What a difference a day makes.

    APC and EOG at all time highs, CHK threatening one

    COP out of the recovery ward and over 85

    even DRYS up

    The HK call still going on…more interest than I can ever remember on one of their calls. They are getting circle back questions from name analysts.

  60. thanks AJ…hey, that’s my job!

    gas number must have been in line with the Street as well as my own since gas is trading up about a penny.Zzzzzz.

    HK – great call…investors just don’t care. Analysts are going to say good things. In a nutshell: big growth, bigger prospects of growth, and falling costs….hmmmmm.

    Wow FTO – told you they liked that conference call. This is a great place to trade if the VLO fire turns out to be a real problem. So far they are saying the fire was quickly contained but no word of damage. With that said I’ll be looking to add to longer term FTO calls soon.

  63. Ron Paul just ripped Ben a new one – accused his weak dollar policy/rate cuts as stealing from Joe Consumer’s bank account.

    It’s fun to watch two economists go at it!

  66. Nicky – what do you think is a good support level for the DJIa /SPX?

    Also, would you mind taking a look at XOI / XNG / OIH…I was pretty comfortable that these are looking a lot more resilient than the broad market in this morning’s post but I’m no TA expert…

    crude just rolled over with the broad market drop. that is volatility.

  68. Not a good forecast for the natty gas bulls. Given phys pricing for daily gas is below $7.00 and weather would appear to support slack demand we could see some very good buying opportunities as we move into the heart of winter.

    “The appearance of two powerful indeed monster low-pressure areas in the Gulf of Alaska on the 12z operational GFS on the 13th and 15th is going to be a real problem for anybody thinking that the middle and second-half of November is going to turn really cold over the Plains and/or Midwest.

    Both of these powerful systems mean a very strong Pacific jet will slam into the West Coast of North America and crush any chance of a significant trough forming in the Plains Midwest or the Northeast… as well as flood the conus with mild Pacific air…”

  69. Thanks Rick – that echos the sentiments of numerous managements on 3Q calls…Winter is not showing itself yet.

    ok what stupid thing did Ben just say?

  70. Last ? put to Bernanke – “should the US gov. guarantee loans and down to what amount”. Answer was absolutely yes and down to $1M. Never thought the US government would go into the loan business.

    Short term it’ll jerk us out of the housing slump much more quickly. Long term having the politicians determining who gets/doesn’t get a loan will be a nightmare IMHO.

    Markets apparently don’t like Ben much. Greenspan’s comments usually bounced the DOW up for a few days.

  71. 12:13 pm EST

    Nymex Crude Pares Gains, Turns Briefly Negative

    DOW JONES NEWSWIRES
    From MARKET TALK:
    [Dow Jones] Nymex crude pares gains, turning briefly negative, after prices can’t hold above $97.50/bbl. Dec crude +4c at $96.41 after losing $1 in about half an hour. Prices are still near their record settlement of $96.70 and traders are attributing the swing, which isn’t big by recent standards, to trading and positioning, rather than a reaction to any price-negative news.(matt.chambers@dowjones.com)

  74. Is there any news that could be affecting the dry shippers other than ongoing negotiations with the Chinese?

    These guys are just getting destroyed this week.

  77. yup : down down 200. APC was up 2, now 30cents eog up 2.60, now up .60 etc, etc, etc…

    Ben is a dope and he has insured inflation by trying to please Wall Street.

    Need to print some bumperstickers that say

    I Miss Alan

  81. Bernanke just inherited the mess Greenspan created. Bring back Greenspan and make him accountable imo.

  83. N – GOOG – Couldn’t have happened to a better company. LOL I guess they don’t like CSCO either. Fair weather investors?

  86. N – re missing Alan, only meant that I liked, as did the market, not being certainly that I completely understood, what the hell it was , that he was or might have not been saying. Understanding Bernanke too easily is the problem the market has.

    hemlock = lol

    DRYS down another $10 to $96; exm acting like their ships have been sunk…no way I step in for more here either.

    Think market will test your support today Nicky

  88. Just tested it Z.

    What amazes me is that basically Greenspan just ‘covered up’ for years. Nobody had a friggin clue what he was thinking except he continually bailed the market out so they loved him.

    Now you have Bernanke who is not going to dance to that tune – oh heck reality is starting to dawn.

  90. Port Arthur operating 60% capacity…probably going to be awhile before they have a timeline on getting it back up.

    I think Ben is not covering up but he is kowtowing to Wall Street. Oh, I care about inflation, what’s that, you want a rate cut, how much? 50 bips, can do! But yes, I care about inflation.

  92. Helicopter Ben really shows he cares about inflation. Action speaks louder than words. Heard that somewhere before.

  93. XOM giving the down market the bird, up $1.10

    CHK up 1.5% here…unreal how well it would be doing if not for Ben bloodbath.

    crack spreads improving again if current prices hold today. will post graphs in morning.

  94. Raymond James read my note and upgraded CHK from hold to Buy. That leaves 7 stupid analysts out of 26 that cover it, lol.

    Including Tristone that raised their price target from $35 (only 5 bucks below where it was) to $42…wow, that’s gutsy, what a manimal of analyst you are!

  95. Dems telling Bush he should tell the courts to reconsider the offshore Royalty case that APC just basically one. This goes back to the misprinting issue of the offshore leases. I stay away from politics on this site because that kind of discussion generally fruitless for investing but I’ve got to say that congress urging the executive branch to intervene in the courts is very banana republic and stupid. The companies were sold the leases with the terms attached. Now you want to change the deal and a court says no, so congress wants to do an end around.

  97. Sam – right…but I don’t hear them prating about reducing their dependence on foreign oil one minute and them lambasting the companies who help to do that the next.

  99. 12:40 PM EST

    Crude Pares Gains, Follows Stock Market

    By GREGORY MEYER
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures surrendered gains Thursday, reflecting a pullback in the U.S. stock market and concerns about the U.S. economy.

    Light, sweet crude for December delivery on the New York Mercantile Exchange was recently down 23 cents, or 0.2%, at $96.14 a barrel. Brent on the ICE futures exchange was 48 cents higher at $93.72 a barrel.

    Concerns about the U.S. economy and a flagging stock market helped knock down oil prices, said Phil Flynn, senior analyst at Alaron Trading in Chicago.

    The Dow Jones Industrial Average was recently trading down 72.91 points to 13227.11.

    “It’s the stock market” along with projections of slower growth made by Federal Reserve Chairman Ben Bernanke in congressional testimony Thursday morning, Flynn said.

    Oil had received a boost earlier Thursday on reports of shut-in production due to rough weather in the North Sea.

    StatoilHydro ASA (STL.OS) said Thursday that oil and gas production from the Grane, Visund, Oseberg South and Heimdal fields will stop production during the bad weather, forecast for Thursday and Friday. Around 320,000 barrels of oil equivalent a day will be cut, the company said.

    ConocoPhillips (COP) and BP (BP) said they were moving personnel off platforms and shutting in production totaling more than 200,000 barrels a day equivalent amid strong winds and high seas.

    Also Thursday, Swiss-based Petroplus Holdings AG (PPHN.VX) said that output at its U.K. refinery Coryton would be down 30% to some 110,000 to 120,000 barrels a day in the fourth quarter compared with the previous seven months after reporting a fire at the site last week.

    “There is very little margin for error,” said Addison Armstrong, an analyst at TFS Energy Futures in Stamford, Conn. “Any time you get a storm or a pipeline being attacked somewhere in world, it’s taking barrels off the market that are very much needed.”

    Front-month December reformulated gasoline blendstock, or RBOB, rose 17 points, or 0.1%, to $2.4423 a gallon. December heating oil rose 49 points, or 0.2%, to $2.6224 a gallon.

    —By Gregory Meyer, Dow Jones Newswires

  100. Sam – can’t disagree with Flynn on the curde price reversal although it is already coming back.

    That refinery down in the UK is no small deal and a boon for VLO. I’d be in here buying calls on them and longer dated FTO and COP if this market would just stabilize. That refinery will jack up diesel and gasoline prices on this side of the pond. It’s that tight out there on the products side.

  102. Good afternoon
    Thought I would share these thoughts on a grim day
    Why I am going massively long today(not all energy)
    -my favorite short seller DKass posted early this am -he thinks Barton Biggs is right we will rally into yearend
    unfortunately he is on a plane and in Europe and did not share at what level
    -My T/A wiz posted last night that the ISEE put/call ratio had dropped to 108% from the over 200%’s
    some fear and panic had happened
    She felt(this was last night) that the low was not in yet but we will be oversold Turkey week and a rally
    -YahYah you all dis him But the Pied Pumper penned a what could happen reasons to be bullish this am(Jim Cramer)
    Whenever these 3 align-generally right-I have been following them for 10 years
    So I may be early or wrong but…..

  104. Other money managers I read are beginning to buy-paticularly financials
    -was unable to post on site for last hour
    good signs maybe?

  105. Thanks Denise…I have not sold a thing today and am looking for support from the broad to buy more.

    Energy sector continuing to green back up led by XOM and COP.

    If you are a believe in a rally here and I am EOG and APC will outperformn.

    FTO already back up a buck…will have the differential charts for crude in tomorrow’s post but suffice it to say they are NOT paying these high prices and they are using less of the sweet stuff too.

    PQ – wow

    CHK going to go to new highs very soon.

    HK pops but not until tomorrow or next week.

    Again…given a not plummeting broad market.

    Denise…unable to post on this site? If so maybe you can help me solve the problem if you have some computer savvy.

  107. Lots of company-sorry for all the posts I am getting excited this could turn
    The financial guy i read is buying C(wow)
    he is very good

  109. Financials = “Catch a falling knife”. Denise, nobody knows what and how much of this toxic paper is on their books. I am hearing that a money market is in trouble and could go below $1.00. If that happens, what out below on the financials. IMHO

  110. No computer savy whatsoever-was in school when there were punchcards-
    I hit submit and it would bring me to WordPress

  111. ok thanks…need a tracert and ping from someone who has been having trouble … really all you need to be able to do is get to a dos prompt.

  118. Samborne-I got started at the first MMF to break a $1-we were taken over by GS-
    I agree -these are short covering trades -think the rubber bands are too stretched
    Do not plan on sticking around and will bail if wrong

  119. Z– Best refiner in this situation is FTO? Among the best bets in energy currently are the refiners?

  120. Hey cattle – let me put it this way…

    safest bet in refiners: VLO then TSO, SUN
    most bang for the buck: FTO, then TSO

    best bet in energy? hmmm. refiners are a good bet for a recovery but I think the cheap E&Ps are probably my favorite play right now. CHK first, then NFX and some other mid caps…warming up to PXD, XTO, then smaller names like HK,PQ

    favorite major: still COP

    then you’ve got service …but everything is trading more or less with the market right now.

  122. Re 120: I was speaking to the current refiner valuation situation. Then re read your question and you are more likely referring to the WTI / heavy crude spread widening. In that case then FTO first, VLO second in terms of who will benefit.

  123. The sentiment feels far too bullish for me to yet call a bottom. Whilst everyone calls for a rally this has further to go….

    I don’t doubt you are right Denise but as Samborne says its a question from where. Its not at all out of the question that we could test the August lows. Obviously the days lows need to hold today or the last hour could turn into a meltdown.

  124. Z– Thanks for the perspective. Got to saddle up Bronco Billy and bring $700 worth of beef back from the neighbors. I going to ensure you all can have that prime rib this weekend to celebrate your market success.

  126. re 123. sorry hard to put a bullish spin on it right now. but at some stage we are going we are going to see a fast and furious rally.

  128. T – if you are around.

    The BTU root options are BTU current company only.

    The PWUs are supposed to be a 90% BTU / 10% PCX split. But they look outrageous at that price.

    Anyway, the BTU root looks like its just BTU (see deep in the money on the Novembers).

    Nicky – you just broke my brain.

  129. Z– All ranching imputs are directly influenced by energy, from the diesel for the tractors and trucks, to the fertilizer needed to raise the feed we do ourselves or purchase. Other posters have noted the inflationary implications of oil and gas prices. Evidence of climate change is also evident everywhere you look here so its easy to feel challenged. I’ll make sure you folks have the steaks you need though. A fella a couple of miles from here makes a great wine, Cowboy Springs Chateau Bubba. The April is perfect with a burger.

  130. yes but it’s going to be $10 burger. Cow milk outstripping soy and rice milk in the grocery stores…never thought I’d see that either…good thing food and energy don’t count when they look at inflation. I assume housing prices do though so we’re ok, LOL.

  131. LOL Z!

    In other words once this consolidation is done we go higher!

    OMG thats two bullish statements in one day. I need to go sit down!

  140. z without a doubt the best ep co is sd 7th largest drlr in the us & nobody knows who it is Ward has put 925million of his own money in it show me another ceo that likes his own co that much

  141. you Brits and your caveats. You’ve got to remember that folks on this side of the pond are more accustomed to the red faced monkey screaming buy,buy,buy (sorry Denise but it was an easy shot at your boy JC)

    APBD – ok thanks. let me see.
    note to members…you’ll have to read apbd’s link to have any of the follow making since.

    1) not anymore…the storage situation has substantially weakened since June.
    2) true lots but his support is weak and demand rises every year so current rates is not the case. EIA and IEA say demand will be up by 50% by 2030. Also, try getting that oil out of the Orinoco without the U.S. of A involved.
    3) US still declining substantially each year, OPEC controls flood gates as does Russia, now tied with Saudi as #1…again, kind of a weak argument.
    4)he makes a point on Saudi but that has no effect on their production. The oil sands price is low and quoting LOE for Shell without the full cycle cost (buy the land, seismic, develop the infrastructure etc) is like showing half the cost pie but still it is true, margins on the oil are very good. However, margins don’t dictate price and the increasing role of the multination oil company in production is much more important in governing #3 and therefore #4 doesn’t come down to cost but supply control.
    5) iran disruption: that’s a coin toss and the author’s opinion. There are many ways for the US to intervene without an all out shooting war with Iran that could still lead to disruptions however temporary from Iran. The author is completely wrong that it won’t effect prices due to storage. Wonder if he’s ever looked at a supply demand model for global oil production / consumption.
    6) evidence not clear
    7) Iran and China have artificially low prices as is…but the real point is the US, chief consumer of oil appear unaffected by higher prices as evidenced by most recent gas consumption data which shows we are at record levels for demand.
    8) yes, that just means that the old linkages aren’t working, not that oil should come down. bad logic there. oil is global, gas is local. Gas is in abundant supply due to a string of warm winters. this too will change despite whatever Al Gore has to say.
    9) I agree
    10) I agree

    He would have done better to argue 9 and 10 more and leave off several of the preceding points. I’m not arguing oil should stay at $100 but his points won’t keep it from doing so.

  144. z will have a race 1 month from today best % gainer between sd & chk a bottle of dnr wine or something chk 41.05 sd 32.29

  148. Texana – that’s funny but no bet. I bought some yesterday and will be buying more. 28 days and everyone on the cover of the deal comes out with a screaming buy which I would have to say might give you a distinct advantage, LOL

    Helluva market.

  150. CHK at all time high.

    I’ll be working up the simple model on SD soon.

    CLR recovering nicely today and yest.

    nice to know 1 point up day in the DJIA means a huge move up in the oih, xoi, xng.

    Sorry no trades today but I don’t trust the broad market for more than five minutes at a time and I’m not a day trader. I don’t panic and flush.

  151. In the interest of sharing information, I have puts on::: XOM NEM GRMN CROX SPY QQQQ CFC LEA AMAT KLAC

    CALLS: EXM APC ECA VLO CHK CNOOC HP GG BG BHP ACI MEE FCX SOV PFE DBA FCF

    ANY COMMENTS??????

    Phil

  153. Doc:

    XOM: I would not be short it…if the argument is that their reserves are in dangerous places (politically or otherwise) I say you will lose that bet. If it is one of valuation that comes closer to the mark but I think they will ultimately move higher and not in the too distant future.

    The rest of your puts are in stuff of which I know little of value other than I am surprised by the number and variety of Crocs in my household. My daughter, I kid you not, has 9 pair.

    CALLS:

    APC/VLO/CHK – me too,

    EXM – me too unfortunately

    CNOOC – the Chinese national offshore oil co? That’s a good bet long long-term

    ECA: still waiting on your thoughts on this one from this morning.

    Coals: good idea although MEE has some nasty legal liabilities ahead of it.

    the rest I know not.

  161. that was harsh…I just might cry…did you see the Thankyou post? I even cited you as a member under the Canadian section.

  164. HOUSTON (Dow Jones)–Pointing to a variety of political and technological
    constraints on energy investment, chief executives at two oil giants Thursday
    highlighted systemic limitations on the growth of the supply of oil, implying
    that there will be high oil prices for at least the medium term.

    BP PLC (BP) Chief Executive Tony Hayward predicted that medium-term oil
    prices will be in the $60-$80 range. “For the medium term, it’s very clear the
    era of cheap energy is behind us,” the recently installed CEO said in Houston,
    adding that it isn’t clear how long the medium term will last.

    ConocoPhillips (COP) Chief Executive James Mulva had earlier told a New York
    financial conference that he doubted that world oil producers would be able to
    meet forecast long-term energy demand growth. The International Energy Agency,
    the energy watchdog for western economies, has projected 2030 world oil demand
    of 116 million barrels a day. But Mulva said he doesn’t believe oil supply will
    ever exceed 100 million barrels a day. He didn’t offer a price forecast.

    “Demand will be going up, but it will be constrained by supply,” Mulva said.
    “I don’t think we are going to see the supply going over 100 million barrels a
    day and the reason is: Where is all that going to come from?”

    Their comments came amid the market’s continued preoccupation with the
    likelihood that oil prices could soon breach $100 a barrel, a level that would
    spawn dramatic headlines while effectively setting a new record for crude
    prices in inflation-adjusted terms. But oil prices actually receded somewhat
    Thursday, dropping 91 cents to $95.46 a barrel.

    Although the tenor of the executives’ comments were similar in some respects,
    Mulva’s remarks indicated that the ConocoPhillips CEO sees a permanent
    ceiling on oil production, while those of BP CEO Hayward suggested that
    significant output growth was still possible, perhaps through increased
    recovery rates at existing fields.

    Mulva effectively restated his stance from March, when he also highlighted
    the 100-million-barrel limit at the company’s annual analysts’ meeting in New
    York, citing the decline curve of existing fields and the effects of
    environmental regulation, which imply greater conservation.

    BP’s Hayward, by contrast, spotlighted improved recovery rates as a possible
    source of significant new production growth. “We are very very early” in
    developing and applying new technologies to improve recovery from existing oil
    fields, he said. BP has been able to boost recovery at some Alaska oil fields
    60% by employing sophisticated drilling and production methods.

    Overall, Hayward said “about half” the world’s oil has been recovered, but
    he implied that significant improvement is possible on a broader scale. “The
    biggest source of new oil will come from increasing recovery,” he said.

    Although BP has increased the oil price it uses to test whether energy
    investments are economical, Hayward rejected the idea that oil prices have
    shifted permanently into a higher trading range – along with the notion that
    the world has hit peak oil production.

    “Oil is a commodity and is subject to price cycles,” Hayward told reporters
    after the event. “Who knows where prices will be in 15-20 years.”

    Dow Jones Newswires

    11-08-07 1830ET

  167. yea, thanks for the shout out. i got some for my exm 80’s a while back, i think less than a buck. whats it trading at 5x’s earnings lol, what a crap maret. thats all it is.

  173. what are you doing up? crox inventory night.

    did you see what i missed by selling into the morning excitement of PBR. lots of good pr surrounding this, but like you said, old news. ive gotten used to not beating myself up over 3-baggers.

  174. saw that big PBR continuation. probably should take the time to look at them on a reserves per share basis vs U.S. big caps.. That is a big reserve pool at Tupi. Still a 3 bagger is a problem to have.

    Asked someone who would know about CAM for you…they were kind of like, commodity business, good company, good product but kind of luke warm on the stock. I’m afraid I don’t have any better insight. I played once and got burned but it was just buying in late (kind of like bulk shipping) except it did sport a substantially higher multiple.

  175. my GF bought me a new 24″ lcd monitor for my bday! wow we’re geeks!

    im getting it ready for tomorrows session, do you have 3? this thing is a monster! you should see how the big retailers have lowered the hell on prices since summer- especially on electronics!

    while were on the currency topic, my dad just got back from bora bora and fiji. the furthest you possibly can get from civilized society, and guess what currentcy they were shunning- lol the green-back! i got a kick out of that, they barely have TV’s!

    this could vanquish the whole Brazilian model wanting to be paid in euros thing as a contrarian indicator

  179. drys volatility is priced like a biotech stock with no drugs on the market, revenue, and one hail mary in the pipeline

  181. DRYS: I like being in the Decembers, the comeback will be interesting.

    Motley Idiots did a retrenchment story today…

  200. PF quotes:
    After crosses and losses, men grow humbler and wise

    Early to bed and early to rise makes a man healthy wealthy and wise!

    sounds like somebodies hitting the sauce pre tini time/beer thirty…that’s just sad.

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