Wednesday – Bouncing Crude and No Energy Reports Until Tomorrow Will Give It Room To Run – Time to Close Many November Positions

No EIA Inventory Report Today.  Expect to see plenty of November trade closings starting today as we continue yesterday's rally.

Analyst Price Deck Watch: (the price deck is the estimate analysts use to run their models that ultimately produce the CFPS estimates). Right now, the deck particularly conservative relative to 4Q oil pricing. 


  • As you can see from the red circled 4Q oil numbers, analysts did not anticipate anywhere near the prices we have seen. As such, when they begin the process of marking their estimates for E&P company earnings to market (the first round of which begins after Thanksgiving) those estimates will be going up. Many E&P names likely to benefit but obviously the oilier the better (DNR), (SD), (CLR) to name a few of the more closely watch ones around here. Back with more on this next week. 
  • Also, it's interesting to note the lack of price leverage in the forward estimates, at least on the oil side of the equation. Look at those 2008 and 2009 oil estimates at $70.28 and $65.67 per barrel respectively. Note also that the 2008 strip is roughly $88 right now, $18 above analysts estimates.

Commodity Watch:

  • Crude Oil: Tumbled yet again on the close of futures options expiration. December crude fell $3.45, to $91.17. This morning crude is trading up $1.00 to $92.20. Nicky called for a bounce here in comments yesterday so we're not surprised but instead pleased as it will give us better exit points on the November calls.
  • Early Read On Crude Report:
    • Crude draw of 700,000 barrels seen.
    • Factors affecting that draw: Mexico still had about 1.0 million bopd shut in due to high seas at its ports.
    • OPEC Watch 1 (Mixed Messages of Late from Saudi Arabia): Speaking ahead of the OPEC heads of state meeting Ali Al-Naimi, Saudi Arabia's Oil Minister said:
    • ...there was enough oil in the market, and blamed the recent price hikes on a "multitude of factors" including speculative investors. "Price is no reflection of the fundamentals. We don't like it when the high price hurts the economic growth of any country. But we do not determine the price – and where that price might end up, we do not know." ~ UK Telegraph

  • Bodman Watch: Meanwhile U.S. Energy Secretary Sam Bodman taunted the Saudi's by saying there is a disconnect between his position, that OPEC should pump more oil, and the Saudi's who he characterized by saying, "Their response is, by the way, that 'Gee, we have no customers asking for more oil.' Z Comment to Sam: lose the Sarcasm. Without a doubt A-Naimi is the most powerful man in the room in terms of oil when you are talking. Saudi produces 9 mm bopd (give or take 500,000), will soon be capable of producing 12 mm bopd, and exports the vast majority of it. The U.S. produces just over 5 mm bopd in a good month, down from 6.5 mm bopd ten years ago (and  > 8 mm bopd 20 years ago), and imports almost twice what it currently produces. Didn't you read that book on How To Win Friends and Influence People? 
  • Nigeria Watch: MEND Steps Up Attacks. Exxon evacuated non essential personnel from a Nigerian export terminal after militant attacks. So far production at the 400,000 bopd terminal has not been impacted but this is the third MEND sponsored hit on the facility since September and the boldest with attackers numbering about 60.
  • OPEC Watch 2: Ecuador Gets A Second Chance: Ecuador to rejoin the cartel on Saturday after a 25 year suspension. They expect to have a production quota of 530,000 bopd which is roughly in line with their 2006 volume average.
  • Natural Gas: Fell a penny yesterday to $7.95. This morning gas is trading 
  • Bastardi Watch: from MarketWatch ~ forecaster Joe Bastardi of AccuWeather on Tuesday reiterated his forecast for a warm winter in the Northeast, although the weather has been running colder than normal since Nov. 1. He said it will stay cold until the middle of December and then run about four degrees above normal in the northeastern U.S.


Stocks We Care About Today Watch:

(CLB) Core Labs. These are the guys who look at the cores and tell operators how to more efficiently get oil and gas out of the ground both initially and later in the life of the wellbore and / or reservoir. The business is broken down into three segments which you can think of chronologically in the life of a field: reservoir description, production enhancement, and reservoir management. CLB's revenues are best described as coming from: 70% big operators (they work for the top 40 operators on the globe, 70% is international business, and 70% is focused on oil plays.

Anyway, I've liked this one for years and have been waiting for a pullback for months. Ah subprime. The stock pulled back sharply from a high of $155 one week ago to 130 yesterday's close. Most of the plunge occurred Monday and this is the single quickest drop in share price in over 20 years. The fall from grace was not precipitated by news and their 3Q earnings, which were out way back on Oct 25, were a modest beat of consensus and a boost to 4Q guidance which was well received (the shares jumped 5% immediately afterwards). So the drop was the death of momentum players and profit taking. 

Comments from the Houston Energy Financial Forum were pretty bullish as more revenue streams are coming on line from existing customers and they have introduced multiple products to give them multiple touches in complex completion solutions like the Barnett Shale. Earnings are expected to grow from $4.86 this year to $6.10 next and $7.28 in 2009. I'll be looking at December and January calls around $145 to $150.  

(EXM) reported $1.00 (after items) vs $1.07 expected. The topline was also shy of expectations and investors savaged the shares in the aftermarket.  


(DRYS) Goldman Presentation:

  • What's New?
  • Projected EBITDA now $1 billion for 2008, up from $900 million in the 3Q presentation not two weeks ago.
    • How Does This Improve 10% in under 2 weeks? Two F-words:
      • Fixings. Recent fixings have been remarkable. Low $80s Kpd in the Panamax which they are heavily weighted towards
      • Forward Curve:




Odds & Ends

Analyst Watch: (EOG) from sell to hold and (KWK) from hold to buy at Citi, (EGLE) to buy at UBS, 

The Things Subscribers Say Watch: Hmmmm… my short guru just posted from Europe-said a chance today could be one DJ’s 10 largest gain days-his tip off financials yesterday (he is also usually early) ~ Denise. (Nov 13, 2007, 9:54 e). Z Comment: DJIA closed up 320. The good TA guys are worth more than their weight in oil.

117 Responses to “Wednesday – Bouncing Crude and No Energy Reports Until Tomorrow Will Give It Room To Run – Time to Close Many November Positions”

  1. 1
    Sambone Says:

    7:54 am EST

    Crude Higher; OPEC, Data Boosts Buying

    By Nick Heath

    LONDON — Crude oil futures traded higher in London Wednesday after Tuesday’s steep falls proved attractive to buyers with an eye on Thursday’s U.S. Department of Energy inventory data and the latest OPEC comments on output levels.

    Nymex light, sweet crude and ICE Brent contracts both climbed to more than $1 above Tuesday’s closes in early trade as crude oil prices put the brakes on two days of falls.

    But with demand concerns heightened by the International Energy Agency in its report Tuesday and an OPEC output rise still the subject of speculation, debate surrounded whether crude oil prices will be able to retest their recent highs.

    “The immediate temptation is to believe that this is a correction in a bull market — and the odds certainly justify that belief,” said Peter Beutel of Cameron Hanover.

    “We could have a rally, even another last gasp attempt at $100 (a barrel). But it looks like this leg of the bull market is near its end.”

    At 1227 GMT, the front-month December Brent contract on London’s ICE futures exchange was up $0.47 at $89.30 a barrel.

    The front-month December crude contract on the New York Mercantile Exchange was trading $0.62 higher at $91.79 a barrel.

    The ICE’s gasoil contract for December delivery was up $4.75 at $796 a metric ton, while Nymex gasoline for December delivery was up 206 points at 233.73 cents a gallon.

    In addition to concerns over shrinking global oil demand growth highlighted by the IEA Tuesday, the day’s lower closes were attributed in part to the expiry of December crude options.

    But with the December products off the board, the market was able to focus its attention on fundamentals again, and posted modest gains early Wednesday.

    “Yesterday’s aggressive sell-off was as much to do with the (Nymex December crude) options expiry as the fundamentals in the market,” said Rob Laughlin of MF Global. “Large open interest in the $90 strike was too much for many to resist testing, but in the end fell short.”

    The see-saw speculation over whether OPEC will announce an output hike before the end of the year continued Wednesday, with latest comments from the organization shifting back in favor of those betting against an increase in OPEC’s production quota, helping to push crude prices higher.

    OPEC Secretary General Abdalla Salem el-Badri said Wednesday that there is no need for the Organization of Petroleum Exporting Countries to add more oil to the market.

    “Frankly we don’t see the need that we should add more oil,” el-Badri told a news conference in Riyadh.

    He was responding to questions about the call from U.S. Energy Secretary Samuel Bodman for OPEC to raise its crude oil production to address falling oil stock levels and high oil prices.

    OPEC ministers are set to meet informally Thursday and Friday ahead of the Nov. 17-18 OPEC Heads of State summit, but comments from ministers recently make it likely that any output decision would be expected to follow formal policy talks, due to take place two weeks later in Abu Dhabi.

    After options expiry Tuesday, the crude oil market was training its sights on Thursday’s U.S. Department of Energy’s weekly inventory data wary that a larger-than-expected draw in crude oil stockpiles could boost prices significantly.

    Normally published on a Wednesday, the U.S. Veteran’s Day holiday on Monday of this week has pushed the report’s publication back a day.

    Crude oil inventories are expected to decline by 300,000 barrels in the week to Nov. 9, according to the mean of a Dow Jones survey of nine analysts’ forecasts, with predictions ranging from a 3-million-barrel increase to a 2- million-barrel decline.

    Gasoline inventories are seen dropping by 100,000 barrels, according to the analysts’ average, while stocks of distillates, which include heating oil and diesel fuel, are expected to fall by 300,000 barrels.

    Following weeks of volatility in crude futures prices, analysts debated whether Tuesday’s declines marked a continuation of the trend or hinted at a shift in bullish momentum.

    “With (Nymex crude) stalling in the last three days of last week and correcting the first two day of this week, the technical momentum is starting to shift to the downside,” said Olivier Jakob of Petromatrix.

    “(Nymex crude) will need to show some strong rebounding action today or risk facing a confirmed momentum shift.”

    But others argued that the bullish outlook remained intact and further price gains were possible.

    “Time spreads were marginally changed at the front of the curve yesterday indicating little shift in near-term bullish sentiment,” said analysts at BNP Paribas.

    “While the price fall is wide and more can follow, it is not entirely disconnected with recent observed volatility,” they added, suggesting that with the expiry of the December contract Friday, another run towards $100 with the January contract is “entirely possible”.

    —By Nick Heath; Dow Jones News

  2. 2
    aitrader Says:

    Diana Shipping (DSX) reports earnings of .78 cents vs. consensus of .45 cents. DSX is up 7% premarket after a 15% up day yesterday.

  3. 3
    zman Says:

    Nice Ait although the beat is not as big as it appears. There’s a gain from the sale of an old ship in there. In my opinion, management is pulling a fast one by not better breaking it out in the release in terms of after tax net income impact. Just something to be mindful of.

  4. 4
    kaman Says:

    Ecuador wants to rejoin the “civilized world”, huh? Perhaps our Navy should accidentally discharge a torpedo into one of their tankers…OXY want shareholders their seized stuff back or fair compensation.

  5. 5
    zman Says:


    Out remaining EOG Nov 85 calls for $3.20, for 78% gain. Sold the first half for $4 pre reincarnation of the sub prime mess.

    Out HAL $37.50 November Calls for $0.85. 70% 2 day gain. Said that one would be quick. Still hold the ailing $40 strikes of November.

  6. 6
    zman Says:

    K – No doubt, with interest their debt to re enter OPEC is a good chunk of one year’s GDP and they’re not even repaying anything but original principal, think they could afford it by selling of stolen assets, lol. Re the torpedo, I don’t think Bodman would want to take credit for $200 oil though.

  7. 7
    zman Says:

    TSO, a little profit taking on no word from management after yesterday’s 10% run at day’s end. They do need to say something soon. This is putting a lid on VLO today. FTO mounting a nice recovery however.

  8. 8
    kaman Says:

    OK, just aim for the prop…

  9. 9
    zman Says:

    OII back in vogue today, go figure.

    Well, we’re certainly getting Nicky’s oil bounce. Even COP is up.

    my CLB from this mornings post is running…I’m waiting for a little retreat on that and then buying the some 145s in a Dec or Jan call.

  10. 10
    Dave J Says:

    Houston Chronicle / AP think there will be an EIA forecast today.


  11. 11
    zman Says:

    Thanks Dave J…nice catch.

    According to the EIA, their won’t be until tomorrow.


    Also, just confirmed its tomorrow on the phone with the EIA.

  12. 12
    zman Says:

    Broad market no like $2.35 up oil

    MEE upping their dividend, BTU still doing well, looking for a re entry their this winter.

    Bulk shippers just not holding up again…looks to me like a some people who wanted out during the big sell off, held their breath yesterday and today are again resuming the selling. I hate momentum stocks.

  13. 13
    Sambone Says:

    9:51 am EST

    Nymex Crude Up On Dollar, Chart Buying After Steep Loss


    NEW YORK — Crude oil futures climbed higher Wednesday as a weaker dollar and expectations for a draws in U.S. oil stockpiles led some traders to buy in after steep losses crude made in the previous session.

    Crude oil slumped nearly 4% Tuesday after the International Energy Agency cut its demand forecasts for 2007 and 2008 and as expiration of December options failed to provide a boost to $100 a barrel that many had been looking for. The fall was the biggest since Aug. 6 and came amid record volumes on the New York Mercantile Exchange.

    Despite a marked change in sentiment among analysts who had previously been predicting crude prices would head to $100, traders Wednesday took advantage of the previous session’s loss to buy in.

    Light, sweet crude for December delivery on the New York Mercantile Exchange was recently up $1.79, or 2%, at $92.96 a barrel. Brent crude on the ICE futures exchange rose $1.60 to $90.43 a barrel.

    “The market’s fall yesterday was a little overdone,” which has inspired some chart-based, or technical, buying, said Tony Rosado of IAG Energy Brokers in Fort Lauderdale, Fla. “It’s going to have to clear $95 in order for us to get a bullish consensus again.”

    There were a record 880,731 Nymex crude oil futures traded Tuesday, beating the previous record 800,731 set Jan. 11.

    Helping boost prices Wednesday, the dollar fell close to its record low against the euro after a report showed U.S. retail growth slowed during October. The euro was hovering near $1.47 after the data, just off its all-time high $1.4753 reached Friday.

    The weaker dollar has been an important factor in crude’s more than 50% rise this year, because it has made crude less expensive for traders using other currencies and has blunted demand destruction from higher prices in nations that don’t use the U.S. currency.

    U.S. crude oil and distillate inventories are expected to have fallen by 300,000 barrels each last week according to a Dow Jones Newswires survey of analysts. Inventory data, due for release Thursday by the Department of Energy, is also expected to show a 100,000-barrel draw in gasoline and a 0.7 percentage point rise in refinery use.

    A big crude draw of around 2 million barrels, which some analysts are tipping, “could force a further price rally back to above the $94 area, (but) such a feat will likely require another decline in Cushing stocks,” Jim Ritterbusch, president of trading advisory firm Ritterbusch and Assoc said in a research note. Cushing, Okla., is the delivery point for Nymex crude futures.

    Front-month December reformulated gasoline blendstock, or RBOB, rose 2.32 cents, or 1%, to $2.3399 a gallon. December heating oil rose 3.9 cents, or 1.6%, to $2.5411 a gallon.

    —By Matt Chambers, Dow Jones Newswires

  14. 14
    zman Says:

    testing, hello, where is everyone…very slow week for comments. any site trouble or is it just the market?

  15. 15
    Sambone Says:

    Hey, I’m here! No probs.

    Batman: “Go back outside and calm the flower children.”
    Robin: “They’ll mob me!”
    Batman: “Groovy.”

  16. 16
    Brian08 Says:

    Here and watching Z…Trying not to barf after all this vol and hoping TSO would wake up…

  17. 17
    Popeye Says:

    Wake me when HK is above 18.

  18. 18
    Sambone Says:

    Uncle Phil


  19. 19
    zman Says:

    Sambone: classic! Heard some stories about Adam West and his “casting calls”, lol. Thanks for shout…thought this thing was broken again….guess I’m just unpopular. Got any thoughts on the market today?

    Denise had the call yesterday for a big move but now it looks like the DJIA is teetering.

    B: thanks, so the Ivy is here too, groovy. TSO needs to comment soon.

    P: hear ya. Stocks are lacking catalysts post 3Q, pre holiday.

  20. 20
    Brian08 Says:

    Looking at streetsmart and this site are the only thing keeping me awake during a current discussion about mutual funds…

  21. 21
    zman Says:

    B: are you in class right now?

  22. 22
    Brian08 Says:

    yup, investment management…one of the few classes taught by practioners here, could be so much better than it is…if i have to hear about historic market returns ever again i’m gonna barf…

  23. 23
    zman Says:

    my coffee cup has graphs of the markets back to 1920 or so wrapped around. All the history you really need.

  24. 24
    Brian08 Says:

    Exactly…I’d love to see this place offer a trading class taught by a retired trader…But I’m sure most traders wouldn’t want to teach and this ain’t a Wharton or Chicago with all the quant-trader type guys…But I think that there’d be some strong interest for that around here…

  25. 25
    Brian08 Says:

    Hey Z, any reason that TSO and VLO are joined at the hip and WNR/HOC/FTO are running up today?

  26. 26
    Denise Says:

    Good morning,
    -Read someone bought 3mm xle and sold 1mm xlf this am
    Thinking FTI might run up again into yearend with CLB
    My Gann/Wave voodo man thinks small sell off this am and close positive
    -My T/A says this is her Turkey Rally and everyone is mad at her because she was late(always early on her calls)
    Said it would happen next week
    The short guru D Kas started shorting index’s at the close thought too much too

    When is NG going too sell off(tomorrow?)
    so I can buy it?

    I think from what I am reading people think good chance global growth will sell of and selling dry bulks because-
    If they are wrong there will be some nice W’s in the charts(EXM)-but Drys sure looks like a head and shoulder top.

  27. 27
    Denise Says:

    Sorry typo last sentence-I should check!
    Slowing global growth and selling drys,

  28. 28
    Sambone Says:

    Z – I think that a money market somewhere will “Break the buck”. That might be the Black swan. I’m still hedged on my portfolio using SKF and SJH. Got spanked pretty hard the past two days on the Financials. I don’t believe for a NY second that the Toxic paper mess is over. So, I’m still looking for a down market overall going forward. US$ continues to slide, inflation is up (Been grocery shopping lately?), Oil up, gas going up, housing sucks, credit cards maxing out, etc., etc. and so on.

  29. 29
    Brian08 Says:

    Speaking of food inflation…I’ve been doing a security analysis class and my reports have been on the grocery store industry…Don’t expect this problem to get better any time in the near future…

  30. 30
    Denise Says:

    Sambone-I take the other side on the market for the next month-will sell before yearend.
    Think the dollar will have a good bounce and suprise everybody- might take awhile to happen
    Inflation I agree-but next years issues-
    people have there performance to protect through year end.
    But then again I very well could be wrong
    Finanacials are trades-but glorious ones when it works-

  31. 31
    Sambone Says:

    Went shopping the other day. Last year you could buy three cans of peas for $1.00. Now on sale two for $1.00. Oh silly me, it doesn’t matter because food is not part of the CPI.

  32. 32
    Sambone Says:

    D – That’s cool. That’s what makes a market.

  33. 33
    zman Says:

    TSO not saying much re KKs offering is dragging it and VLO down. The little guys were just catching up a bit. FTO really fundamentally outperforming the others but it too is losing steam. More red creeping into the group now as the DJIA starts to threaten a sell off.

    Hey D – you keep passing those ideas right along on the broad. I’ve usually got my head in so far into energy I get taken by surprise like last week on the extraneous machinations of overpaid bulge bracket bank executives.

    NG: have not seen the consensus numbers for the storage report yet but they have to be thinking first draw of season. Weather is all that matters right now…Bastardi has been pretty good in the past and he also commented re increased water supply out west which will mean more hydro next spring which isn’t great for elec gas demand (but that’s a ways off). Honestly I think CHK played this Fall very well but that there is a lot of unconnected gas waiting to hit the market. It won’t stay that way through December, at least for the little guys who will want to talk about exit rates vs 4Q avg volumes. Anyway, weather, weather, weather.

    I think DRYS gets another big push up simply because its cheap and the forward curve, which keeps advancing, is a pretty good indicator of demand/global growth. But the chart needs to rally soon.

    Sam – I hear ya, that’s why you gotta like energy. It’s cheap now, let alone on the basis of the first table in today’s post were you to market estimates to market. And oil demand is strong…I see stories talking about demand slacking here and that is BS inspired by flip floppers who read the IEA headline (Kilduff and Flynn) and then want to be on the right side of that trade. That’s crap. Gasoline demand is off the hook for this time of year and we’re over $3 per gallon. Warm weather means more driving, plain and simple. I am going into the next month a bit thinner on positions as I’m sure you are right about full disclosure in the financials not having been accomplished yet, but as to oil, we’re still tight, even after the IEA “revised” their number down. Comment: they are alway too high.

    B: yup … corn is in everything you eat one way or another. even fish (gotta to get to market in those ethanol powered trucks, lol.)

    Popeye: almost had to wake re HK

    BofA has the worst investment website on the planet. No

  34. 34
    apbd Says:

    I’m here!

    ” Things are never so bad they can’t be made worse.”


  35. 35
    cattleman Says:

    Re:28&29 Ag, the new growth industry. Lots of money and a luxurious life style. I’ll get a course together and send you all the syllabus.

  36. 36
    zman Says:

    D – Cramer makes some very good points in that oil bull call you mailed me. I agree pretty much 100%

  37. 37
    Denise Says:

    We wan’t a pullback-so we can climb a wall of worry! (well most of us)
    Sambone I will join you in the financial shorts after they climb more-think they are value traps.

  38. 38
    Sambone Says:

    Z – Agreed on demand. I don’t see very many people if at all slowing their trips, etc. It’s like the pot and the frog. If you throw a frog in a pot of boiling water, he’ll jump out. But you put that frog in a cold pot of water and slowly heat it, he’ll boil to death. i think gas will be $4.00+ a gallon in the spring. If so then I think people will start conserving. It’s gonna take a 2×4 upside their head for them to conserve. Jim Rogers saids that the current bull market in commidities will run til at least 2014, so that’s why I’m long energy.

  39. 39
    zman Says:

    apbd – honestly I think we see energy rally through year end. I’ll even through in a back test on the indexes’ 4Q performances so Brian feels right at home, lol.

    Cattleman – great minds, been thinking about that since the ethanol craze. how do you not like Tyson when they can make biofuel out of fat which they have plenty of. One question. Are you seeing demand destruction in beef consumption? I looked at steaks the other day, not at my local butcher which has been crazy for awhile now but at Kroger. I thought it was a typo! Eat a steak or fill up my car? Hmmm. Also, are margins for the beef guys declining with costs on the rise? Finally, what’s the play?

    Denise: moderate pullback early December then rally through year end re NG…you heard it here first!

  40. 40
    zman Says:

    HO in lockstep with Oil, basis point for basis point, mogas not keeping up today so cracks will be off slight if we closed now.

    TSO option volume dead as a door nail today. They really should respond with their thoughts on the offer soon.

  41. 41
    Sambone Says:

    Z – Farmers in the south are selling off their herds because of the drought.

  42. 42
    zman Says:

    TSO said this on October 29th:

    Tracinda began the tender on Nov 7th

    which would mean TSO has until next Wednesday to respond. They speak at the B of A conference tomorrow at 2:05 est…but I would doubt they will comment then.

  43. 43
    zman Says:

    skinny but expensive cows.

    DO outperforming RIG today.

  44. 44
    cattleman Says:

    Z – Excellent questions. There is an ongoing effort from big business to integrate the beef industry as it has the other animal proteins. Because of the long production cycle and the fragmentation of supply chain (often several different grazing stages before feed out)and unpredictable weather on the plains they have had mixed success. They keep an animal on feed for 110 to 120 days so the price of corn or its equivelant is a big deal. Ethanol or steak as you suggest. The difference in quality between what is commerically done and what we do is stunning. None of my associates eats store beef.

  45. 45
    zman Says:

    C – but that gas injected WMT beef is so nice and red, lol. Does anyone in the industry have pricing power / control over their margins? Milk is lot more expensive than gasoline these days…

  46. 46
    ram Says:

    Milk in California is cheaper than gas only because gas is rising faster.

  47. 47
    zman Says:

    Ram – really? cow milk is $4.50 to $5.50 a gallon in the south.

  48. 48
    ram Says:

    We are around $3.20 to $3.50. We actually produce most of the milk consumed in this state so the cost savings is from freight and distribution. Gas has gone straight up in three weeks from about $2.75 to $3.50.

  49. 49
    cattleman Says:

    Z – I don’t think so. Consumers can always opt for chicken or pork when beef gets too high. Remember that there is also a large amount of imported beef, often hamburger that’s mixed trimming from many animals, which keeps a check on the industry. Local farmers are locking in $6.00 wheat for July delivery now, futures telling us that wheat should be at least 20% higher next year. Bon appetite.

  50. 50
    Sambone Says:

    Here in the south diesel is higher than regular gasoline. Milk is higher than both.

  51. 51
    zman Says:

    Interesting single digit midget DNE out with ops update after posting results the other day. Busy/growthy with experienced management in place. They speak at the Houston Energy Fin’l forum at 4:05 est.

    Thanks C – was just looking at tyson. You a Kobe guy?

  52. 52
    cattleman Says:

    I’ll do a little reading on Tyson and see if I can add any perspective. We raise Salers, French breed. Great cattle, take them all the way through the production cycle. Do have a Saler/Angus cross hanging for 14 days at 34 degrees, dry aged and ready next week. Steaks 1″ thick. Had Kobe in Tokyo, great stuff – prepare to leave your wallet.

  53. 53
    zman Says:

    C – wow. Got a website?

  54. 54
    freeflow Says:

    EXM target reduced to 73 from 84

  55. 55
    cattleman Says:

    Z – No website. May do that next year. I’ll fix you up. Tyson buys fat cattle so they avoid the feeding risk. They have 25% of the U.S. beef market according to S&P, plus chicken of course and pork with the goal of being the primary supplier of protein. There are several large feeding operations and many mid and small size feeders supplied by thousands of small producers. The Tyson chart looks ripe for a rebound but I’m super long animal protein. Real long.

  56. 56
    zman Says:

    Thanks. EXM is toast at least for the Novembers.

    Cattle: thanks and thanks!

  57. 57
    bill Says:

    cape rates at a new record high of 192.3 per day

    heard there was a deal over 200 k per day today

    11/1 163,563
    11/2 164,179
    11/5 166,377
    11/6 171,534

    a panamx went for 100 k per day

    DWT 73679
    Built 1999-07
    Flag HKG
    Draft 13,8710
    73,679 BLT 99 LABUAN/HONG KONG 27-30/11 USD 100,000 DAILY
    11/7 175,563
    11/8 177,946
    11/9 182,965
    11/12 187,703
    11/13 190,668
    11/14 192,311

  58. 58
    zman Says:

    Bill, you still like QMAR? Lots of Capesize and Panamax exposure there. Don’t know how much is spot vs charter. I bet on the wrong horse as far as one quarter goes on EXM (although the results were still pretty strong).

  59. 59
    kyleandy Says:

    z agree bofa’s investment site the worst. but they let u trade free. everyday threaten to transfer but cant quite pull the trigger. free is hard to beat

  60. 60
    ram Says:

    Bill, you can print numbers until the cows come home – sorry – but it seems that investors enthusiasm has left the dry bulk stocks.

  61. 61
    zman Says:

    kyleandy: free is nice. I was just trying to get them to give me the schedule for their big Energy Conference Thursday and Friday. The rep I talked to had no idea there was a conference and could not connect to anyone who knew anything about it but did point out that they are not FDIC insured twice during a 30 second conversation. moron.

  62. 62
    kyleandy Says:

    i was talking about trying to trade there. its brutal – but free!!

  63. 63
    zman Says:

    K – I hear you, as long as you don’t have to trade by actually talking to the dolt I talked to you’ll be fine…no wonder it’s free, lol. Do they let you trade options for free?

  64. 64
    zman Says:

    NG diving for the mat, down 16 cents, to 7.78, support closer to mid 7s

  65. 65
    ram Says:

    The core index, which offers a fuller snapshot of inflation by excluding volatile food and energy costs, was unchanged after rising 0.1 percent in September. Mrs. RAM tried to explain this statement was justified through her MBA jibberish – no offense for the other MBA people here. Every month food and energy related costs are rising which directly affects net personal income.

  66. 66
    kyleandy Says:

    z u get 30 free stock trades a month if u have 25k cd. option trades are expensive so luckily no good for u.

  67. 67
    dooch Says:

    whats everybody’s opinion on the TSO tender? I thought the cat was out of the bag with the stock move yesterday, but today it is down.

  68. 68
    ram Says:

    What data are people looking at when they expect the crude inventory to decline again?

  69. 69
    aitrader Says:

    I’d say 80% likely to approve and TSO should move above $60+ when it’s official.

    Rationale is that if they don’t approve TSO will drop equivalent to WNR’s fall, since TSO missed their Q3 numbers. Stockholders will take the board to task and hold them responsible for the drop and missed opportunity with Tracinda.

    Could be wrong tho – rational markets, like the folks that trade them, aren’t.


  70. 70
    aitrader Says:

    re: #67

  71. 71
    zman Says:

    TSO: up 10% yesterday, down 2.5% today. Still just a rumor yesterday….today no pr and you get the sell off. Like the fundies but if they don’t go with it, which they may not it sells off to low $50s, then its a screaming buy. Management was very guarded on the 3Q conference call but no board would like having KK on it so they will have to balance that with the needs of the shareholder. Kirk is an activists activist which would be a pain as with 20% he’ll have more than one seat on the board. I think they would be foolish not to do it but they will take a much longer view than most investors meaning its a coin toss.

    Ram – slight rise in utilization given the time of the year which will draw barrels plus the outage in Mexico that persisted into last week.

  72. 72
    ram Says:


  73. 73
    aitrader Says:

    Z – there is nothing preventing Tracinda/Kerkorian from fielding the TSO offer to the market even if the board says “no way”, right?

  74. 74
    zman Says:

    From OptionMonster

    Do you keep a performance log?

    No, because we don’t trade every idea we write about and sometimes we don’t specify certain positions. Also, with the markets being what they are and since individuals are being prone to make different decisions about similar positions, we don’t think it’s meaningful. For example, let’s say we both get in at the same price but one of us exits sooner. Over the course of the month, that would change our “results” dramatically.

    Would guys rather I just dump the log and throw out ideas? And that for only $495 per month. Then I could grow that pony tail I’ve been wanting.

  75. 75
    zman Says:

    Ram: exactly…and when KK gets his seat anyway he’s going to be twice as fun for them to deal with.

  76. 76
    freeflow Says:

    nap time

  77. 77
    freeflow Says:


  78. 78
    zman Says:

    Oil up $3.02. Wonder what the Flynn/Kilduff auto opinion flipping machine have to say today?

    FF: if you’re bored you can alway listen to some presentations over here:


    PQ speaks at 2:15 central and little DNE is at five after the bell.

  79. 79
    freeflow Says:

    I like PQ – do you think its too late to catch it?

  80. 80
    freeflow Says:

    thanks for the link

  81. 81
    zman Says:

    FF re PQ – I’m thinking about just buying the stock and holding it for 6 months.

  82. 82
    zman Says:

    options on the little guys are tough

  83. 83
    zman Says:

    CLB ….ug…turned my head.

  84. 84
    Sambone Says:

    FF – Here is a pretty cool link that explains the “Subprime” mess if you missed it the first time.

  85. 85
    freeflow Says:

    i did see that – thanks. I really liked the bernake vs. Ron Paul video.

  86. 86
    Brian08 Says:

    Ram Re; #65…I’m in my 2nd year and couldn’t agree more…We actually had a trader alumn speak in one of my classes today…Best 80 minutes of my 3 semesters here so far!

  87. 87
    zman Says:

    “In real terms, demand has not declined sufficiently to allow the market to feel flush with supply,” said John Kilduff, an analyst at futures brokerage MF Global, in a research note. “As for yesterday, it represents a temporary, albeit large, correction.”

    I saw him on CNBC say we are seeing demand destruction due to high prices yesterday. This is the same guy who says to throw out the coach after his first loss in 12 games. Moron.

  88. 88
    Sambone Says:

    Hmmm Z, tell us how you really feel! LOL

  89. 89
    zman Says:

    S – they should put them on either side of a coin CNBC could hawk during commercial breaks. The question would be what material would be worthy of such a prestigious piece? Flotsurium or Jetsurium. That coin would be the worst idea I’ve heard since the “jump to conclusion” mat in Office Space.

  90. 90
    zman Says:

    Ram – the stocks have switch back from trading with the commodities to trading with the market. Must be Wednesday.

  91. 91
    freeflow Says:

    z – any thoughts on stp?

  92. 92
    ram Says:

    I was hoping for this up day that NICKY or Z was expecting to salvage any $ from the NOV’s. Alas, right you are Z, it is follow the market Wednesday!

  93. 93
    zman Says:

    STP – I hate to pull anything out of my … you know. Solar I have dabbled in but not since the recent run. They are mo-mo rich stocks to be sure. Sorry me no help there.

  94. 94
    zman Says:

    R – The broad may still rally, this morning I took out some of the leftovers, will do more soon.

  95. 95
    Sambone Says:

    Spanking (Not bad) the refiners today.

  96. 96
    ram Says:

    ZZZZZZZZZZZZZZ Say, Z, do you consider also any high outstanding shorts when you choose a position to take advantage of a potential squeeze?

  97. 97
    zman Says:

    R: not so much for options as your timing has to be pretty perfect. You have to have a catalyst for that to work like good news or an earnings beat. Otherwise the shorts can be pretty patient

    Market turning up for you on request.

  98. 98
    Brian08 Says:

    Hey Z, you think COP and XOM are being “pressured” by natty gas’ weakness here since oil is up 2+% today and they are both up less than 1%?

  99. 99
    cattleman Says:

    I wonder what Denise’s experts would say about XLF Dec atm puts trading in excess of 27 thousand contracts today?

  100. 100
    zman Says:

    B – yes, they were up more earlier with lower oil and slight gas… think now they are just getting sold down by weak hands.

    C: probably tells you something about how much more news is yet to come from sub prime slimers

  101. 101
    Sambone Says:

    3:25 pm EST

    Nymex Crude Up On Expectations For Inventory Draw


    NEW YORK — Crude oil futures rose Wednesday, reversing an options-related slide the previous session, as traders bet U.S. crude stockpiles fell last week for the fourth consecutive time and amid expectations for colder-than-normal weather in the U.S. Northeast.

    Light, sweet crude for December delivery on the New York Mercantile Exchange rose $2.92, or 3.2%, to settle at $94.09 a barrel. On Tuesday, prices fell $3.45 to $91.17, the lowest close for a front-month contract since Oct. 30. Brent crude on the ICE futures exchange rose $2.18 to $91.01 a barrel. Brent settlement prices weren’t yet available.

    Crude oil slumped Tuesday after the International Energy Agency cut its demand forecasts for 2007 and 2008 and as expiration of December options inspired a big sell-off. The fall was the biggest since Aug. 6 and came amid record daily crude volumes of 880,731 on the New York Mercantile Exchange.

    “Yesterday’s sell-off was clearly driven by options expiration, and, apart from the IEA revisions, nothing has really changed” to alleviate perceived tightness, said Addison Armstrong, an analyst at TFS Energy Futures in Stamford, Conn. Armstrong expects slowing demand to eventually help push prices back to $70, but not in the near term.

    “There’s expectations that stockpiles will fall, and we’re faced with forecasts for colder-than-normal weather in the Northeast for the rest of November, so there’s still a bullish patch to get through,” he said.

    Analysts are expecting a 300,000-barrel draw in U.S. stockpiles for last week when the Department of Energy releases its weekly data Thursday, according to a Dow Jones Newswires survey of analysts Monday. Gasoline stocks are seen dropping by 100,000 barrels and distillates are seen down by 300,000 barrels. Refinery use is expected to grow 0.7 percentage point to 86.9% of capacity.

    The National Weather Service is forecasting colder-than-normal weather in the U.S. Northeast, the world’s biggest heating oil market, for the last part of November. The NWS is predicting the cold weather in both its six- to 10- and eight- to 14-day outlooks charts on its Web site.

    Buying Wednesday was in a large part inspired by short covering, or exiting bets on a fall in prices, before the DOE data, said Jim Ritterbusch, president of trading advisory firm Ritterbusch and Associates in Galena, Ill., who expects crude oil stocks to fall by 2 million barrels.

    Helping boost prices early Wednesday, the dollar fell close to its record low against the euro after a report showed U.S. retail growth slowed during October. The euro was hovering near $1.47 after the data, just off its all-time high $1.4753 reached Friday.

    The weaker dollar has been an important factor in crude’s more than 50% rise this year, because it has made crude less expensive for traders using other currencies and has blunted demand destruction from higher prices in nations that don’t use the U.S. currency.

    Front-month December reformulated gasoline blendstock, or RBOB, rose 5.37 cents, or 2.3%, to $2.3704 a gallon. December heating oil rose 7.13 cents, or 2.9%, to $2.5734 a gallon.

    —By Matt Chambers, Dow Jones Newswires

  102. 102
    zman Says:

    spoke to soon re market

    thanks Sam…nervous looking market.

    B: funny thing about gas being down…not affecting gassiest names like SWN and KWK, both up big.

  103. 103
    ram Says:

    SWN and KWK gassier than CHK?

  104. 104
    zman Says:

    yes, CHK is 92%, they are higher than that.

  105. 105
    Sambone Says:

    What happened to this market suddenly?

  106. 106
    Brian08 Says:

    Like they were waiting to blow the brains outta the energy names…

  107. 107
    Sambone Says:

    Yesterday was just a reflex rally. We’re back to the good old wait-and-see posture, waiting for tomorrow’s CPI announcement,” said Frederic Dickson, senior vice president and market strategist at D.A. Davidson & Co in Lake Oswego, Oregon.

    “I think a lot of traders realize that the overall situation hasn’t changed a whole lot, with yesterday’s rally notwithstanding. There are more mortgage-rate resets on the horizon.”

  108. 108
    Sambone Says:

    Uh oh, GOOG and APPL down. Who would have thunk it? Looks like D’s TA guy might be wrong today.

  109. 109
    Sambone Says:

    Tini TIME!!!!!

  110. 110
    ram Says:

    Just can’t catch a break this week.

  111. 111
    zman Says:

    Ram – hear ya, got out of the close HALs and rest of EOG this morning…had I waited they got killed. Did wait on the COP 80s and they are down from nice ups. Cross fingers on tomorrow. Just been doing my oil numbers and we have the potential for a good sized oil draw…refiners are overdue to get on the stick after maintenance season. Combine that with Mex and you could see a bigger draw than what is expected. The weekly #s game is tough, especially this time of year but that’s how it looks to me now.

  112. 112
    bill Says:

    I like QMAR only as a takeover play. They have nice new ships but they are locked into long term time charters

    Ive talked until I’m blue in the face which stock i favor.

    Maybe Ram is right..sell the sector now and come back in when the momentum players cash out and move into the next hot thing.

    I see year end tax selling an nervous investor’s and a wall of worry to overcome.

    Also the rates sooner or later will come down and cause another panic.

    Anyone got an unloved stock selling below book and generating cash? let me know, please

  113. 113
    aitrader Says:


    CHICAGO (Dow Jones)–Open interest in the December crude-oil contract on the
    New York Mercantile Exchange dropped by 48% Tuesday, triggered by expiring
    options contracts and potentially signaling buying ahead.

    The decline in open interest, or the number of futures contracts still open
    at a particular time, came amid a massive sell-off as front-month Nymex crude
    futures dropped $3.45 a barrel, or 3.7%, to $91.17 on record volume – the
    biggest percentage price drop since Aug. 6. Prices rebounded nearly 3%
    Wednesday, settling at $94.09.

    Open interest in December futures, which expire Friday, fell by 122,896
    contracts to 134,956, while total crude oil futures open interest fell by
    92,346 contracts, or 6.7%, to 1,445,162.

    Close observers of open interest said the change was extraordinary. “I think
    it’s the largest one-day decline this year, and the largest I think I may have
    ever seen,” said Peter Beutel, president of Cameron Hanover, a New Canaan,
    Conn. energy advisory firm. “If I missed a day sometime in the last 24 years,
    then it is surely the second-largest ever. In any event, it is huge.”

    Beutel said a drop in open interest coinciding with a market sell-off often
    means upward price trends ahead. His reasoning: when the market falls along
    with open interest, it suggests profit-taking by crude investors, rather than
    fresh bets that prices will fall. “There will be that much more ammunition
    available for a future buying spree, should they want to get back in,” Beutel

    The calendar also partly explains why open interest in December futures
    evaporated so quickly. Tuesday marked the expiration date for options on
    December futures, which gave their holders the right to buy or sell futures at
    a set price. This Friday, the December futures themselves expire, and long
    investors may be starting to either liquidate their holdings or roll them into
    the January contract.

    December open interest “would have gone down anyway, just because we’re a few
    days away from the contract expiring. A combination of the approaching contract
    expiration with the options expiring yesterday really pushed a lot of guys
    out,” said Peter Donovan, a vice president at Vantage Trading in New York.

    But it appears more holders chose to liquidate than roll over contracts: open
    interest in Nymex January crude futures grew by 28,082 Tuesday – less than a
    quarter of the December contracts that closed. The net decline in all
    outstanding crude contracts was close to the difference between the December
    and January contract changes.

    That fact moderates the theoretical potential for future buying, Beutel said.

    “In a bull market that’s gone on this long, having three-quarters of the
    people that got out of the December contract yesterday not get back into
    January is a sign that hitherto bullish traders have a sense of creeping
    doubt,” Beutel said.

    Open-interest watchers will have a better sense of the data’s significance on
    Thursday, when data on Wednesday’s open interest is released, Beutel said.
    Lower open interest amid Wednesday’s rally means there is “a good chance you
    would see selling into Thursday and Friday,” he said.

    Whether those exiting contracts were large speculators such as banks and
    hedge funds or commercial traders won’t be made clear until Friday, when the
    Commodity Futures Trading Commission releases its weekly Commitments of Traders
    report showing open interest on Tuesday.

    For the prior week ended Tuesday, Nov. 6, large speculators boosted their net
    long position by 22,696 to 105,816 on the Nymex, while open interest rose by
    65,248 contracts to 1,513,362, the CFTC reported. The net long position is the
    difference between the number of longs, or bets prices will rise, and shorts,
    or bets they will fall. Of the contracts that closed Tuesday this week, “It
    would be normal to assume a good slug of those guys were speculators,” Donovan

  114. 114
    TTupp Says:

    re: XTO

    can someone enlighten me as to what the heck a 5 for 4 split is ? what the point would be, and how the cash would be paid instead of fractional shares…

  115. 115
    zman Says:

    T: should just be multiple outstanding shares by five, then divide by 4. I guess on the partial shares you get them as cash in your brokerage account. If you have 10,000 you end up with 50,000/4 = 12,500 shares and no partial worries.

    they also upped their dividend

    released 2008 budget, pretty good size, very development weighted, 17% production growth target is identical to that established in 3Q note. I still like these guys but have not bought in as of yet.

  116. 116
    TTupp Says:

    i have a position i took on black monday, added today. i wised i would have intiated apache at $95.

  117. 117
    zman Says:

    T: makes two of us.

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