Finally Friday: Gas Preview and Oil Review

109 thoughts on “Finally Friday: Gas Preview and Oil Review”

1. 8:45 am EST

   Nymex Crude Shrugs Off Weak Employment Data

   By Nick Heath
   Of DOW JONES NEWSWIRES

   From MARKET TALK:
   [Dow Jones] Nymex crude shrugs off US employment data showing jobs posted their smallest increase in more than four years in Dec and the jobless rate hit a two-year high. Feb crude -22c at $98.96/bbl, roughly where it was trading before the data. Weak numbers imply lower demand for crude, but give more chance of a US rate cut, which is seen as positive for crude because it weakens the dollar and provides consumers with more spending power. (matt.chambers@dowjones.com)

   LONDON — But analysts suggested the declines may prove temporary, with the crude market continuing to be supported by an array of bullish fundamentals.

   “There is no real reason to sell this market,” said Peter Beutel of Cameron Hanover. “OPEC remains immovable, the dollar is still under pressure and Fed Funds markets continue to suggest the Fed will lower interest rates again when the governors meet in a little over two weeks…demand remains fairly solid.”

   At 1232 GMT, the front-month February Brent contract on London’s ICE futures exchange was down 4 cents at $97.56 a barrel.

   The front-month February light, sweet, crude contract on the New York Mercantile Exchange was trading 36 cents lower at $98.82 a barrel.

   The ICE’s gasoil contract for January delivery was down $6.50 at $854 a metric ton, while Nymex gasoline for February delivery was down 118 points at 252.96 cents a gallon.

   Supportive for crude prices, fundamental supply-demand balances remain tight analysts said.

   “Oil prices are high, yes, but seemingly still not high enough to quell demand,” said Citigroup analyst James Neale. “With the supply response still seemingly on hold, it seems likely that oil prices have little choice but to continue to rise until markets appear well supplied again — either through production growth, or demand destruction.”

   The Organization of Petroleum Exporting Countries — whose members supply more than 40% of the world’s crude oil — ruled out an increase in production quotas when they met last month. OPEC is due to meet next Feb. 1. and has said it has no plans to meet prior to that despite crude prices reaching $100 a barrel.

   Economic slowdown remains a possible drag on crude demand and traders were waiting for U.S. Non-Farm Payrolls data due out later Friday for the latest indications of the health of the U.S. economy.

   But with prices closing little changed from their opening levels Thursday, analysts suggested the market could take a breather Friday, particularly if the jobs data is in line with expectations.

   “We suspect that after Wednesday’s spectacular run higher, markets may be in for a pause here, especially now Thursday’s EIA figures didn’t provide enough of a spark to catapult a run off the $100 mark,” said Edward Meir, analyst at MF Global in New York.

   News of a larger-than-expected 4 million barrel drop in U.S. crude oil stocks propelled Nymex crude to a new high of $100.09 a barrel Thursday, but the advance was checked by news of a surprise build in distillate products.

   Distillate stockpiles rose 600,000 barrels to 127.2 million barrels, compared with analysts’ forecasts of a 600,000-barrel draw.

   “We broke $100 yesterday but only for a few minutes — we need better confirmation of that,” said Olivier Jakob of Petromatrix in Switzerland. “Once we see it, we should see more buying coming in.”

   Its recent declines a pillar of support for crude prices, the dollar climbed slightly against the euro Friday, offering little resistance to crude’s moves lower.

   —By Nick Heath, Dow Jones Newswires

2. Part I

   End-Year Data Show Tight US Oil Market

   By DAVID BIRD
   A DOW JONES NEWSWIRES COLUMN

   NEW YORK — The first peek at full-year 2007 U.S. petroleum demand data shows why oil prices aren’t likely to fall from record levels anytime soon.

   Despite record prices for crude oil, gasoline and heating oil futures, U.S. oil demand in 2007 eked out a slim 0.3% rise, to 20.743 million barrels a day, the most since 2004. While that’s just around 56,000 barrels a day more than a year ago, it’s a big swing from a drop of 115,000 barrels a day recorded in 2006.

   Demand for both gasoline and distillate fuel, the umbrella grouping for heating oil and diesel, was at record levels for the year. Notwithstanding a dip in jet fuel demand, consumption of core petroleum products — gasoline, heating oil/diesel, jet fuel and residual fuel — rose to its highest-ever level, as slack demand for lesser products diminished the overall strength.

   And tight year-end petroleum inventories may prove to be the holiday gift that keeps on giving, keeping prices orbiting around record levels set Wednesday.

   Nymex crude oil futures settled 44 cents lower Thursday at $99.18 a barrel after hitting an intraday record of $100.09 a barrel. Heating oil fell 2.13 cents to $2.7191 a gallon, while gasoline futures settled 3.08 cents lower at $2.5414 a gallon.

   The Energy Information Administration reported Thursday that crude oil stocks fell 1.4%, or 4.056 million barrels, in the week ended Dec. 28, to 289.577 million barrels, the lowest level since Jan 7, 2005. That’s the lowest year-end figure since 2004 and 8.1% below a year ago.

   A review of preliminary EIA data shows U.S. crude stocks in the fourth quarter declined by 182,000 barrels a day. That’s smaller than the 222,000 barrel-a-day decline seen in the fourth quarter of 2006, but well above the five-year average decline of 2,400 barrels a day.

   Biggest Crude Stocks Fall Since ’90
   But the data show that crude stocks have tumbled by nearly 16%, or 56.2 million barrels, in the last six months of 2007. The steep fall came from the end-June level of 354.7 million barrels, which was the highest level in more than 17 years.

   The second-half drawdown of more than 305,000 barrels a day is the biggest since 1990.

   Market players were encouraged to draw down crude oil stocks in late July, when the near-term supply worries pushed the price of front-month crude futures contracts above forward contracts.

   Measured against current crude oil demand from refineries, of 15.4 million barrels a day, crude stocks cover just 18.8 days on Dec. 28, the lowest since Jan. 7, 2005. The figure is down from 20.6 days at the end of 2006, the lowest end-year level since 2004 and below the five-year average of 19.3 days.

   “What was a significant overhand is now a deficit relative to normal patterns,” analysts Paul Horsnell and Kevin Norrish at Barclays Capital in London said in a report. They expect U.S. crude oil stocks to trend upward in the next six months. A normal build of around 25 million barrels could be expected, but in 2007, the rise was 35 million barrels, they noted. A stock build to less than 315 million barrels by the end of the second quarter of 2008 would suggest market tightness is continuing, they said, while a rise above that level would suggest an easing of inventory tightness.

3. Part II

   Total U.S.-company-held crude oil and petroleum products stocks on Dec. 28 were sufficient to cover 45.6 days of current oil demand, the lowest year-end level since 2000 and two days below the five-year average level. The figure is the lowest for any week since March 18, 2005. Total commercial stocks were 974.577 million barrels, down 5.8% from a year earlier.

   Distillate Stocks Tightening

   Distillate stocks fell around 69,000 barrels a day in the fourth quarter to end the year at 127.177 million barrels, 11.2% below a year ago and the lowest since 2004.

   The drawdown in the fourth quarter was bigger than the 61,500 barrel-a-day decline in the period last year, and compares with a stock build, on average, in the past five years, of nearly 78,000 barrels a day.

   Compared with current demand of 4.34 million barrels a day, distillate stocks are sufficient to cover 29.3 days of consumption, the lowest since 2004. At the end of 2006, stocks were sufficient to cover 32.7 days of demand. The five-year average is 31.8 days of cover.

   In the main heating oil consumption regions, New England and the Mid-Atlantic states, total distillate stocks are about 25 million barrels below a year ago. In the Mid-Atlantic region, where the most heating oil is consumed, stocks are at their lowest end-year level since 2005 and 1.5% below the five-year average. New England total distillate stocks are at their lowest level since the end of 2003 and are 5.8% below the five-year average.

   Gasoline stocks ended the year at 207.8 million barrels, the lowest level since 2003, despite a 99,000 barrel-a-day rise in the fourth quarter. End-year stocks were sufficient to cover 22.4 days of demand, the lowest level since 2005 and fractionally less than the five-year average of 22.7 days.

   Total oil use in the month was 21.228 million barrels a day, up 437,000 barrels a day from a year ago, led by the strongest December distillate demand since 1976.

   EIA data show distillate fuel demand jumped 5.7% in the four weeks to Dec. 28 from a year ago to average 4.506 million barrels a day. That’s the most for any four-week period since March 16, 2007. Distillate demand hasn’t been this strong for a calendar month since February 1979 and hasn’t been higher for the month of December since 1976.

   Four-week gasoline demand of 9.342 million barrels a day, up 0.1% from a year ago, would be a record for December, too. Demand for core products — gasoline, heating oil/diesel, jet fuel and residual fuel — was up 1.4% in the latest four weeks, with gains in propane/propylene use and catch-all “other oils” adding to the size of the overall gain.

   More Crude Headed To SPR
   While there have been calls for an opening of the U.S.’s emergency Strategic Petroleum Reserve, or a halt to transfers of crude oil into the stockpile in the face of $100-a-barrel crude prices, the Energy Department Thursday pushed ahead with plans to move more crude into the rainy-day stockpile.

   The DOE said shipments of crude oil under the Royalty in Kind program will total some 13 million barrels in the first seven months of 2008. Between January and July about 61,000 barrels a day of crude oil will be transferred into the stockpile.

   While some critics in the industry and in government argue otherwise, the DOE insists the small volume, relative to global demand of 85.8 million barrels a day, has little impact on demand. Rather than purchasing oil in the open market, the DOE is allowing companies which produce oil under federal leases to shift some crude oil into the reserve as royalty payment instead of cash.

   EIA data show that the SPR grew by a net 7.77 million barrels in 2007, compared with a net rise of 4 million barrels a year earlier. The DOE said the SPR currently holds 697.5 million barrels of crude, and it intends to use the RIK program to lift the SPR to its current capacity of 727 million barrels.

   —By David Bird, Dow Jones Newswires

4. Nigeria Rebel Group Vows To Continue ‘Bloody Fight’

   Associated Press

   ABUJA, Nigeria — Nigeria’s main militant group promised a “bloody fight” in the new year, according to an e-mail message sent Friday.

   The Movement for the Emancipation of the Niger Delta, or MEND, said in the statement sent by e-mail their “goal remains to paralyze 100% of Nigeria’s oil export in one swipe.”

   MEND says it is fighting for an increased share of oil wealth for the people of the country’s oil-rich Niger Delta, who remain among the poorest in the world despite the huge wealth extricated from their soil. Attacks by armed groups in the region have cut more than 20% of Nigeria’s daily oil production, adding to the upward pressure on global oil prices.

   Nigeria is Africa’s leading oil producer and the fifth-biggest source of U.S. oil imports.

   MEND in its e-mail told residents of key oil-producing states “to avoid milling around army checkpoints and armored personnel carriers as they have become targets for attacks by explosive devices.”

5. unemployment at 5%, paltry job growth, market to be down 1% at open

6. how often is there a blip in the jobs number?

7. how often does it come out, lol

8. SWN pumped this morning on RealMoney.

9. Thanks K, and UPL by that crazy money guy last night.

10. One subscriber asked me last night to give them a brief update on where I stand on names in coal, nat gas, offshore service and oil services in general:

    1) Coal is a near and long term play both for electricity generation and metallurgical needs. China, India, etc. BTU is particularly well placed in terms of types of reserves, cost of extraction and location (some Australia so its close to emerging “size” end market)

    2) Natural gas is a stability of price play that in the long term will drift higher. We’re flush with shale production now so that’s keeping a lid on prices but at the same time, the guys who are making this possible are seeing uncharacteristically high production volume growth. CHK is a deep value play on this, SWN is your super growthy but expensive name, HK is a cheap smaller player that I think gets gobbled, APC and EOG are both large cap plays there. I like management and game plan of all those. There are more like XTO and UPL and on and on but those are kind of my big five favorites for now.

    3) Offshore: Right, deeper is better. (RIG) and (DO) for deepwater which is bullet proof through 2010. ( I hate it when people say bullet proof so I’ll add the caveat that above $60 oil they are bullet proof). Also getting things done in the deepwater are (OII) (ROVs, divers, and other deepwater services) and FTI ($1B contract for subsea trees off Angola yesterday) and CAM (lots of subsea components). In the shallower waters I still like RDC and am warming up to ESV.

    4) Oil Service: (HAL) for mainstream service as the cheap play and b/c they have gone the extra mile to service the middle east and still aren’t getting much credit for it but long term I think their results will wow people. I’m very like to be long HAL prior to 4Q #s. (SII) is a bits and mud company plus a few other things these days but they have come up in the wake of the (NOV)/(GRP) merger. CLB – THE core testing company. Recovering without me at present but I like them as they are the leader in the space and business is booming. As with the OII, FTI, and CAM trio above they are not cheap among service companies but their earnings have a way of surprising and revising to the upside.

    5) Tiny E&P: This will be out in a report soon.

    I’ll have a list out shortly of names I definitely want to be in for their 4Q releases and for the longer term (in the stocks).

11. well i’m looking at a chart of the additional jobs added jan – dec and it kinda stands out… gdp final will tell all, it i hae to admit i havent felt like this since 2000. you know of any blogs on your blogroll that might have some good economic analysis/ breakdown?

12. Phil at philstockworld.com for blogs that relate it well back to the stocks.

13. T – Don’t listen to the wire houses, whatever you do. Worst than political spin masters.

14. 9:52 am EST

    Nymex Crude Falls After Weak Job Numbers

    By MATT CHAMBERS
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures were slightly lower Friday, defying dollar weakness after U.S. job figures for December came in weaker than expected.

    The dollar fell to a five-week low against the euro after the Labor Department said U.S. non-farm payrolls posted their smallest increase in more than four years last month and that the jobless rate hit a two-year high. While the weaker dollar has been aiding crude oil’s run to $100 a a barrel, which futures cleared Thursday for the first time, the job numbers could also portend slowing demand in the U.S., which is the world’s biggest energy consumer.

    “We’re going to see this conflict where the market has to decide whether to follow the dollar or look at indicators suggesting an economic slowdown, which will add to volatility,” said Jim Ritterbusch, head of trading advisory firm Ritterbusch and Associates in Galena, Ill. “I think we’re seeing some consolidation after its recent run higher” and that prices could be preparing for another run at $100 next week.

    Light, sweet crude for February delivery on the New York Mercantile Exchange was recently down $1.10 at $98.08 a barrel. Front-month futures hit an all-time intraday record of $100.09 a barrel Thursday before finishing that session slightly down.

    Brent crude on the ICE futures exchange was recently down 69 cents at $96.91 a barrel.

    Gasoline futures led the oil complex lower, weighed down after the Department of Energy Thursday reported a greater-than-expected boost in both inventories and refinery use for last week. Some analysts said the boost bodes well for refineries starting to ramp up gasoline production before the coming Northern Hemisphere summer driving season.

    Front-month February reformulated gasoline blendstock, or RBOB, fell 2.79 cents, or 1.1%, to $2.5135 a gallon. February heating oil fell 1.91 cents, or 0.7%, to $2.70 a gallon.

    –By Matt Chambers, Dow Jones Newswires

15. Puncturing Myths About The Rising Price Of Oil

    As markets digest $100 oil, Sean Yun, trading manager of Nakagawa Korea Co. Ltd. (a unit of Japan’s Nakagawa Bussan Corp.) in Singapore, writes:

    “Now the market must turn its attention toward the actual supply & demand, based on the weather in the United States.

    “Last night, we saw the decrease of the crude oil inventory; however, we also saw the increase of the middle products and gasoline inventory. Even if the crude oil inventory was down about 4 million barrels, there were 560,000 barrels & 1.97 million barrels of heating oil, and gasoline. Also in fact the decrease in the crude oil inventory was mostly tax- and accounting- (fiscal year) related for the end of the year. Which means that refineries in the U.S. intentionally decreased their crude oil inventory due to year-end tax and accounting.

    “Now the temperature in the States is higher than even last year; however, the crude oil price has been about 76% higher than January 2007. Where has such huge demand — like a black hole — come from?

    “Speculators say that demand from China and India has been up a lot. However, if we see the actual Chinese monthly import figures of crude oil and products, we can see the truth so easily. For example, in the case of fuel oil (180cst & 380cst; cst=centistoke), China is the largest market for fuel oil in the world. But everyone knows that the Chinese have stopped buying fuel oil, due to the too-high MOPS (MOPS=mean of Platts Singapore) price of the market.

    “We have to see the true factors of the market, not just the assumption that the “current world oil reserve will be dried up within 20 years” or that geopolitical conflicts create a supply disruption immediately. Actually, most geopolitical conflicts have never caused supply disruptions, just potential risk, but they were emphasized to increase the oil price. Instead of oil, now the press and journalists say, “A nuclear power renaissance is coming back to the energy market” to replace fossil fuel.

    “In conclusion, the current high price actually has been discouraging oil demand from Korea (#4 largest oil buyer), and Japan (#2 largest oil buyer), very soon China, and India also.”

16. “I think we’re seeing some consolidation after its recent run higher” and that prices could be preparing for another run at $100 next week. ~ the part I agree with for #14.

    Dollar is not that big a factor right now, its all sentiment based on economy vs the draws we’ve seen that are swing crude in a +/- range around $95.

17. Morning all.

    Consensus for natural gas is a draw of 110bcf.

18. WTI – Wave I of 5 ‘could’ be done but it is not my preferred count. The preferred count says we are in iv of v of 1 of 5. V still appears to be playing out as ending diagonal triangle and if so this pullback should come down to the 95 area before the final move up of this wave.

19. Nicky’s broker

    http://www.321energy.com/reports/flynn/current.html

20. Sam – #15 is just nutty. The tax incentive story is way overblown if you look at past years you’ll see that impact. Also, inputs to refineries increased which is how products saw builds yesterday (they made more) which necessarily requires oil to do.

    temp in the U.S. comment completely wrong.

    how does this fellow explain low global inventories

    also, import figures to China are gamed, everyone knows they are completely unreliable and often bent to influence price.

    I haven’t seen anyone saying we’re out of oil in 20 years. agree on the geo-pol not influencing production except in Nigeria where it has about 600,000 bopd off line and in Mexico where it will soon.

    nuclear renaissance affecting oil? he states that the US is the driver for oil prices earlier so I’ll say no new nukes here for at least 5 more years and that we only produce about 3% of U.S. power from oil. Coal 50%, nukes 20%, gas 20%, solar wind, water, oil the last 10%.

    his last point is actually probably true but he puts no degree on to it. I learned that higher prices discouraged consumption in my freshman year. Give me an order of magnitude on it.

21. Man oh man…VLO just getting “waterboarded”

22. Nicky – where’d you hear 110? Seems low.

23. SPX has support in the 1420 region. We need to hold that or we could be back to the mid 1350’s very quickly.

24. Just gave it on CNBC Z.

25. K – its nice to be away from the group when this happens. FTO trying to make a run but you gotta think that’s a fools errand for now.

26. Hasn’t ‘Nicky’s broker’ flip flopped big time! Is’nt this the same guy who spent months running it up for all the reasons he is giving??? Shameful.

27. Nicky I suggest you talk to him about being true.

    So how does one say the market isn’t at least somewhat tight if we had the biggest draw down on stocks since 1990?

28. Z – #15. I just post what others are saying. I agree with you, the guy is nuts. Probably makes 7 figures though.

29. Sam – I know, I just had to retort. Not even 7 figures if those are SGDs and note USDs. Now if you are talking yen…

30. 87 wow, what a crazy, weak number.

31. 87 bcf for nat gas

32. That’s very ugly. SWN going to get hit hard on this number if gas goes through $7.50 …very bad number.

33. Good nite nurse…Looking at a WNR chart…Who woulda thunk that this guy would be here after we started to short this bad boy in the $50s this summer…Sheesh!!

34. ZTRADE: Out January $37.50 CHK calls for $2.35, up 8%. Still holding the $40s and the Februaries.

35. B – yeah, seems we were a little early, should have just shorted them after that abysmal 3Q. Their 4Q unlikely to be better but they are pretty beat up at this point.

36. ZTRADE:

    PBR Adding to Jan 115 Calls for $2.60.

37. Hey, I’ll take energy anytime, Good, bad and the ugly over financials anyday. Be glad you don’t own RF. It’s gone all the way back to it’s support in 2000. Wow

38. Overall market – Got a feeling it’s gonna get ugly this afternoon.

39. Z, Sam: re #15

    An even more basic point than “high prices discourage consumption” is the often ignored equation: “supply=consumption” in a supply-constrained market.

    OK, so there is a bit of storage so consumption one minute needn’t *exactly* equal supply the next. But over slightly longer timescales (months) the supply=consumption equation will hold.

    Now we all know that China and India etc are consuming more. We also know that supply hasn’t increased over the last few years. In fact, don’t look now but by some measures the peak is in the rear-view mirror already. OK so supply is stable-at-best and China, India etc (including the producers like Iran, Saudi etc) are gobbling more. What gives? Someone *must* be consuming less. The first to go were the poor African countries that burned oil for electricity. What have they replaced it with? Erm…nothing (yet).

    But they really weren’t major consumers, so someone *else* must have been outbid for some of their previous oil consumption. Korea & Japan might fit that bill.

    So far and #15 tells us nothing new. Only if the *prediction* that China and India reduce their consumption comes true will anything have materially changed. At some point (i.e. price) they *will* reduce consumption, but as Z says, this is just Econ 101. Not exactly tradable info 🙂

40. Sam – as opposed to now when I’m so happy 🙁

41. Reaction in energy is an over-reaction. The question is do you get in an play it for a trade or establish longer position or do you say that Monday could bring an even big over-reaction. Other than my PBR trade (and I’ve already been slapped for it) I’m content to watch this for now.

42. Nat gas holding up well considering the data.

43. Nicky – best guess is they are scratching their heads over the number which looks pretty odd considering the weather and then looking ahead to next week’s number which should take into account the coldest weather of the season.

    Beyond that though, you’ve gotta think a test of $7 is in the cards as the weather warms up and we face tough comps from last year (see the bar graph near the top of today’s post)

44. 2nd in command at Fed Reserve speaking shortly.

45. Energy stocks keying most off the drop in the DJIA/SPX at this point and not the one in the commodities which may or may not be the start of a new trend in trading.

    Drybulks getting woodshedded
    Ditto for Solars

    We’re back to the “all or none” style trading I detest.

46. wti has support at 96.80 and then 95.90.

47. How’d you like to be on this platform in a storm? Cool Video.
    http://www.dumpert.nl/mediabase/31894/b021e7ed/windkracht_11_op_de_noordzee.html

48. John Najarian saying short refiners. I think its late and I’m staying away from that but I understand his statement since he’s looking at the put-call ratios build while hearing that yesterday’s EIA report for refiners was bad. He’s saying short VLO which is the most liquid of the bunch but also among the cheapest.

49. Sam, not me my friend. I was supposed to chopper out to a TLM N. Sea platform for one of those tour/photo ops they do with analysts but I decided to choose life instead.

50. Like Nicky said, nat gas doing an admirable job of staying above $7.50 which is key psych support.

    Drillers trying to make a bit of a comeback but I’ll wait to set what the broad market has in store. I may punt the second half of my RIG 135 calls soon.

51. What happened to PBR?

52. Ram – re PBR the market.

53. Z- Any value in VLO march calls?

54. Scoop – I think so but it may be a painful and certainly a bump ride between now and then. I’m trying to decide right now if I want to be long anyone in that group prior to 4Q results (which are not going to be pretty). Earnings momentum is slightly negative, chart looks like its about in support but I’m not sure its very strong. As always, these guys trade with oil and then cracks so a move to $95 wti puts you closer to $60 for a bottom.

    Big volume in the NTM $65 strikes in Feb calls, bigger volume in the puts as Najarian was pointing to.

    On the fundamental side, while cracks aren’t compelling now, I expect them to become more so in February as utilization takes a dive. VLO has said they will have better utilization in 2008 relative to 2007 levels (lower planned outages) before they go into a heavy maintenance season in early 2009.

    I’m pretty torn on it for now but don’t be surprised if you see a trade here next week (and I mean trade…don’t think I won’t to hold through 4Q results)

55. Z: any wild hypotheses on how the NG number was so crazy? Someone forgot to phone something in over the holiday?

    Denise & Scoop: maybe the Kass short OIH call from yesterday *was* informed partly by economic outlook..i.e. economic numbers (=assume bad) were due out today, so short what was up (=OIH). Anyway, he may usually be early, but only a few minutes in this case …

56. ATW – Missed this yesterday. They’re adding a 10th rig to their fleet.

    3 year minimum contract with Chevron starting in 2011 when the new rig is delivered to ATW. $470,000 day rate which is not too shabby for a 6,000 foot h2o capable platform.

57. D: how about slight contango kept gas in storage until the front month expired. I don’t buy that as the contracts were near flat into the first 6 months.

    how about screwy EIA data? its either that or the consumer, getting his November bill was shocked into conservation and blanket wearing.

58. Nicky-good wave call on oil
    Dman-I think there is more to his view-
    A thought of mine-may not be right-Kass added to his energy short this am
    I think he is thinking our slowdown will slow growth globally? abit?
    He is generally not a day trader-forms a thesis and sticks with it for years
    Have to admit his calls have been excellent lately-he is in his element
    Also said before market open he expects a 50bp cut soon and did some small buying of spy’s

59. Dman,

    or how about every once in awhile Z just prangs one? Fortunately for the gassy stocks I hold now (just CHK and SWN) are up since the gas number came out. So is NG for that matter some maybe a lot of people are wondering the same thing you are about the number. Maybe they are thinking that next week we see an even bigger one than people were already expected. Before today I would have put it at about 175 Bcf based on the preliminary weather outlook.

60. DO and RIG still recovering, more than the market. Continuing to hold both …would add to the DO but you really have to be right given the swollen premiums.

61. natural gas up a nickel. who woulda thunk it? APC and SWN probably worth a trade here but I have to step out for a few.

    DO now positive by the way, could be set for a good bounce given the last few days of water boarding. RIG likely to follow.

62. 12:24 pm EST

    Nymex Crude Back Above $98/Bbl

    By Greg Meyer
    Of DOW JONES NEWSWIRES

    From MARKET TALK:
    [Dow Jones] Nymex crude crawls back above $98/bbl after earlier fall on weak US jobs data. “In a technical sense, the market overdropped a little bit,” says Tony Rosado of IAG Energy Brokers. Still, with the weaker-than-expected US payroll report, “the economy is looking pretty questionable,” he says. “I think the market needs to drop off a little bit and ease the consumer pain out there.” Nymex Feb crude -$1.15 at $98.03/bbl. (greg.meyer@dowjones.com)

    Reported earlier:
    NEW YORK — Crude oil futures fell below $98 a barrel Friday, defying a lower dollar as traders focused on indications of a slowing economy after U.S. job figures for December came in weaker than expected.

    The dollar fell to a five-week low against the euro after the Labor Department said U.S. non-farm payrolls posted their smallest increase in more than four years last month and that the jobless rate hit a two-year high. While the weaker dollar has been aiding crude oil’s run to $100 a barrel, which futures cleared Thursday for the first time, the job numbers also portend slowing demand in the U.S., which is the world’s biggest energy consumer.

    “Crude’s fall is all on the employment report and signs this economy is slowing,” said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago. “In the past, the weaker economic data meant a weaker dollar and more interest rate cuts and there was a hope this would solve the problem. But here we are in the new year and the economy is still slowing.”

    Flynn, who has been predicting higher prices for years, said the market is $10-$20 a barrel above where it should be and that a slowing economy could drag prices down further.

    Light, sweet crude for February delivery on the New York Mercantile Exchange was recently down $1.34 at $97.84 a barrel. Front-month futures hit an all-time intraday record of $100.09 a barrel Thursday before finishing that session slightly down.

    Brent crude on the ICE futures exchange was recently down 70 cents at $96.90 a barrel.

    Many analysts still see higher prices, though, as global demand continues to outweigh supply and amid expectations of more hedge fund interest in commodities in the new year.

    “I think we’re seeing some consolidation after its recent run higher” and that prices could be preparing for another run at $100 next week, said Jim Ritterbusch, head of trading advisory firm Ritterbusch and Associates in Galena, Ill. “We’re going to see this conflict where the market has to decide whether to follow the dollar or look at indicators suggesting an economic slowdown, which will add to volatility.”

    Gasoline futures led the oil complex lower, weighed down after the Department of Energy on Thursday reported a greater-than-expected boost in both inventories and refinery use for last week. Some analysts said the boost bodes well for refineries starting to ramp up gasoline production before the coming Northern Hemisphere summer driving season.

    Front-month February reformulated gasoline blendstock, or RBOB, fell 4.24 cents, or 1.7%, to $2.499 a gallon. February heating oil fell 2.94 cents, or 1.1%, to $2.6896 a gallon.

    –By Matt Chambers, Dow Jones Newswires

63. Z-was looking at Deep-appreciate any thoughts-
    Is it a value here under $4?

    /

64. wow, still ugly, only nat gas, the dollar and the 10 year up on my screen.

65. Also looking at the 10% yield on PRGN
    Has Bill ever posted on this shipper

    Any opinions anyone?
    Thank you

66. D – saw it getting hit again today. Supposedly they will make $1.30 in in 2009 and I don’t think the stock is going to “go away” but there is some pressure at present with fund registrations of 144 shares. Would like to see the 4Q #s here before buying.

67. what an ugly opening week for the market.

68. does anyone on here have nasdaq total view?

69. I hope an NFC team wins in the Superbowl.

70. Sorry T, just Level II, you looking for depth on something?

    Ram = no kidding.

71. Stocks that drag themselves up have no problem falling fast. MM are right up there with lawyers – IMO.

72. Nicky: Earlier this year you mentioned that Dow support at ~12600 or so was crucial. Where do you see it now (support).

73. E&P 4Q conf call dates starting to be announced. As you’d expect they all hit first half of Feb.

74. I can’t recall CHK moving more than a buck before today.

75. Beer thirty may come early today. man this is ugly. Only natural gas showing a bright spot and the stocks could care less.

76. Popeye – that 12600 on the Dow is still key. Equivalent area on spx is 1375.

    Looks like they want to bounce energy into the close. If we are in iv down it will be 3 waves. We may be about to get the leg up.

77. It is rare. And it makes no sense since they are 92% natural gas sellers and then there are all the other reason it shouldn’t be this low. Its just a blood red day with 2% to 5% off sales on everything energy.

78. Nicky – the bounce to me in energy looks to be just tracking the Dow.

79. from Market Watch:

    Robert S. Morris, Banc of America Securities LLC, New York, said, “After outperforming the broader markets in 2007 for the fifth time in the past 6 years, the key relative performance driver for the exploration and production sector continues to be the consensus outlook for commodity prices while, from a valuation perspective, the risk-reward [ratio] is now more balanced given our ‘normalized’ ($70/bbl [for crude] and $6.75/MMbtu [for gas]) commodity price outlook. However, apart from a sharp turn in the weather this winter, we believe that the 2008 consensus for natural gas prices has further to drop while, if the current NYMEX futures strip price is any indication, then, similar to 2007, the consensus for crude oil prices would rise much more sharply than the anticipated drop in the consensus outlook for natural gas prices.”

    Morris said, “Along the natural gas front, and apart from normalizing for weather, we still project that the domestic supply/demand balance will be no tighter this year than in 2007. However, we are keeping a particularly close eye on LNG imports, Canadian imports, and electric generation-driven gas demand. Thus, our projections also assume that natural gas prices remain effectively disconnected from oil prices in 2008.”

    Bob makes some pretty fair statements here which yield a view that there is limited upside to gas prices in 2008. However, given that Revenues come from a combination of units multiplied by price, I think his statement regarding analyst consensus prices being the driver for the energy sectors speaks to an inflated sense of self importance on the part of analysts who make generalized statements without providing caveats as to individual company performance. If my company is going to grow unit volumes at 20% and prices are going to fall 10%, that’s bad in his book?

80. Next level of support for spx is 1400 – 1406

81. I can’t believe how strong energy futures are with the dow like this. Its crazy.

82. N – ya mean nat gas futures or just oil?

83. Oil really Z. If it was keying off a weakening economy it would be tanking. I guess the argument will be the $.

84. Dollar argument’s pretty thing though, surely someone through a rock at a pipeline somewhere, lol.

85. General market

    Bad Friday May Be Just The Beginning For US Stocks

    By KAREN TALLEY andROB CURRAN
    Of DOW JONES NEWSWIRES

    NEW YORK — U.S. stocks’ slide might not end with the closing bell Friday, as the unexpected spike in the unemployment rate has damaged one of the last economic supports for a bull market while increasing fears of a recession.

    Employment reports are notoriously fluid; a reported contraction in August payrolls, for instance, was later revised to show growth. But if the surprisingly stark 5% reading on the unemployment rate holds, it will remove fuel for the engine of the U.S. economy — the consumer — and make it harder to support arguments that a recession can be avoided.

    “The consumer needs to keep spending to keep the economy afloat,” said Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research. “If people don’t have jobs, they’re probably not going to keep spending money.”

    At its low point Friday, the Dow Jones Industrial Average had fallen more than 200 points and was down 10% from its 52-week high. If its decline were to stop there, analysts would call it a correction. But with high oil prices making it tricky for the Federal Reserve to pursue aggressive interest-rate cuts, economic data increasingly grim, and finance-sector companies in the doldrums, reasons to buy stocks are becoming increasingly scarce.

    “We are either already in recession or we are very close,” said Lorenzo Di Mattia, manager of hedge-fund Sibilla Global Fund, who currently has a net neutral position on stocks. “Now the market is trying to assess how bad the recession is going to be.”

    Technology companies, which helped the Nasdaq 100 put in the strongest showing among the major indexes in 2007, don’t do business in a vacuum, Di Mattia said, noting that banks and other financial companies were major buyers of technology, “and they’re going to cap spending a lot in 2008.”

    Stocks fell across the board Friday. The Dow recently was recently down 183 points, or 1.4%, at 12874. The broader Standard & Poor’s 500 index was down 1.7%. The technology heavy Nasdaq shed 2.6%. The Russell 2000 index of small stocks — which tend to have slimmer cushions against slowing growth — fell 2.6%, setting a new 52-week low.

    Jobs grew in the U.S. at the slowest rate in more than four years last month, with only 18,000 jobs added, as the housing downturn continued to take a toll. The jobless rate rose to 5% for the first time since 2005. Thursday’s weekly unemployment report also indicated weakness in the job market. A day earlier, the Institute for Supply Management said the U.S. manufacturing sector contracted in December after 10 months of growth.

    “Employers are losing confidence in the economy,” said David Kelly, chief market strategist at JPMorgan Funds. “That’s a significant issue. I don’t know if we are going to be in recession today, but we are closer to one at any time than in 2001.”

    Companies that tend to get hit harder than others when the economy worsens — such as computer chip makers, steel processors, truckers and hotels — were among the leading decliners recently.

    Retailers and financial stocks, already badly bruised after months of selling, faced yet another round of selling. Wal-Mart Stores Inc. (WMT) shed 1.9% to $45.52; Citigroup Inc. (C) fell 25 cents to $28.68, and touched a 52-week low earlier.

    The labor market has been the “backbone” of the economy as payroll numbers have held up despite fears to the contrary, said Sean Simko, head of fixed-income management at SEI Investments. “If consumers have jobs, they can continue to spend, holding up the economy.”

    —By Karen Talley, 201-938-5106; karen.talley@dowjones.com and Rob Curran, Dow Jones Newswires

86. Wow, financials getting KILLED! SLM down 11%. WB down over 3%. Exit stage right.

87. Didn’t Herbert Hoover say the same thing?

    Bush: Despite Uncertainty, Financial Markets Are ‘Strong And Solid’

    By HENRY J. PULIZZI
    Of DOW JONES NEWSWIRES

    WASHINGTON — Addressing fears of a U.S. economic slowdown, President George W. Bush said Friday that financial markets are healthy, despite recent volatility.

    “While there is some uncertainty, the report is that the financial markets are strong and solid,” Bush said following a meeting with his working group on financial markets.

    Bush said the broader economy is on a “solid foundation,” but added that growth shouldn’t be taken for granted.

    Earlier Friday, the Labor Department reported the smallest increase in U.S. employment for more than four years in December and an increase in the unemployment rate to 5.0%, its highest level in more than two years. The figures rattled Wall Street and added to concerns that the economy could be headed for a recession this year.

    “There are signs that cause us to be ever more diligent and make sure that good policies come out of Washington,” Bush said, pointing to December’s slower job growth, increased food and gasoline prices and declining home values.

    Bush, flanked by top officials including Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke, didn’t take questions. And he didn’t discuss a potential fiscal stimulus package to safeguard the economy. He said Thursday that he is considering “all options,” but that a decision probably wouldn’t be made until later this month.

    Bush will deliver his State of the Union address on Jan. 28.

    Repeating some of his top economic priorities, Bush called on Congress to keep taxes low and said increased domestic oil and gas exploration would help combat high energy prices.

    “If the foundation is strong, yet indicators are mixed, the worst thing Congress could do is raise taxes on the American people and American business,” Bush said.

    He also urged lawmakers to pass legislation to make it easier for struggling homeowners to refinance their mortgages.

    “When Congress comes back, I looking forward to working with them to deal with the economic realities of the moment, and to assure the American people that we’ll do everything to make sure we remain a prosperous country,” Bush said.

    —By Henry J. Pulizzi, Dow Jones Newswires

88. Z – The 7 year itch employment contraction in heavy and light construction equipment is in this time frame. But as I eluded before, it is much different than seven years ago. If foreign sales hold up then manufacturing is O.K. What I don’t understand is where the hundreds of thousands of recent and future unemployed in the housing and financial are going. What will be their next job life? That to me is the most serious part of our economy in 2008.

89. as to the construction guys I have no idea, maybe they become bloggers. The financial guys will likely walk across the Street within the next 3 to 4 months and get hired by the competition.

90. I have 6 things up on my main screen.

    FTO and DNE up a penny, the Chinese oils and DUG.

91. Scratch that, 7 things. MCF (Contango) one of the best little names in E&P (no options) is up on increasing the stake in two of their big 2007 discoveries (Dutch and Mary Rose) in the Gomex Shelf. This is one I first yelled about at $17 with a big discovery early last year but failed to buy. Very interesting presentation and outsourced business model.

92. HGT and MCF also green

93. Z – To take our minds off the carnage: Honda and GM both have put fuel cell vehicles on the road in the last month. The Honda FCX Clarity (I think)is being leased in southern California. I saw mention in the story of a home hydrogen fueling station. FCEL spiked around the same time. Any thoughts?

94. Cattle: Those and hybrids are going to be very popular this Spring. I have not yet seen a comparison of the cost savings (if any) of paying for your car by either plugging it into your house at night or of generating your own hydrogen (which I assume is done via electrolysis so you have both electricity and water bills to consider). Have been doing some reading on alt energy and am just not to that point yet. Anyone else?

    By the way, thanks for the burgers and steaks. Fantastic hamburger. We’re having the steaks this weekend and a friend of mine wants to split half a cow already based on what I read him and my description of the burger.

95. Glad you like it. Medium rare is the ticket on the steaks. Talk to you later.

96. right, bloody as hell, not burned to a crisp. will be back over the next few days re FCEL and co. Used to trade Ballard but not in awhile.

97. 3:29 pm EST

    Nymex Crude Drops On Jobs Data, Warm Forecast

    By GREGORY MEYER
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude-oil futures slipped Friday for the second session in a row as traders confronted signs of a slowing U.S. economy and warmer air outside their doors.

    Light, sweet crude for February delivery fell $1.27, or 1.3%, to settle at $97.91 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange fell 81 cents to settle at $96.79 a barrel.

    The Nymex contract failed to print triple digits for the first time in three days, reaching an intraday high of $99.41 a barrel earlier in the session. On Thursday, oil futures rose to $100.09 a barrel, an intraday record, after first touching the $100 mark a day earlier.

    Oil futures softened after the Labor Department reported U.S. nonfarm payrolls increased 18,000 in December, the job market’s worst performance since a decline in August 2003. The unemployment rate rose to 5.0%, the highest level since November 2005, from 4.7% the prior month.

    “The unemployment report pretty much killed any idea of rallying today,” said Rob Kurzatkowski, a futures analyst at optionsXpress Inc. in Chicago.

    The darkening jobs picture furthered speculation about the degree to which the Federal Reserve will respond to an economic slowdown by trimming its benchmark interest rate later this month. The dollar fell to five-week lows against the euro and yen on the expectation the jobs data would lead to a fourth consecutive Fed rate cut.

    But oil traders seemed to prioritize concerns about the economy’s impact on oil demand over a softening dollar, which typically supports dollar-denominated crude by keeping oil cheaper for consumers using other currencies.

    “Short-term, it’s obviously bad for crude bulls,” Kurzatkowski said. But in the longer term a shaky demand picture might lead the Organization of Petroleum Exporting Countries to leave its output unchanged at an upcoming meeting Feb. 1, Kurzatkowski said, potentially keeping supplies tight and prices high.

    After a cold snap in the U.S. Northeast, the world’s largest heating oil market, temperatures rose and are expected to remain above normal there well into January, according to the National Weather Service. That also pressured oil prices, analyst said.

    The selloff “starts with a 20-degree rise in temperatures,” said Peter Beutel, president of Cameron Hanover, a New Canaan, Conn.-based energy risk management firm. “Traders arrived at the Nymex this morning and found that they were able to take their hands out of their pockets.”

    Milder weather in in the Gulf of Mexico also pressured crude, as Mexico’s three Gulf coast oil-loading ports reopened after being shut several days by poor conditions, the Communications and Transport Ministry said. The ministry reported that Pajaritos, Dos Bocas, and the offshore loading terminal at Cayo Arcas were all open Friday.

    A spokeswoman at Petroleos Mexicanos, the state-owned oil company, said all three ports have resumed export operations.

    Front-month February heating oil fell 3.56 cents, or 1.3%, to settle at $2.6835 a gallon. February reformulated gasoline blendstock, or RBOB, fell 3.04 cents, or 1.2%, to $2.5110 a gallon.

    —By Gregory Meyer, Dow Jones Newswires

98. My read

    Dow – 1st support is 12,725. 2nd support is 12,518 and then 11,940.

    5 minutes to “Tini time” and the street is trying to hold 12,800. We’ll see.

99. DUG up 6% today and its still well below where I remember last contemplating buy into it.

    12,800 busted

100. 12,791

101. Check out the trend line (TRIN). Not good at 4.17

102. Z and Cattle-
     My day job re: 93 & 94…some quick observations: the fuel cell thrust could evaporate with the next administration, FCVs will only penetrate to ~200K vehicles in U.S. by 2020. Contrast that with 17M veh.s in annual sales and a total US fleet of over 200M right now. Bottomline…widespread adoption of H2-FCVs are a 2035 vision and will require (in many opinions) too many miracles to occur for it to become reality. Now, even the Saudis recognize that the end of the Oil Age will precede the actual “end of oil”. I think this time we (in particular DOE) have decided to get serious about ethanol. Thats your near term investment opportunity.

     Hybrids? Toyota owns the market. I think they’ll stay ahead of other OEMs with diesel and flex-fuel variants. Indeed, plug-in hybrids are getting a serious look, many challenges(needing a few miracles as well)to deploy on the U.S. grid as it stands. Investment opportunity? Batteries! (JCI, A123, Saft plus Japanese suppliers)

     cheers- K (p.s. envious of the steaks, Cattleman, do you sell them online?)

103. Thanks K,

     Any cellulosic ethanol plays besides STKL? Corn based is a bad idea and we’re pretty tapped out for growth their given the price of corn. Same for bio-diesel when you consider bean prices have shot the moon and bio-diesels cracks are worse than traditional refiner cracks at present. See deal canceled yesterday for big bio-d IPO. Thanks for the JCI will look, any others I’m happy to look at (this will likely get a lot more attention this year with gas hitting at $4.

     As to the beef, I believe Cattleman is taking deposits on animals to be harvested in a few months.

104. Save me the trouble of digging back thru old posts….what breed of beef were they?

     Will look at cellulosic ethanol plays…I’d personally be inclined to look at niche science-y outfits that have some corner on, say, plant genomics, enzymes, etc. (though most are small and private)
     K

105. They are Saler/Angus cross sold by the quarter, half and whole carcas.

     Re ethanol, right, it could be Monsanto or ADM as much as an actual refiner.

106. Speaking of ethanol…its Friday and approaching 5 o’clock. Have a good one all!

107. Weekend Wrap (in progress) out a bit early.

     I plan to have multiple tables added for the groups and a list of stocks I plan to make sure I’m long prior to their 4Q press releases by Sunday.

     Have a great weekend everyone!

108. Hoepfully next week will recover most of the carnage of this week so we can get long stocks into earnings.

109. Pingback: luz

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