Tuesday Morning – Update On Drillers.

Commodity Watch:

  • Crude Oil. Oil fell $2.82 to $95.09 yesterday on fears over slowing economies and resultant demand. Bears were quick to claim that the end was (once again) near. This morning oil is up $1.64 to $96.75 as traders mull fresh warnings of impending rebel attacks in Nigeria and the possibility of investors will increase their weightings in commodities relative to equities. 
  • Early Read On Crude Inventories (from Bloomberg)
    • Crude: down 1.25 million barrels.
    • Gasoline: up 1.6 million barrels.
    • Distillates: up 1.0 million barrels. 
  • India Sees $150 per barrel oil in 2 years. As such, they are seeking XOM and CVX's advice in deepwater exploration.
  • Natural Gas: Increased $0.04 to $7.88 yesterday. I think we are increasingly on borrowed time as we shift from colder weather and easy comps from year ago to warm weather and difficult comps. This week's report should provide one last boost and then the warm forecast should dominate. This morning gas is trading up very slightly.
  • Imports - Fell 1.1 Bcfgpd week to week.
    • LNG continued to languish at the lows of 2007 at 0.6 Bcfgpd last week. Competition for LNG is fierce and Platts reported that spot-LNG prices in Asia reached $18/MMBtu at year end.
    • Canadian imports came in at about 9.0 Bcfgpd last week, down 0.9 Bcfgpd from the prior week after a one week spike in shipments.

More Earnings Multiples. Today: Drillers broken down into land, offshore - shallow only and offshore deep water capable.



Key Points & Takeaways: 

1) Land drillers

  • Expected Dayrate Trend: flat to slightly lower due to a combination of a deceleration in the growth trend of rigs drilling for natural gas in the U.S., continued weakness in Canada, and additional lower capacity commodity rigs being unstacked. 
  • Earnings Trend: Earnings have been falling for quite some time so as the stocks fall multiples have not necessary contracted.
  • Valuation: Cheap for a reason. This segment will no doubt enjoy a recovery some day but for now I'm just watching. 

2) Shallow water drillers:

  • Dayrate trend: Up. Jackup utilization remains high at 88.8%. The dispersal of several once upon a time GOMEX only rigs to point abroad has helped to stabilize rates in the Gulf. National oil companies in particular are expected to step up shall and deepwater drilling this year and into the near future.
  • Earnings trend: Up.
  • Valuation: Cheap. Will likely be long (ESV) prior to the 4Q call.

3) Deep water capable:

  • Dayrate trend: Rising. National oil companies in a frenzy to get rigs. Majors and LC E&P ditto.
  • Earnings trend: Rising with good and improving long term security as capacity utilization is building out beyond 2010 at present.
  • Valuation: Cheap. General trend in the stocks is up and I continue to trade in and out of (RIG) and (DO)  

Cracks Spreads Still Languishing; Wait and See Attitude Toward Group: This chart goes with yesterday's post and helps explain the group's recent lousy performance. Let's see where the earnings fall on the calendar but for now I'm thinking of getting back long once earnings for the first of the big boys, (VLO), comes out at month end. On a disappointment (which would drag the sector lower) or a beat (which would probably have a very modest positive impact) I like FTO for a trade and (VLO) and potentially (TSO) for a move up in the Spring. 


Stocks We Care About Today Watch:

(DNE) Sets 122% Production Growth Target for 2008.  I've mentioned Dune several times in the past few months as a little name with big management talent and an under-exploited asset base. At 55,000 Mcfepd, this level of production is essentially flat with year end 2007 exit rates and a testament to my favorite brand of "under-promise, over-deliver" management. Clearly, micro cap E&Ps have fallen off the Street's radar with tax loss selling and the market's recent discombobulation but this name may soon get its attention again. I will have one of my company book reports out here shortly.

Holdings Watch:


  • APA January $105 Calls for an average of $2.60. This will likely be another quick round trip with oil being as volatile as it has been.

PUTS: No action

Stocks: No action 

Odds & Ends

Analyst Watch: (WNR) from sell to hold at Deutsch.



84 Responses to “Tuesday Morning – Update On Drillers.”

  1. 1
    Denise Says:

    Good morning,
    Mr. K covered his energy shorts last night and is short term bullish on the market.
    Thank goodness I hate betting against the man he is too darn good!

  2. 2
    Sambone Says:

    9:14 am EST

    Nymex Crude Rebounds Above $96

    From Market Talk:
    [Dow Jones] Nymex crude rebounds back above $96/bbl after big losses Mon. Jan crude +$1.63 at $96.72 after falling nearly $3 last session. Little change to supply and demand situation sparking the gain, apart from a slight downturn in Iraqi oil exports for last month and revisions to US government weather charts for the next six to 14 days that show more expectations for colder weather than they did Mon. (matt.chambers@dowjones.com)

    Reported Earlier:
    LONDON — Crude oil prices traded higher in London Tuesday as Monday’s sharp falls attracted a wave of new buying ahead of weekly U.S. oil inventory data.

    Traders said that with a lack of fresh fundamental news to steer prices, the market was focusing on Wednesday’s U.S. Department of Energy readings, expected to reveal further declines in U.S. crude oil stockpiles.

    “There seems to be people re-entering long positions after such heavy selling Friday and Monday,” Samir Tazi a dealer at CMC Markets in London said. “Lots of funds are re-entering positions looking to buy it up cheaper.”

    At 1230 GMT, the front-month February Brent contract on London’s ICE futures exchange was up $1.31 at $95.70 a barrel.

    The front-month February light, sweet, crude contract on the New York Mercantile Exchange was trading $1.43 higher at $96.52 a barrel.

    The ICE’s gasoil contract for January delivery was up $15.75 at $832.25 a metric ton, while Nymex gasoline for February delivery was up 370 points at 246.68 cents a gallon.

    Following three days of lower closes that have seen Nymex crude prices shed more than $4, profit taking by short sellers Tuesday lent some early support to crude prices.

    But it was also accompanied by fresh buying as the markets looked ahead to Wednesday’s weekly U.S. Department of Energy inventory data, viewed as a possible catalyst for a move higher.

    After U.S. crude stockpiles fell to their lowest levels in almost three years in the final week of 2007, analysts predict that a further drawdown in U.S. stocks is likely to be revealed in latest inventory data due out Wednesday, which could further stoke supply concerns.

    According to the average of a Dow Jones survey of 10 analysts, crude oil stocks will have fallen by 300,000 barrels in the week to Jan. 4, the eighth straight week of declines, although analyst predictions range from a build of 4 million barrels to a draw of 3.25 million barrels.

    Gasoline inventories are seen growing by 1.7 million barrels, while stocks of distillate, which includes heating oil and diesel fuel, are expected to fall by 600,000 barrels.

    “Two temporary factors contributed to last week’s large crude draw — end of year tax incentives which encouraged inventory shedding and 2 million barrels of crude absent from the data,” said analysts at Lehman Brothers. “With tax-reporting incentives eliminated this week, demand for imports to build stocks may increase.”

    Despite having moved further away from the $100-a-barrel mark in recent days — driven largely by concerns of slowing U.S. economic growth and mild weather in the Northeast U.S. — a renewed assault on triple digit crude prices couldn’t be ruled out, analysts said, suggesting that recent slides were more of a correction within an ongoing upwards technical trend.

    “We should not make light of yesterday’s energy decline, which was significant, but it comes after an almost uninterrupted $20 gain in the last six weeks,” said Edward Meir, an analyst at MF Global in New York. “More importantly, our charts show that both (Nymex crude) and Brent could afford to sell off to the $93 and $90 mark respectively, and still be within their upchannels.

    “Given the light calendar and the absence of any looming “macro triggers’, we do not think commodity markets are ready to sell off in more extensive fashion just yet,” he said.

    —By Nick Heath, Dow Jones Newswires;

  3. 3
    zman Says:

    Morning D – Kass’ is usually not that quick a trade is he? Taking a look at DUG you can see just how hard it is to short the energy group. On the whole trend in earnings and the stock is up…can’t really say that for the rest of the market.

  4. 4
    sane Says:

    re #2:
    2 million barrels of crude absent from the data?

  5. 5
    Denise Says:

    No he generally isn’t
    Looks like he picked off 5 to 7 points on OIH -and a couple on Dug-not bad for a weeks work-while the rest of us were being whacked

  6. 6
    TTupp Says:

    z- i was looking at your refiners table yesterday and noticed that the 5yr forward range for wnr and alj was 8-19 & 7-16. that being said, i notice that they are both trading below the low end of that range, and even more so now.

    just to be clear, you are defining the the “fwd” as the leading 4 quarters, or the multiple on the next calendar year- ie, we’re in 2008 now- so take the multiple for 2009. thx.

    out of curiosity when say tso or vlo traded at the low end of the range what was the reason at that particular time for the depressed multiple? is it in any way possible to see a line graph of the stocks with a graph underneath anotating the fwd pe? i think you did it before.

    ps good work on the break downz these past two days.

  7. 7
    TTupp Says:

    is d-kass the doug kass who writes for the street.com?

    this guy: http://www.thestreet.com/s/kass-what-to-do-when-the-smart-guys-lose/newsanalysis/investing/10397271.html?puc=_tscs

    if so ive read some of his articles; they were quite good. is this an investment newsletter you talk about with him?

  8. 8
    zman Says:

    D – I think that’s very hard to do over time. I like adding on weakness instead rather than jumping on that band wagon and trying to pick it off. For instance, the APA trade taken at 2.60 yesterday is bid 3.70 now. In general, I think the direction is up and so adding on days of silliness / noise seems the better course than trying to time the market on a daily or weekly basis.

    Sane – I have no idea what 2 mm barrels they are referring to.

    Welcome Back T! In table the forward multiples for historic ranges are the next 4 quarters. The reasons for trading at the low multiples were actually high earnings for the stocks without, at the time a commensurate move in the stocks… the stocks were not always very noticed by the Street. I’ll run those lines versus fwd PEs and put them in tomorrow’s post.

  9. 9
    Sambone Says:

    10:00 am EST

    Nymex Crude Gains Before US Stockpile Report

    By Matt Chambers

    NEW YORK — Crude oil futures rose Tuesday for the first time in five sessions, boosted by expectations of an eighth straight drawdown in U.S. stockpiles and by reports that a major attack on a Nigerian oil facility is being planned.

    The Department of Energy is expected to say Wednesday that crude oil inventories, already at three-year lows, fell by another 300,000 barrels last week, according to the average forecast in a Dow Jones Newswires survey of analysts. Prices were also supported by a view that a nearly $3 fall in prices Monday wasn’t justified and after newswire Reuters said armed groups in Nigeria are building up supplies for a major attack on an oil facility in Nigeria, Africa’s biggest oil producer.

    “I think that yesterday, we were overdone, and with the inventory figures tomorrow and people looking for a draw, clearly supplies are getting tighter,” said Addison Armstrong, an analyst at TFS Energy Futures in Stamford, Conn. “Any extra hostility in Nigeria is also going to impact the price of oil.”

    Light, sweet crude for February delivery on the New York Mercantile Exchange was recently up $1.83, or 1.9%, at $96.92 a barrel. Brent crude on the ICE futures exchange rose $1.63 to $96.02 a barrel.

    The DOE’s weekly inventory report, due Wednesday at 10:30 a.m. EST, is also expected to show a 600,000-barrel drawdown in distillate stockpiles, which include heating oil and diesel fuel, and a 1.7 million barrel build in gasoline stockpiles. Refinery use is seen growing by 0.2 percentage point to 89.6% of capacity.

    The report on Nigeria said a planned offensive is coming after the collapse of a government peace initiative and in response to increased military raids on militant hideouts in Rivers state. Reuters cited Jonjon Oyeinfie, a member of a committee representing militants and former leader of an ethnic rights group, as saying “there could be a massive attack on an oil installation.” The report also said security consultants working for oil multinationals had “picked up talk” of an attack. It didn’t name the consultants.

    Front-month February reformulated gasoline blendstock, or RBOB, rose 4.97 cents, or 2%, to $2.4795 a gallon. February heating oil rose 4.86 cents, or 1.9%, to $2.6421 a gallon.

    —By Matt Chambers, Dow Jones Newswires

  10. 10
    Denise Says:

    Z-agreed-but anyone who has been successful over time is always worth listening to.
    Was thinking yesterday-how about some suggestions on down and out companies you would buy and put away for your childrens account?
    Ones you think have a high probability of working out over time.
    Example-refiners-was trying to figure out WNR? any value? catalysts?

    TTup-yes Doug Kass-about $1200 a year worth every penny

  11. 11
    zman Says:

    D – Agree Kass is good …just think in general that is not his norm and a hard row to hoe. He’s definitely worth reading and I appreciate you dropping the occasional snippet over here.

    Re Ideas for the kids account: that’s a good idea. I don’t have a lot of down and outs in the kid list right now: GOOG, TGT, LUV, HK, CHK.

    However, I have been giving this some thought of late and will soon post a list of small and not so small cap ignored energy names. I think your DEEP will be on it.

  12. 12
    Denise Says:

    Speaking of down and out-Has Bill had any words of wisdom in the shipping area?
    Unfortuantely my ace T/A woman-said she sees DRYS at 44 eventually-says its a top
    -She has been right-worrisome

  13. 13
    dmh Says:

    Z. Re Novozymes from yesterday. it trades on the pinks, symbol NVZMF.PK. Hard to find analysis on it. They have a website Novozymes.com

    Re energy shorts. DCR seems to work ok

  14. 14
    zman Says:

    Re 12: Have not seen him in a few days. Rates for capesize and panamax appear to have peaked for the near term after their huge run for most of last year. This is taking the earnings down and the wind from the sails of the group. The transport tab has the latest charts on rates.

    I was thinking yesterday of shorting DRYS if it stays below $70. Purely a chart thing. I know they are cheap and believe me I would not get attached to a position in this industry for any length of time but man does that thing look like it could fall out of bed!

  15. 15
    Denise Says:

    Re-Drys-just went back and checked her notes-says break of 70 completes the top and would expect a intermediate term move to 55-

  16. 16
    zman Says:

    DMH – thanks, I did see it later on the pinks (which as policy I never trade).

    The ultimate play may be Monsanto or ADM (say ADM hit a 52 week low yesterday so maybe there’s a down and out “energy” play for Denise). The guy who figures out how to grow sugar cane in Iowa probably wins the race. Anything but corn which is so low bang for you buck it pales in comparison to sugar. I’ll keep looking.

    DCR – got a component list for this? Apparently too new to have options yet.

  17. 17
    zman Says:


    DRYS – so now that its back above $70 my guess is you wait for it to crack back through it (likely any time the DJIA/SPX turns red in the next day or so) and as long as the day rate indexes continue to fall you are pretty likely to get that move lower to $55. But again, I’d wait for it to break the short point at $70 again as it can move $10 up on a whim.

  18. 18
    zman Says:

    MCF sold its interest in an LNG project. These guys are very smart…no options, but very smart.

  19. 19
    Denise Says:

    Drys-I would avoid it -15% of float short
    too squeezable and obvious-might if it ran back up a lot-Are we going to have a global slowdown? seems very iffy and late

  20. 20
    jiveyjr Says:

    great write up on the drillers Z…been hoping day rates get cheap enuff they will drill again near my place S. of Abilene…looks headed that way

  21. 21
    zman Says:

    D – DRYS – I was just thinking a quick short on the chart… no doubt its late but that chart is vulnerable. Already missed an entry @ 70 b/c I got up to get another cup of Joe to sit down with it at 68.50 ( and a red DJIA).

    Re WNR from earlier…I’d wait. No one thought they could blow the quarter as bad as they did in 3Q and the fundamentals point to similar bad news in 4Q (at least this time the analysts have hacked back their numbers) so it may have another leg down when they report. Much prefer and will likely be in FTO for the 4Q report.

  22. 22
    zman Says:

    J – As they unstack some rigs that look like they haven’t seen service since the 1970s it should help with pricing for the shallow, non-horizontal, non complicated stuff. Hope you own the minerals!

    Speaking of drillers, a couple of more days like to day and I may take home a little ESV long position.

  23. 23
    jiveyjr Says:

    thx..we own some minerals in W. Texas and some Barnett acreage in Hill County TX

  24. 24
    zman Says:

    Just read another beginning of the year thoughts piece on oil, natural gas, and E&P stocks sent along by a friend of the blog. This piece, from Simmons, echoes a recurring them from the sellside: In a nutshell:

    oil = good
    natural gas = not so good
    E&P = has been good and therefore should continue to be good.

    I can argue the finer points of the first two statements but I won’t since in essence I “generally” agree with them. The one point I would add is that since everyone seems to expect little out of natural gas in 2008 in terms of favorable price action it stands to reason that we are unlikely to be disappointed. My sense is that LNG liquifaction capacity delays and increased competition for those shipments will result in LNG imports having less of an impact on US volumes than many are expecting. In fact, I believe that total imports will be lower in 2008 than 2007, a model that is not widely held as people think LNG growth will more than offset any declines in Canadian volumes.

  25. 25
    zman Says:


    Has PF gone bullish? Just read a quote in market watch in which he simply said today is a day to buy commodities. I thought he was short oil, heating oil, gasoline and long natural gas?!

  26. 26
    Sambone Says:

    12:03 pm EST

    Nymex Crude Rises To New Session High $97.54

    From Market Talk:
    [Dow Jones] Nymex crude rises to new session high $97.54/bbl as analysts continue to forecast a drawdown in US crude stockpiles in a DOE inventory report due Wed. Feb crude now +$2.37, or 2.5%, at $97.46/bbl, making back most of Mon’s $2.82 loss. Analysts are expecting an 800,000-bbl draw in crude, according to the latest Dow Jones Newswires survey, bigger than previous survey estimate of 300,000 bbls. (matt.chambers@dowjones.com)

  27. 27
    freeflow Says:

    I’m thinking of buying some puts on USO if it hits 78. No way oil stays this high for more than a few weeks with the weather at 65 degrees in NYC.

  28. 28
    Denise Says:

    I know this has nothing to do with energy
    -but lots of chatter from all my sites that CFC is close to going under and may take a few mort insurers with it.
    Possible early fed cut in the works?

  29. 29
    dmh Says:

    Z. Re DCR. It’s paired with UCR, invests in derivatives with the bulk of assets in short term treasuries. One problem with them both is that they can trade at large premiums/discounts to net asset value at times. But I think they are ok for short term trades.

    Re DRYS, (stock du jour?), it’s sitting at 200 day mov avg and 50% retrace from 2006 low so theoretically at support, (for now)

  30. 30
    Sambone Says:

    D – Check out the charts on MBI and ABK. Now that’s ugly.

  31. 31
    ram Says:

    Apparently the decision makers at B of A blew it by investing 2B into CFC. They actually thought the stock would hold up above 18. I hope someone is accountable to shareholders at BAC.

  32. 32
    Sambone Says:

    Ram – Not Ken Lewis. LOL

  33. 33
    jazzkool Says:

    Denise, a FED cut is the only thing that is going to save my January calls. I don’t want to wish CFC or its holders any bad luck but a Fed cut before January 18th is likely to be my only salvation.


  34. 34
    zman Says:

    dmh – had thought to use DUG for same purpose (has options although a bit pricey)

    re 28, 30-33 … a still I see and read that talking heads are saying to buy financials and sell energy equities.

  35. 35
    TTupp Says:

    z- re the whole biofuel debate: i read this article in national geographic a few months ago and looks almost too good to be true, but nonetheless awesome! think about it: hydrocarbons that are pumped from the ground now were originally algae too, so it makes a lot of sense. don’t know if you’ve heard or seen anything about this.

    link: http://ngm.nationalgeographic.com/ngm/2007-10/biofuels/biofuels-p6.html

    ps- took DRYS, FTO, and TSO puts noonish. they all have broken severe support in my view. anchors away lol.

  36. 36
    scoop006 Says:

    Z- Does yesterday’s APA trade still work for today?

  37. 37
    zman Says:

    T – re bio – I read that article too. Sounds great … I can’t find a public play on it (there wasn’t one in the article to my recollection) and many of these things are being done at universities or are otherwise private so its hard for us to make a buck.

    Those bets don’t sound bad to me, good luck!

    Energy starting to green up again but still a long way to recover the late Thursday to Monday slide.

  38. 38
    zman Says:

    RE APA: I think so. First, its at the lead among E&P names for 4Q mark to market estimate revisions as oil consensus numbers turned out to be way low to reality. Gas turned out to be a bit high. So oily names like APA get a pretty good boost. Also, I’ve seen several broker comments favorable to the group and more favorable to them in the last few days…nothing real specific other than their leverage to oil and their good growth rate, prospects and hedge position next year. It’s acting funny today with oil up and I am mulling a double but will likely give it another day.

    If PF and his ilk are right about a big early year reversal in stocks tomorrow based on the tax on inventories held at year end effect then APA is not a good bet. He may be wrong though and I’ve look back at Januaries past and the effect is often pretty muted. Maybe near $100 oil its is more pronounced but I think imports and utilization will have a lot more to do with the end numbers than the machinations of storage operators.

  39. 39
    TTupp Says:

    z- you see the dispersion of expectations on tso’s earnings? eek.

    over the past 90 days the estimates have more than been cut in half.

  40. 40
    zman Says:

    T: right, much line WNR, analysts got TSO very wrong last time. They don’t want to be that wrong again. I would not be short FTO during earnings however.

    Thinking of adding to Solars again. The cheap got beat up along with the expensive in the last few days. Maybe double YGE in the out months or maybe add a position in SOLF.

  41. 41
    freeflow Says:

    csun is good too z, I thing asti might also be good.

  42. 42
    zman Says:

    Thanks FF, will have a look at those little solars as well.

  43. 43
    zman Says:

    PBR – anybody see news for the move?

  44. 44
    scoop006 Says:

    #43 Yeah I sold my calls

  45. 45
    TTupp Says:

    re solars: there is a conference in china a read an article on this am, i cant find it, but the jest of it was that this may be a catalyst for more momentum from the current retracement in most of the bigger manes, Chinese and usa. they specifically cited the stocks FSLR and JASO. i know they are expensive, but they will probably go up, just like the dry bulks are cheap and they go down. got to love the stock market.

  46. 46
    Sambone Says:

    PBR – Rumor that PBR will buy the rest of PZE that it doesn’t already own.

  47. 47
    TTupp Says:

    z- re tso, yea i see that fto’s estimates have moves up in the past few months. i hadent planned on using this trade for an earnings thing- purely technical. almost 2 months for the fto’s numbers anyways.

  48. 48
    TTupp Says:

    idint they spin off pze? that would make no sense to buy back a previously sold off business unit?

  49. 49
    TTupp Says:

    is nicky around?

  50. 50
    Sambone Says:

    Dec 21st PBR authorized PZE to sell 40% of it’s Peruvian unit for 423 million to Netherlansd based subsidiary Petrobras International Braspetro in a move to boost investments in Argentina.
    Now PZE is up on rumors that PBR will buy the rest of PZE that it already doesn’t own.

  51. 51
    TTupp Says:

    say that 5 times fast lol

  52. 52
    zman Says:

    Thanks Sam … sometimes you’ve got to take a good thing back.

    Re: FTO yeah, I thought that was the case, just thought I’d point it out. I’ve been saying for ahwile that FTO would do better with the current heavy-light spread being favorable for them in the 4Q but the stock has done nothing but drift lower.

    Agreed re comment on higher priced solar…thanks for the prompt on the coference, will google it.

  53. 53
    TTupp Says:

    it sems that the refiners dont guide as well as traditional hydrocarbon co’s

  54. 54
    Sambone Says:

    “I don’t know if a minorities buyout would be logical from a Petrobras point of view, but the market is believing it” said Juan Jose Vazquez, an analyst with Bull Market Broker in Buenos Aires.
    In Sao Paulo, Petrobras shares were trading 4.5% higher to BRL82.59

  55. 55
    TTupp Says:

    re solars; the fact that yge and solf have 1/3 the analysts covering them should hold some stock in the quality of the moves (ignore the pun). might go with the crowd and trade the fslr cause the options depth on them.

  56. 56
    TTupp Says:

    guide = earnings guidance

  57. 57
    TTupp Says:

    don’t aquirerers shares usually get pressured in a takeover? and the target benefit? corny joke: maybe its like the toilets flushing backwards in the southern hemisphere, and there two phenomenon are also backwards?

  58. 58
    zman Says:

    Thanks T re Solars. Been reading the same book as Sambone, Solar Revolution, while reading presentations from the companies. FSLR has mastered the art of shrinking margins and has some massive capacity on line. Now, there are some theories that global capacity is growing at such a rate that we will have a glut 2H08 or sometime in 2009…but that’s a long way off, right? To steal a phrase: “what, me worry?”

  59. 59
    zman Says:

    T: the acquiring company’s shares do go up when they get a sweetheart deal or the fit is so perfect that it gives them other economic advantage, but yeah, generally it works the other way.

  60. 60
    Sambone Says:

    #58 – “What, me worry?” I think the overall market is now “Worried” LOL, bout time too!

  61. 61
    scoop006 Says:

    Z- Re PBR Jan $60&$70 calls.What is the buyers stratergy for purchasing 1000+ contracts

  62. 62
    Sambone Says:

    Got a feelin that it’s gonna be an ugly close.

  63. 63
    TTupp Says:

    there are no 60 & 70$ pbr calls

  64. 64
    TTupp Says:

    oops nm

  65. 65
    zman Says:


    998 contracts were listed as a spread so he bought the Jan $60s which are basically the same as buying the stock in that they have 0 premium but they will trade dollar for dollar with changes in the stock and sold the 70s for a slight premium (about $2) to reduce his cost basis. To me it’s just a more leveraged way of buying the stock and hedging at once than simply buying it and then buy puts on it.

  66. 66
    TTupp Says:

    you could get rid 1000 contracts there, it would take an hr or two though, i see more for ale though

  67. 67
    TTupp Says:

    that should read sale

  68. 68
    TTupp Says:

    sambone- i agree, ere we cone august lows!

  69. 69
    scoop006 Says:

    Thanks for the explanation

  70. 70
    ram Says:

    Just got back from an auction on our county steps on homes that have foreclosed. Out of 127, just today, none sold. Banks want too much on the minimum.

  71. 71
    zman Says:

    re 70: well that explains this market.

  72. 72
    Sambone Says:

    #70, wonder how that’s gonna affect the banks CDO’s? Foreclosed, so that means nobody is paying their mortgages, so that means default with their CDO’s. Hmmm, I guess the banks will repackage them and sell them to the Chinese?

  73. 73
    ram Says:

    It’s hard to say when they write off. I know if this is any indication then there is more billions of problems coming soon.

  74. 74
    Sambone Says:

    Bill Gross saids 250 Billion, and that’s a BIG number.

  75. 75
    Sambone Says:

    That light at the end of the tunnel looks more like a train.

  76. 76
    Sambone Says:

    3:29 pm EST

    Nymex Crude Gains As US Stockpiles Seen Falling


    NEW YORK — Crude oil futures ended higher Tuesday for the first time in four sessions, supported by expectations that U.S. inventory data will show crude oil stockpiles fell for the eighth straight week.

    Light, sweet crude for February delivery on the New York Mercantile Exchange settled $1.24, or 1.3%, higher at $96.33 a barrel. Prices rose as high as $97.54 before sliding quickly in the last half-hour before settlement. Brent crude on the ICE futures exchange rose $1.42 to $95.81 a barrel.

    The Department of Energy is expected to say Wednesday that crude oil inventories, already at three-year lows, fell by another 800,000 barrels last week, according to the average forecast in a Dow Jones Newswires survey of analysts. The forecasts come after Mexican ports were shut last week due to bad weather, which is expected to have impacted imports.

    A report that a big attack on a Nigerian oil facility is being planned helped prices jump higher earlier in the session, as did the view that a nearly $3 fall in prices Monday wasn’t justified.

    “With the inventory figures tomorrow and people looking for a draw, clearly supplies are getting tighter,” said Addison Armstrong, an analyst at TFS Energy Futures in Stamford, Conn. “Any extra hostility in Nigeria is also going to impact the price of oil.”

    The DOE’s weekly inventory report, due Wednesday at 10:30 a.m. EST, is also expected to show a 300,000-barrel drawdown in distillate stockpiles, which include heating oil and diesel fuel, and a 1.6 million-barrel build in gasoline stockpiles, according to the mean of 18 analysts’ forecasts. Refinery use is seen growing by 0.1 percentage point to 89.5% of capacity.

    Armed groups are stockpiling weapons and supplies in preparation for a major attack on an oil facility in Nigeria, Reuters reported Tuesday, citing militant and security sources. Reuters cited Jonjon Oyeinfie, a member of a committee representing militants and former leader of an ethnic rights group, as saying “there could be a massive attack on an oil installation.” The report also said security consultants working for oil multinationals had “picked up talk” of an attack. It didn’t name the consultants.

    While the report gave a definite lift to oil prices when it came out, it caused a mixed reaction among analysts.

    “It’s not really new,” said Olivier Jakob, an analyst at Petromatrix in Switzerland, although he cautioned the reports could add to worries security in Nigeria is deteriorating. “I think that Nigeria has fallen on the sidelines during the fourth quarter and is not yet fully taken into account in the (oil) risk premium.”

    Front-month February reformulated gasoline blendstock, or RBOB, rose 4.41 cents, or 1.8%, to $2.4739 a gallon. February heating oil rose 4.28 cents, or 1.7%, to $2.6363 a gallon.

    (Nick Heath contributed to this article.)

    —By Matt Chambers, Dow Jones Newswires

  77. 77
    zman Says:

    indeed, you may have to change your sign off from “tini time” to “bloody mary time”

    this broad market drop has damped several of my gains on the day and put APA to just under where I did that trade, round tripping a 30% gain this morning.

    DRYS in free fall.

  78. 78
    Sambone Says:

    Nah, Bloody Mary’s are for the morning. Glad I’m short. Love that SKF, go baby!

  79. 79
    Sambone Says:

    S&P broke it’s first support. Next support is 1364.

  80. 80
    ram Says:

    Aren’t we approaching last August lows?

  81. 81
    Sambone Says:

    Wow, Dow chart looks like a “Head and shoulders”. Not good.

  82. 82
    Sambone Says:

    “Tini time!”

  83. 83
    Popeye Says:

    Nicky, next support in the DOW?

  84. 84
    TTupp Says:

    re dow head and shoulders: ive heard from 4 prominent chartists who have said the same. completion puts us to 10% lower. 1250pts

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