Tuesday – Refiners in the Spotlight

Posted on by zman

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Commodity Watch (the equity markets may have been closed yesterday but the commodity markets were alive, kicking and rallying hard)

  • Crude Oil is up about $3 to $98.50 this morning, (this looks like an over-reaction to me but every talking head to be found is talking trip-digits again):
  • OPEC Watch: Venezuela is threatening to sue (XOM) over their ongoing fight over control of the heavy oil project XOM spearheaded in that country and OPEC says it may back Venezuela which sounds ominous but so far nothing has been put in writing.
  • Exploding Refinery Watch: Alon (ALJ) USA Energy's 70,000 bopd capacity Big Spring Texas (290 miles west of Dallas) caught fire and part of it exploded Monday morning.
  • The following came from subscriber Texana in a comment last night:

z, i was about 20 miles away from Alon's Big Spring,TX refinery when it exploded today. It's still burning and will completely destroy the cracking unit. There were 4 people injured and no known deaths at this time. Thats the good news the bad news is that it will be a long time before they will be able to get this 70,000 bbl refinery back up & running. They supply all the 7-11 & Fina conv stores in west texas & se new mexico The interesting thing is that all of the oil we sale is shipped via pipeline to Galveston for processing. Most of the crude processed here was low gravity high sulphur oil which is vlo's niche.  oh yeah that is Alon Israel Oil co.,Ltd

  • Big Springs refinery capacity:  41% of Alon's total capacity; or just under 1% of US total.
  • Based on reports I've read so far the damage appears extensive and not subject to a quick fix and I would agree with Texana's assertion that "it will be a long time" before they're back up and running. This is a small refinery but U.S. cracking capacity is extremely tight.
  • Last January, a BP refinery outage set the stage for a 6 month run in products prices (and a similar run amongst refining company stocks). There was a slight delayed reaction to the news and I will be taking a hard look at (VLO) and (FTO) upon this news.
  • On the other side of the coin (and world) Shell said it has ramped Forecados (Nigeria) production to between 150,000 bopd and 200,000 bopd following a pipeline repair. At last word Forecado terminal production was closer to 100,000 bopd. The Bonny light production of which Shell recently commented as being down well into March or April remains off line.

Refiner Multiples: Relatively cheap.

refiner-multiple-021508.jpg

Key Takeaways:

1) Estimates keep dribbling lower on a weekly basis. 1Q estimates look too high relative to 4Q results but the market may be willing to look through this trough.

2) ALJ's numbers will clearly be coming down but it may take some time for estimates to filter through.  

Crack Spreads: Still nothing to brag about but this event may be the push needed to get products prices into rally mode.

crack-spread-021508.jpg

Gasoline Prices Have Been Strong Despite Adequate Inventories And Lackluster Demand. Reformulated gasoline prices have largely shrugged off the recent build in inventories to surplus level (click on any recent Thursday post to see a graph of gasoline stocks which are good likeness for the east face of Everest). Instead of paying attention to those inventory levels they have tracked crude prices and the refiners would tell you that they've in fact underperformed crude. This ALJ event may be the kickstart needed to get products to outperform crude.

rbob-021808.jpg

Heating Oil Prices Are Also Poised To Rally. We're approaching the time of year when production of diesel and heating oil shift into lower gear and stocks are off relative to year ago levels. Again, diesel prices appear poised for a breakout on supply concerns.

ho-021808.jpg

 

Natural Gas: After a brief dip Friday, NG rebounded yesterday and is trading up nearly $0.25 this morning to $8.89. This looks like a combination of short covering and a sympathy trade to oil and makes little sense. I took puts last week in the natural gas ETF (UNG).

  • Weather: Once again, it was colder than the CPC originally forecast. Last week, gas weighted heating degree days came in at 224, up from the 213 forecast. This was colder than normal but warmer than the year ago reading of 250 HDDs. 
  • Imports fell 0.2 Bcfgpd from the prior week to 9.5 Bcfgpd. The dip was attributable to a second week of falling imports from Canada. In aggregate, imports are 1.8 Bcfgpd lower than year ago levels. 

Odds & Ends

Analyst Watch: (FCL) upped to Buy at Stifel, (GSX) to overweight at JP Morgan, (FTI) cut to neutral following earnings last week at JP Morgan, and RBC cutting their (FTI) price target.

(COP) replaced 159% of reserves in 2007. That's no small feat for a company of their size and it does fall to 29% after you exclude the billion barrels stolen by Hugo Chavez from the calculation. There's not enough information out yet to calculate finding costs but excluding those costs and barrels associated with expropriation I'd expect (COP) to turn out a F&D number somewhere in the $12 to $14 per BOE range.

159 thoughts on “Tuesday – Refiners in the Spotlight”

  1. Morning all. Z if you think nat gas makes no sense then the rest of the energy complex makes no sense to me either! More than adequate supplies across the board and yet rbob and distillate march contracts now making new all time highs!

    Personally this is just plain disgraceful behavior by OPEC who two months ago were saying how worried they are about oil at $100 and now they are actively promoting it by threatening to cut production every 5 minutes.
    The economy is on the bones of its arse and this will be a killer! What the hell are they playing at???

  2. Nicky – hear ya although I’d point out that Cartel and words like shame or disgraceful cannot be used on the same page, lol.

    I’m going to get slapped on the open on my nat gas puts despite this waning weather and, still full storage, etc. This move is in sympathy with crude and makes little sense to me and as its still mid Feb and I have March puts I’m going to grin and bear it for now.

  3. Samborne said last week Z he thought they would cut – what do you think? I can’t see it being possible up here but maybe it will be a question of buy the rumour and sell the fact…

  5. I have thought they would cut all along at this meeting. I think price to the upside enters into their thoughts somewhat less than price to the downside. With that said, I think if we are still up here on March 4 they will stand pat and play the magnanimous role … “in our most gracious splendorific benevolence we have decided to keep producing at levels which will supply and replenish the peoples of the world” yada,yada,yada

  6. of course the flipside to my ng puts is all the energy stocks I’m long, even the APA $110s are back in black this morning.

    Honestly, I think this refinery fire could be the seminal event for refining (or the lead of to it) for 2008. Going to own VLO in a minute.

    4Q Calendar Week 5 is updated on the Calendar page.

  7. Well seeing as there has been zero sign of it going below 85 which was a level most people thought unimaginable last year they are hardly at risk of downside to price.
    Also playing devils advocate – all I hear is supply problems – if thats the case how can they possibly cut?

  9. APA is right on the edge of making an all time high and a long term breakout. Any of you TA guys up this morning I’d appreciate a read there and of course, CHK where the long term chart will make your mouth water. I may leave CHK early this week before earnings on the 21st.

    Hear ya Nicky, how they keep the indicies rising with oil making this kind of move is beyond me.

  11. 9:03 am EST

    Nymex Crude Clears $98/Bbl On Technical Factors

    DOW JONES NEWSWIRES

    [Dow Jones] Nymex crude continues last week’s climb, fueled by technical factors. Refined products, including RBOB gasoline, are stronger after an explosion Monday at Alon USA’s 70,000 b/d capacity refinery in Big Springs, Texas. A day before expiration, Nymex Mar crude +$2.62 at $98.12/bbl. (greg.meyer@dowjones.com)

  12. Nat gas has resistance at 9050 and then not much until 10.

    WTI – we are now back looking at 99.77 and 100.09 for resistance. This move could make it to 105 – 106.

  13. Dry bulks are back to where they were before reporting at the end of last week. I’m still holding DRYS and DSX and QMAR.

  16. Wiki holdings ticker page is updated.

    Nicky, hear ya, pullback first. You ever look at equity charts? Love to get the opinion on APA.

  17. IOC up a buck on no news. Ya gotta figure news of some sort will be out here very soon. I’m giving it another week and then I’m shifting to April calls.

  19. Drybulk rates get a haircut:
    -4000 on Capesize, -1000 on Panamax (although these had a big run into the weekend and Monday and are at 61,000. Now the smaller Supramax/Handymax rates are rallying. This is good news for most carriers with spot market leverage as they generally have many more of the smaller craft than the they do of the behemoth Capesize vessels.

    http://www.dryships.com/index.cfm?get=report

  22. DSX now above the price at which it missed earnings. DRYS recovering as well. It turns out that China did not, in fact, disappear.

  24. FTI thumbing its nose at the broker downgrades this morning. Could be up $3 oil but it could also be that analysts have to make trades for their firms. We used to call it a downgrade on valuation, otherwise known as a buying opportunity.

    Thanks Ky, I think it was a momentary lapse of router.

  26. Careful trading this morning, option premiums are pretty swollen as this is the first day of the new month and we have a major rally on, both in and outside of energy. I took those VLO calls earlier at a lower price on the common and the bid is in the same spot as they have normalized (deflated) as the stock has continued to rise.

    Back on drybulks, the rising Handymax rates are especially good for DRYS and for EXM/QMAR who have lots of exposure there.

  29. TY Nicky. Crude looks like it’ll test $99 later today to me. Take a look at CL/H8 on a daily chart…has $100 written all over it. Then note that the March contract expires tomorrow. April is only a dime under it now and all of the 6 month strip is over $96. Gotta be crushing the bears here. Hope PF is ok, lol.

  30. Z – On the FTI conf. call last week, some of the analysts managed to twist management’s arm into admitting that their subsea business is lumpy and that since they just had a $930m win in January, it might be that the next big lump might go to CAM. Now, I thought that was all already taken care of in the guidance, but the analysts wanted to dwell on it.

    So the analysts managed to convert a huge win and massive backlog into a negative.

    Considering that the tone of the call was very positive on the future of the subsea business, I would think any downgrade would be a buying opportunity in a 6-month time-frame (but maybe not in a front-month timeframe).

    Then today the commodities are surging & suddenly everyone remembers why FTI has that valuation in the 1st place.

    The lumpiness thing probably explains the zany chart and as long as the subsea story is intact, those zany dips are buys IMHO.

    CLB on the other hand, much less lumpy, so less zany on the chart, but it was clear on the call that business is going gangbusters, so I’m guessing any decent pullback is a gift in a 3-4 month timeframe.

  31. natural gas in a world of its own…..no doubt being technically driven now. Another huge up day though…

  32. I suspect we get a pullback in wti tomorrow Z – too far too fast right now….and the bulls need to start being afraid of bearish data having run it this high.

  33. Dman – I could not agree more. Analysts did the same to OII last go around. That should be something I own but have been spineless in getting back into so far.

    NG levering up again…unreal. They’re going for $9 like nobody’s business. As long as the LNG numbers stay low I guess they can play it off oil. I wish I still had my COP calls and may enter them again shortly as they are in the best of all worlds now. Great hedging environment too as the strip is way up.

    Nicky – ya know data doesn’t come out until Thursday this week due to Pres day.

  38. Nat gas – premature I know but a move below 8775 would be our first indication that at the least this leg up is done and 8663 would confirm it.

  39. Nicky, re 35 , Ok, just checking. Happens often enough on the last day. Still thinking they give it a go at 99 later today.

    Funny to see the brokers getting tagged today.

    Re nat gas, hear ya Nicky…looks like its just trading with oil. Don’t get me wrong, long term I think gas is higher (increased demand, treadmill domestic supply etc) but this move is way overdone.

  40. PF saying this rally is “amazing”. Last year he would have been screaming $4 gasoline had a refinery blown up. Now its a relentless drumbeat about the weak economy killing demand. Demand is off some but not that much just yet. Still, I can’t call him a flip flopper just yet.

  42. The rally this morning in the broader markets came on lower volume which was indicative that it was countertrend. That said my preferrred count says we still have a higher high out there for the indices in the next week or so. I am looking for 12780 to be exceeeded or at least tested in the Dow.
    There are other less bullish counts on the table of course.

  43. looking at some April OII calls.

    Bob – well, it’s ticking me off. EXM is up 3.3% today, no reason for QMAR to be down and yet it is. Also, I detest the way the options in QMAR are trading. Not happy at all with my position in the Marches here and am contemplating taking a 15% hit now and re-evaluating. Should have just taken the EXMs. Live and learn. I’d be more patient but this is just stupid trading and unless EXM beats and runs there’s no hope for QMAR. I’d say its an opportunity but again, not liking the way the options are trading. Very sluggish even to the move in the QMAR common last week. Ug.

  45. Clean (green) energy stocks off to the races with oil this morning. MOO up 3.4%

    HAL lost some very important laptops of PBRs over the weekend. Corporate espionage sited as they were stolen in transit from 2 big deepwater discoveries. No impact to stocks but interesting.

    Bob – that is the single most frustrating trade to me this year even though its not one of my bigger losers and I may still get out with my skin intact. Just feel like everything went right except I took the wrong horse there. Hopefully we get another big up day in the group soon and I can punt that. Still think there is a better than 50/50 chance the group moves on up near term as 1Q08 estimates are starting to rise.

  48. Scoop – I got nothing there…probably means they beat. The news has all been good, the long term outlook should be glowing. DO and ATW moving on up. Thanks for the reminder, it somehow slipped on my calendar. I’m mulling the March 140s for $2.20ish. Of course, if they beat, those other 2 will run hard as well. If I do go in it will be small.

  51. ZTRADE: Entered RIG $140 March calls for $2.25. Earnings due out tonight. Call tomorrow at 10 EST. Obviously, this is a high risk trade.

  52. Nicky, all it took to drive gas to 8 month highs was me shorting it. Its really odd to see the strip up so uniformly. Ya know the short position rose last week, wonder how long they can stand this or if we are seeing purely short covering at this point.

  54. Aside from short covering Z is there anything fundamental behind the rally? Any more hedge fund rumours for example? And what is the situation regarding the weather – they can’t possibly be ramping it on that surely?

  55. VLO knocking on $61, thinking that runs to $65 near term with would push the forward multiple back up towards 8x which is a little more fair as we approach their busy season. By the way, gasoline is sharply outperforming crude today.

    CHK knocking on $44. What little they don’t have hedged for 2008 may be getting hedge at $9 plus now.

    NFX tapping on $51…it really was a good quarter and update, I promise.

  56. Looks like Mr Market suddenly rememebed that HK has something to do with NG. Or maybe someone just dropped the C from CHK. Whatever. Earnings release: Feb 27 before market (says Briefing.com)

  57. There’s your 99 Z. This is a disaster – the broader market will never hold up with wti up here.

  61. whats going on with ioc– when wiull the news be out

    question 2. if they find gas can they get it out?

  62. Bill,

    still waiting on news, rumor is they have run casing to 6100 could be anyday to 10 days out on news if that’s the case. The idea would be to find enough to justify an LNG facility.

  65. Hear ya Nicky, now they want $100, $99.40 and rallying. very odd action. stocks once again no longer moving up on the move in oil.

  71. Ok, somebody explain to be a 6% divergence, just today in the QMAR. Bill, you hearing anything about “busted deal” here? I haven’t heard a thing.

  72. Answer to Bill: Press release by the 26th. From their presentations; setting pipe at 6100′ is flat to Elk 1 and way high to HKW in Elk 4.

  75. Probably wishful thinking but NG not following crude on this last leg up. Nothing like watch 1/3 of the value of an option come off in a morning.

  76. Piper Jaffray Solar Power Conference tomorrow..could move some of the sector. Presenters include FSLR, AMAT, WFR, ESLR,CSIQ, JASO, YGE, SPWR, STP, etc

  77. Bob – thanks, with that in mind, STP reports either after the close today or before the open. I’m away from the group but monitoring. From having listened to the FSLR call twice, I think the group will regain momentum this year but fade next as over supply hits.

  79. oil going for it into the close, up $4. Read PFs comments … he talks about the oil bears like he’s not one of them. hmmmm. pretty short post there…must be feeling a little bashed. I’ll get short when he flip flops

  83. News out of Nigeria that their leader has been killed – they want confirmation within 24 hours or they will start attacks.

  88. 9:50 am EST

    Nymex Crude Jumps On Technical, Supply Factors

    By GREGORY MEYER
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures surged above $98 a barrel Tuesday, supported by technical factors and lingering supply uncertainties.

    Light, sweet crude for March delivery was recently up $2.81, or 2.9%, at $98.31 a barrel on the New York Mercantile Exchange. The March contract expires Wednesday. The more actively traded April Nymex contract was trading at $98.23 a barrel, up $2.78.

    April Brent crude on the ICE futures exchange was trading $2.33 higher at $97.24 a barrel.

    Analysts said technical factors helped stoke buying. A strong uptrend over the past two weeks has drawn investment funds back into the marketplace, helping lift oil prices close to their nominal record intraday high of $100.09 a barrel, touched Jan. 3.

    “Do we see $100 crude? Now it’s probably a given,” said Steven Bellino, vice president of energy at brokerage MF Global in New York. “But does it stay there for an extended period? I’d be surprised if it did, given the economic situation that we’re finding ourselves in.”

    Refined oil products helped lead the rally higher, with March reformulated gasoline blendstock, or RBOB, hitting an all-time front-month intraday high of $2.6084 a gallon, before recently falling back to $2.5967 a gallon, up 10.29 cents, or 4.1%. March heating was up 8.63 cents, or 3.3%, at $2.7332 a gallon.

    RBOB began trading in October 2005 and took over as the benchmark gasoline contract last year. Unleaded gasoline futures, which no longer trade on Nymex, reached a record intraday high of $2.92 on Aug. 31, 2005, and settled at a record $2.6145 the same day.

    Analysts attributed the products rally to seasonal factors and an explosion Monday at Alon USA’s (ALJ) 70,000 barrel a day refinery in Big Springs, Texas. Several units have been shut down.

    Anxiety ahead of the Organization of Petroleum Exporting Countries’ meeting in Vienna on March 5 also supported prices Tuesday, analysts said. Some OPEC members have said the group could cut production levels as the northern hemisphere enters a seasonal demand slowdown in the second quarter.

    “It is normal for OPEC to cut its production in March every year,” Iranian Oil Minister Gholam Hossein Nozari said Monday.

    Investment funds have recently returned to the crude markets on the buying side, helping keep prices aloft. According to Commodity Futures Trading Commission data, large speculators boosted their net long position in Nymex crude futures last week, the first increase in five weeks.

    “Technical factors will…be at work in this week’s trade, since this week’s six-to-seven week highs are providing major encouragement toward fresh commodity fund entry back into the long side of the complex,” said Jim Ritterbusch, president of Galena, Ill.-based energy trading advisory firm Ritterbusch and Associates, in a note to clients.

    A report that Royal Dutch Shell PLC (RDSA) has restarted between 150,000 and 200,000 barrels a day of crude output from its Forcados export terminal in southern Nigeria had little immediate effect on oil prices.

    Last month, Shell declared a force majeure on exports from Forcados for the rest of January and February after pipeline sabotage.

    —By Gregory Meyer, Dow Jones Newswires

  89. 2:29 pm EST

    Nymex Crude Above $99/Bbl On Nigeria Jitters

    By GREGORY MEYER
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures leaped above $99 a barrel Tuesday after a Nigerian militant group stirred fears of more disruption to supply from Africa’s largest oil producing nation.

    Light, sweet crude for March delivery was recently up $3.70, or 3.9%, at $99.20 a barrel on the New York Mercantile Exchange. The March contract expires Wednesday. The more actively traded April Nymex contract was trading at $98.97 a barrel, up $3.52.

    April Brent crude on the ICE futures exchange was trading $2.98 higher at $97.89 a barrel.

    A person claiming to be a spokesman for the Movement for the Emancipation of the Niger Delta said that Henry Okah, believed to be the group’s top leader, had been killed by gunfire in Nigeria.

    The purported spokesman, Jomo Gbomo, said in an email to Dow Jones Newswires that the group is giving the government 24 hours to clarify reports of Okah’s injuries.

    “Failure to do this will bring bloodbath in that region and beyond,” the spokesperson said. “We will not take prisoners from the military or oil workers.”

    Instability in Nigeria has been a critical factor underlying crude’s run back toward $100 a barrel in recent weeks. More than 500,000 barrels a day of Nigerian oil production has been halted amid security concerns, leading the country to produce about 2.07 million barrels a day in January, according to the International Energy Agency.

    MEND initiated its campaign of kidnapping expatriate workers and sabotaging oil installations about two years ago. Last week, Okah was extradited to Nigeria from Angola.

    Oil was trading higher before MEND’s message, fueled by investment funds’ return soaring energy markets and a refinery explosion in Big Spring, Texas, on Monday.

    Investors also see the Federal Reserve’s interest rate cuts keeping the U.S. economy on solid footing for the time being, temporarily allaying fears of a collapse in oil demand, said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.

    “Throw in a couple refinery explosions and geopolitical problems, and all the sudden you’ve got a buying frenzy,” he said.

    Royal Dutch Shell PLC (RDSA) earlier said it has restarted between 150,000 and 200,000 barrels a day of crude output from its Forcados export terminal in southern Nigeria had little immediate effect on oil prices.

    Last month, Shell declared a force majeure on exports from Forcados for the rest of January and February after pipeline sabotage.

    Front-month March reformulated gasoline blendstock, or RBOB, was recently up 10.90 cents, or 4.4% to $2.6028 a gallon. March heating oil rose 9.66 cents, or 3.7%, to $2.7435 a gallon.

    -By Gregory Meyer, Dow Jones Newswires

  92. Ky – he’s saying they are setting pipe at 6100 feet which means they are getting ready to drill on or production test. The level is important b/c it means they are near the crest of the structure. HKW is highest know water, which in the 2 well was down around 9700 feet if memory serves. Given where the well is located it could follow that the well is the highest take point found so far, actually higher than the discovery well which could mean stout results. Remember the 2 well was further away from the discovery well and found hydrocarbons but was wet in the productive zones found in the discovery well (it contained water at those levels). Think of the structure as a underground mountain, with gas on top, then oil (if there is oil) then water. The 1 well was drilled near the peak, the 2 well down off to the side and now the 4 well (I guess the order got swapped in that there is no 3 I’ve seen) is back close to the peak and may in fact be higher up “the mountain”. Reefguy can add to that as he sees fit.

  96. Anything much below 1348 spx and 12290 dow and the broader market is in trouble – thank you energy speculators!

  101. T Tupp – its a double edged sword I think. Could be construed as good for energy stocks but bad for the overall economy. Its not coincidental that the broader market started to sell off as the energy market closed at these record levels.

  102. The bullish count for the dow says we find support here at the 13365 level or alternatively we may need to test 12278 in a bigger wave 2.

  104. Oil can go quite a bit higher if MEND starts blowing stuff up over there in earnest. Shell may have to evacuate the country worst case and that’s 2 mm bopd off the market. Think OPEC will keep pumping, enjoy the high prices, and act like a hero by “ensuring supply”

  108. to Ky: From their presentations, Elk 1 did not reach porous limestone in the Antelope. The well encountered dominately fractured pay in the Puri limestone. Elk 2 found matrix porosity below the Puri in the Mendi. It had a DST at about 8000′; this I call HKW about 2000′ low to the current Elk 4 penetration. Porous rock below 6100′ is likely hydrocarbon saturated.

  111. Agree Z – but the market may start to worry that they won’t cut again which could lead to a sell off.

  113. nicky how does the nasadq as a whole look to you here? looks less promising than the spx to me…

  114. reefguy thks for the info, but i am only a bar owner, not an oilman. hope u don’t mind me asking z-man to translate as i’m long ioc and want to get longer cause how the stk is acting. also, why elk 4 instead of elk 3??

  116. Off subject for the guys in the crowd;

    Nine words women use and their proper interpretation:

    1. Fine: This is the word women use to end an argument when they are right and you need to shut up.

    2. Five Minutes: If she is getting dressed, this means a half an hour. Five minutes is only five minutes if you have just been given five more minutes to watch the game before helping around the house.

    3. Nothing: This is the calm before the storm. This means something, and you should be on your toes. Arguments that begin with nothing usually end in fine.

    4. Go Ahead: This is a dare, not permission. Don’t Do It!

    5. Loud Sigh: This is actually a word, but is a non-verbal statement often misunderstood by men. A loud sigh means she thinks you are an idiot and wonders why she is wasting her time standing here and arguing with you about nothing. (Refer back to #3 for the meaning of nothing

    6. That’s Okay: This is one of the most dangerous statements a women can make to a man. That’s okay means she wants to think long and hard before deciding how and when you will pay for your mistake.

    7. Thanks: A woman is thanking you, do not question, or faint. Just say you’re welcome.

    8. Whatever: Is a women’s way of saying … well, you know what YOU M F-ING SON OF A B**CH,,,(FILL IN THE BLANK)!

    9. Don’t worry about it, I got it: Another dangerous statement, meaning this is something that a woman has told a man to do several times, but is now doing it herself. This will later result in a man asking ‘What’s wrong?’ For the woman’s response refer to #3.

  117. kyle: Just a guess here but 4 may have looked more promising after drilling the first two than 3.

  118. Popeye – my thought as well, they probably designated three and four after drilling 1, then after 2 went with #4 instead of #3.

  120. At this point, I’d say anything but a live rebel leader will get you some big fireworks in Nigeria…probably this week. They were pretty ticked about one of their guys being kidnapped and that led to a string of attacks. If one of their other guys got himself shot during questioning in a hospital … probably not good for the peace.

  121. nicky/nostrodomus re #85: great call wow

    z- re 26: that always seems to happen to me on an “irrationally exuberant” morning. iv get all pumped up until the cboe gets adjusted properly. me-as a rule- tend to only sell options before 10am, and buy them after that same time. alternatively, liquidity and pricing is usually decent in the last half our >3:30, but i try to not trade after at least 3:45 (buying or selling).

    just my opinion.

  122. That’s a good opinion. I figure on VLO I’ll be ok as the ALJ fire could be the event that gets crack spreads to rally, much like the BP problem last year did (although that was a bigger refinery). Analysts have been warming to the group and I think this will push more of them over the edge, I’m just looking for a move into the mid 60s on VLO which isn’t asking a lot from the multiple or from the chart.

  123. food for thought-

    people looking for a nice vehicle for portfolio insurance instead of buying QID puts or something, ive found RIMM OTM put options can pay off big if we get a drastic sell-of/ reversal like this afternoon. they are like a double inverse ETF, but the stock and options are far more liquid. i think sometimes they can provide even more leverage as they have a high beta, posted as 2ish, but i think its probably higher than that in sell-offs like we’ve been having in the last 90 days

  124. “double inverse ETF”? you just broke my brain.

    Energy cleaning up with this lackluster market. I probably will take one more shot at NFX tomorrow. Should also take some FTO as I said in the post, best performer among refiners today, up 7%.

    ALJ says to resume partial operations in 2 months.

  129. Okay trying to stay bullish the broader market. This correction could be playing out as a corrective flat from the 13th. If so it would not be out of the question for prices to test 12210 before mounting another rally. Also there is a cycle low due within the next two days and then strength into the end of the month….

  131. Popeye – should be another under promise over deliver quarter there. Maybe we finally see $20. Just holding the common for now.

  132. Nicky – no telling. BBC is running a story saying the government is saying he’s alive and in custody. They’ll need to show him on camera with a local newspaper to prove to the MEND people. And still, they were freaked over one of their other founding fathers being detained. If he is alive, they’re going to want him back.

  134. More weather:

    Here’s the storm everyone is eying…

    http://www.accuweather.com/news-story.asp?partner=accuweather&traveler=0&article=0

    snow and little more…cold lingers for two weeks then should see some warming. With oil at $100, I could see gas staying up on this a little longer than usual. Otherwise, the reaction so far is way out of the norm as this may be coldish weather but its actually warmer than year ago levels and its not record setting by any means. To me it looks like gas is discounting colder than normal weather lasting for more than just a couple of more weeks.

  135. OMG Z – look at nat gas now Z! Let me tell you I am now short nat gas too so we can feel the pain together!

  138. Nicky – its oil. Up $0.30 in the after market…guess no one has faith in CNBC’s ability to confirm anything, lol.

  139. N – re 137 …I agree, but I always keep digging for a reason when the obvious one, short covering, seems unlikely to abate. We still didn’t see the shorts cover at all last week (through Tuesday). Maybe this week, but we know the short and net short positions were at an all time high for NYMEX shorts. This looks like the long awaited stampede for the exits to me starting mid last week. I think a pause of any length will lead to a big down day on profit taking.

  140. Wait till Asia get their hands on oil tonight. Presumably oil too is moving up with the cold weather now.
    From your links it doesn’t appear it will last long – not sure where you saw the two weeks.

  141. on the main accuweather page you can change the date ranges at the top of the page to give you a look at the latest NWS charts of the US, no numbers but you can get the jist from lots of blue being cold or red being warm. I remember last winter posting all red maps of the U.S. Not this year. Man did the forecasters get this winter wrong back in November! And December! And even in January they kept acting like summer in February was around the corner.

    I would also add that this is very supportive of diesel/HO pricing.

  143. N – don’t say that. Crude 99.97 in the after market…so what’s the upside target there if you look at the April contract?

  147. Big contract between RIG and APC. In round numbers works out to $535,000 per day for 3 years for the ultra-deep capable Deepwater Millennium beginning in June 2010. It is currently under contract to APC for $447 mpd so this is a pretty nice step up.

  149. re 71

    sorry ive been away

    Argus put out a sell to take profits. I noticed divergence and bot 2000 shares of qmar at 24.

    as you know you get 12 cash and .4x of exm so a safer player than exm

    the deal is solid and even argus admits that

  150. Bill – the spread is like 17% again now. Was 20% two weeks ago, went all the way to 12% before this fattening. Any idea when EXM reports…if they do well you should see this tighten on the rally again. Also, have you noticed the Handy rates jumping to catch up?

  151. http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_Q/threadview?m=tm&bn=27305&tid=6546&mid=6627&tof=3&rt=2&frt=2&off=1

    13 cash sorry

    btw , the same analyst had qmar as a hold when it was 14

    Argus analyst says, “We are downgrading QMAR as the company has agreed to be acquired by Excel Maritime. Both boards have agreed to the sale, and from a financial perspective Excel Maritime should be able to fund the $2.45 billion transaction with little or no problem. There is little reason to believe another suitor will emerge with a higher bid. QMAR shares spiked after the deal was announced and are now trading close to the offer price, limiting further upside, so we advise shareholders to take profits.”

  152. the analyst must think the offer price is fixed which it isnt

    i find this comment baffling

    “and are now trading close to the offer price, limiting further upside”

  154. I watched it run into DRYS earnings last week and held through the profit taking. Nice gain turned into a nice loss Thursday to today. Today’s trading was baffling with the EXM up 5% at one point and the QMAR off a %. Ended about the same with the EXM up 2.5% and the QMAR down 2.4%. Made no sense unless it was a busted deal which I’m guessing those without an Argus broker or contact may have assumed as the selling accelerated. That idiot owes me a check but he should keep it and go back to school. moron.

  155. ok new topic, new idea same industry dry bulk

    i bought some OKN warrants at 60 cents today. The could be exercisale into okn stock at 6 and the current ptice is 7.75 for okn.

    What’s the catch? OKN is a blank check company. If they dont find a deal acceptale by sept this year they have to return the investors money and the OKN holers get all the assets and the warrants expire worthless.

    If ia deal is done, the warrant’s can be exercised and are worth 1.75 or more. 3 month ago they were trading for 2.50 as they had a proposed deal on the table.

    the company will have a cc call at 9 am tomorrow and still commited in getting a deal done.

    You’re betting 60 cents for 1.20 return .. i like the 3 to 1 odds the market is sayings it wont happen, i say 3 to 1 it will happen

  156. 154, lol,,Yes i only saw the missive on Intersctive brokers website..fidelity only had a blurb

    on 155 the proposed deal that okn fell apart. z you may find this an intersting speculative play.

    I think rig will do the same as drys, up initially then it sells off.

    drys should continue back to 90 if bdi stays firm which i think it will. The chinese ghave agreed to 65 % price increase and closed ports is reopening.

    i bot more calls on drys today on the dip back to 82. Drys is still very cheap

  157. Will give OKN some thought

    Looks to me like DRYS could do low $20s eps 2008….hearing ship yards are bogged down on new vessels and the conversion of tankers stories are way overblown.

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