Tuesday Morning

Commodity Watch

  • Crude Oil Continued To Hang Close To $100: April crude rallied $0.42 to close at 99.23 yesterday, once again coming within a hair's breadth of $100 as geopolitical issues took center stage before another expected rise in U.S. crude inventories this Thursday. This morning crude is trading off $0.30 to $0.40 but unless OPEC backs away from recent statements regarding the possibility of quota cuts at its March meeting I wouldn't it to trade to far from current levels.
  • This "Love 'Em One Minute, Hate 'Em The Next" Mentality Makes This More Of A Schizophrenic Trader's Market Than I Like. For my part, I plan to sell oily E&P (APA) and oil price swing sensitive RIG (the stock, not so much its fundamentals) prior to Wednesday's EIA release as they have both covered more ground, more quickly than I expected. Tomorrow, market sentiment could shift to buying the bashed financials and selling the "bloated" energy stocks. I don't think bloated but I hate giving back quick profits. 
  • Early read on oil inventories: (from the Dow Jones survey)
    • Crude: up 2.6 million barrels
    • Gasoline: up 0.3 million barrels (see more on these inventory numbers below in the Crack Spread Update)
    • Distillate: down 2.0 million barrels
  • Natural Gas: opened another 20 cents higher yesterday but sold off early in the morning to close up only 4 cents at 9.19. This morning gas is trading flat to slightly higher this morning but as you know, I don't expect that to last much longer.
  • Imports  Are Not Helping Gas Prices To Retreat
  • LNG Volumes Continue to Languish. Regassified LNG volumes fell to 0.5 Bcfgpd, down slightly from the prior week but a whopping 1.1 Bcfgpd lower than year ago levels.
  • Canadian Imports into the U.S. were 9.3 Bcfgpd last week, up slightly from the prior week but off 1.0 Bcfgpd from year ago levels. Having listened to a handful of large cap E&P year end conference calls I can tell you that the industry is shocked and amazed
  • Weather Watch: The National Weather Service forecasts warmer-than-normal weather over the entire U.S. in its six- to 10-day forecast ~ Apache.


Crack Spread Update: Cracks show steady improvement as the industry gets ready to exit the Spring maintenance season. Recall that utilization was at record low levels for this time of year last week. I continue to hold my recently added (VLO) call position on the precept that an extended and deeper than usual maintenance season reign in skyrocketing inventories and lead to higher crack spreads as demand accelerates. So far, cracks appear to be rising on schedule although inventories remain bloated. Read on for a little more detail about those gasoline inventory numbers. Also, I'm sticking by my $4 gas in late Spring call from late last year and note that a lot of voices are joining that chorus now. 


Why Are We Paying So Much For Gasoline At The Pump If Gasoline Stocks Are High? Several reasons:

1) the most obvious is that oil is hovering around $100 per barrel. Moreover, several of the non-WTI light grades are already above $100 per barrel.

2) production of reformulated gasoline continues to rise as a percent of total as more specialized grades are legislated into existence.


3) Blending Components Now Comprise A Bigger Chunk of U.S. Gasoline Inventories Than Ever Before. And those components aren't cheap.


Holdings Watch

  • UNG Puts: Picked up the March $43 puts for $1.10.

Stocks I'm Not In But That We Care About Today: (I'll have more on these in the comments section later today)

  • FTO - Reports a big beat
    • EPS of $0.71 after backing out a hedge loss versus Street expectations of $0.46.
    • Conference call at 11 Est.
  • KWK - CC at 11 Est.
  • CLR - CC at 9 Est. Own some of the common here. 
  • EOG announces analyst day - Feb 28th. Webcast of the event will be available.

Odds & Ends

Analyst Watch: (REP) upgraded to outperform by Bear, (OXY) upgraded to outperform by Oppenheimer, (NBF) initiated with a buy at Jefferies with a $3.75 price target.

Questions Last Night From Subscriber Packman Regarding UNG and XLE:

  • Re UNG: I think the move down begins this week or early next. If I’m wrong then I’ll roll to April. This is overdone on weather.
  • XLE - near term I’d think it trades higher as the signals coming out of OPEC are fairly bullish and the geo-political fear factor remains high. I’m planning to light my oily load a little this week as I had a nice run in the face of some pretty stiff inventory increases …another big crude build is expected on Thursday and if refinery utilization slumps again (quite possible) or imports strengthen we could be looking at a surprise surge in crude. Not saying it happens, again this time of year very hard to get close to the oil numbers. Houston has seen some fog so it could go the other way…but gotta protect those profits. To be fair, cold weather has persisted longer than anyone thought and we’ve got another big snow storm crossing Chicago and headed for the north east…that will likely keep sentiment strong as well.
  • Note that the XLE is not yet crossing into record territory and looks a lot like the XOI. The XNG (gassy stocks) are in record territory which makes me laugh when think of all the times I heard talking heads on CNBC and Bloomberg tell investors to sell energy and bottom fish the financials.
  • Anyway, back to the XLE. 20% of it is XOM, CVX is a distant second at 12% …both of those names are very expensive compared to the better performing of late COP which I have been in and out of a lot of late. It also contains other names on my holdings list like RIG, APA, and VLO but each are only 3% or so. Yet all three are cheap and RIG and APA, though I plan to take profits soon, are both growing with our without higher commodity prices, at rates XOM can’t approach (if they manage to grow production on a units basis (at least domestically) at all. So all in all, I’m not a big fan of the XLE as it seems set up to lag. If the stocks continue to rally it will move but not as much as some of its under-weight components. I’ll put this in tomorrow’s post as well to make sure you see it.

106 Responses to “Tuesday Morning”

  1. 1
    zman Says:

    Thanks Texana – saw the ALJ comments.

    Own SD, they are very busy. CLR commenting this morning on its Bakken too. Also, EOG has been doing very well up of late on the oil side.

  2. 2
    Dman Says:

    Hi Z,

    just to clarify: you are saying that the E&Ps were shocked at the 1.0 Bcfgpd YoY decline in Canadian imports?

  3. 3
    zman Says:

    CHK out with a production update from the DFW airport lease in the Barnett. Output has double to 60 mm/d since October, drilled 33 wells so far on the airport grounds, see drilling another 300.

  4. 4
    zman Says:

    D – they’re shocked that Canadian volumes have not fallen more than this and expect them to given the lack of activity up there and the natural declines areas. I would have thought we would have seen a much larger drop in deliverability and also imports to the U.S. in 2006 and 2007 but they’ve held up surprisingly well.

  5. 5
    zman Says:

    Glad I stayed out of the FTO…have not yet pinpointed the problem as the numbers look strong…could be a big planned turn going to sink March numbers and if its something that short sited I may get long later today.

    KWK – ditto with the stock down 7%. That would have hurt.

  6. 6
    zman Says:

    No significant reduction in rates today to account for DRYS getting bashed. I see no broker comment either. Checking. Anyone see anything there please let me know. Could be an opportunity.

  7. 7
    zman Says:


    DSX with a couple of nice contracts.

    Still don’t see anything to account for DRYS drubbing. Stock trying to hug $80 level.

  8. 8
    redjack Says:

    Z…another player in the Bakken is WLL. Also, which I believe hasn’t been made public, is that they are going to make 4 acquisitions…(not necessarily in the Bakken)

  9. 9
    zman Says:

    DRYS – from what I can tell this weakness continues to stem from the option for some drillships DRYS noted in a filing yesterday and that Bill pointed out. This seems like a over-reaction to something they took an option on and not actually committed themselves too.

    RJ – thanks. I never covered WLL but know a couple of smart guys who like them. Time for a workup.

  10. 10
    Sambone Says:

    9:41 am EST

    Nymex Crude Slips As Stockpiles, OPEC Considered

    By Gregory Meyer

    NEW YORK — Crude oil futures edged slightly lower Tuesday, pressured by expectations of rising inventories and the chance that OPEC won’t agree to cut output at a policy meeting next month.

    Light, sweet crude for April delivery was recently down 26 cents, or 0.3%, at $98.97 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange was trading down 12 cents at $97.57 a barrel.

    Nymex oil has traded in a narrow range above $98 a barrel since hitting an intraday record high of $101.32 a barrel last week.

    “A lot of traders are searching for some direction,” said Andy Lebow, senior vice president for energy at brokerage MF Global in New York. The market is sorting out “whether $101 was an overdone move or whether we are headed for another leg up.”

    Cues may come from government data on U.S. petroleum stockpiles, due Wednesday. Analysts surveyed by Dow Jones Newswires see crude oil inventories building by 2.6 million barrels in the week ended Feb. 22, making a seventh straight week of increases. Gasoline inventories are seen growing by 300,000 barrels, while stocks of distillates, which include diesel fuel and heating oil, are seen falling for the third straight week by 2 million barrels. Analysts said another the build in crude could pressure the market.

    The recent distillate drawdowns and persistent winter weather in the U.S. Northeast, the world’s largest heating oil market, have recently fortified heating oil futures, which closed at a record $2.7853 a gallon Monday.

    “Although geopolitical headlines will continue to provide a backdrop for crude price fluctuations, we look for the product markets to provide a heavy influence on crude price direction, at least through the balance of this week,” said Jim Ritterbusch, president of oil trading advisory firm Ritterbusch and Associates, in a client note.

    Front-month March heating oil, which expires Friday, was recently down 2.04 cents, or 0.7%, at $2.7649 a gallon. Front-month March reformulated gasoline blendstock, or RBOB, was off 2.50 cents, or 1%, at $2.5169 a gallon.

    The chance that the Organization of Petroleum Exporting Countries may stand pat on oil production amid record prices also weighed on the market. The group has been mulling a production cut ahead of a seasonal slowdown in demand at its meeting in Vienna on March 5, but Shokri Ghanem, Libya’s top oil official, suggested that production will remain as is as long as oil prices stay well above $90 a barrel.

    “At the prices we’re at I don’t think there’s a need for OPEC to do anything,” he told Dow Jones Newswires in an interview. “We will have our meeting and review all the data but I don’t there will be anything for us to change.”

    Analysts were watching developments in Nigeria, which has lost more than 500,000 barrels a day in production amid civil unrest. A Nigerian tribunal Tuesday upheld the victory of President Umaru Yar’Adua in last year’s presidential election, declaring him duly elected. The verdict ends some uncertainty for the president, though the potential fallout has made some market watchers nervous.

    “The decision by Nigeria’s election commission to ratify last year’s presidential election could result in increased violence there, raising concerns about the security of oil supply from the restive Niger Delta,” said Addison Armstrong, an analyst at TFS Energy Futures in Stamford, Conn.

    Worries about supply from Iraq also factored into traders’ calculations, as a Turkish ground offensive against Kurdish rebels inside Iraq continued. Turkey’s Hurriyet newspaper said Turkish commandos were at least 25 kilometers inside Iraq, the Associated Press reported.

    —By Gregory Meyer, Dow Jones Newswires

  11. 11
    Dman Says:

    Z – re. Canadian declines: driller PDS has continued its ascent following earnings on 14 Feb. But most of the earnings release was about diversification into the US market. Cautious optimism about some improvement in Canada in mid-08, but they weren’t thumping the table or anything.

    FTI holders demanding more Goldman downgrades please.

    NOV daily chart looks interesting. Has rallied since earnings on 6 Feb. Any thoughts on NOV here?

  12. 12
    zman Says:

    D – re NOV – not sure what the next catalyst is there. I’m more comformtable with the deep sea trio CAM, FTI, OII (which are creeping higher, even OII). Analysts have been pounding table on OII since the call, investors starting to listen.

  13. 13
    zman Says:

    NOV – agreed, nice chart.

  14. 14
    zman Says:

    IOC – implied volatility vacating the March calls on lack of news today, which was the rumor. I’ll be leaving the March calls today, taking a break there and adding April calls if we get a dip and no news.

  15. 15
    zman Says:

    D – take a look at the RIG chart too. I still think I’ll roll longer here before numbers tomorrow.

    Fog shutdown the HSC a couple of times last week but doesn’t appear to have stacked up volumes offshore. Imports could be higher than people expect if they were worried about the fog. It was closed again for 12 hours yesterday but again, they can work that off pretty quickly.

  16. 16
    Dman Says:

    Z – I see what you mean about catalysts for NOV. My impression was that management were very bullish about the out-years for deepwater rigs, without wanting to commit to hard numbers. The analysts seemed skeptical, which makes me wonder if they are paying attention to, well, anything really. They seemed to think that the big deepwater build may have already been discounted. So I expect that over time analysts will see why management felt the out-year rig numbers may be too low. But that’s not exactly a near-term catalyst. The chart suggests though that some investors are listening to management.

    See your point on OII, FTI, CAM. I don’t know enough about CAM: is it sort of the “ugy duckling” of the group?

  17. 17
    texana Says:

    z, have you discussed this on the site & i missed it. Could part of the gas stock move be front running the huge reserve increases most of these gas cos would have?(clips from recent Peak Oil News dailies are indicatedUS regulators are on the verge of modernizing oil and gas reserve accounting rules. The proposed rule revisions were based on recommendations made by the petroleum industry and would create standards for unconventional resources such as tar sands and hard-to-produce natural gas and allow the industry to officially book billions of barrels in tar sands or billions of cubic feet of natural gas reserves as assets.(2/21, #13) by date and item #)

  18. 18
    Sambone Says:

    Off subject – Starting buying EOH today.


  19. 19
    rseidman Says:

    Z: It looks like we’re on the wrong side of the UNG trade.
    Any thought changes?

  20. 20
    texana Says:

    somebody just bought 38,000 shares of wll about a 1/4 of todays vol @60

  21. 21
    rseidman Says:

    Refreshing is slow this morning.At least for me

  22. 22
    Dman Says:

    Z – re. RIG chart. Well, it seems to have cleared the $140 level & looks impatient to keep slinking up the upper BB line while no one is looking. Some technicians will like the no-fuss stair-step short term up channel. I still think it is fundamentals and sentiment toward those fundamentals that is in charge. Big money was dumping RIG and its friends early this year & may not have fully reversed that just yet, which suggests some near-term upside unless, as you say, WTI swings down quickly.

  23. 23
    zman Says:

    tex – I haven’t written anything in a post of late but mentioned in comments awhile back. As you know, SEC reserve rules are bogus and I have heard a management teams mention in a cautiously optimistic tone that they see the SEC working towards a revisions in a couple of areas…1) the way performance revisions are treated which as you allude to would be a boon for companies like CHK, 2) oil sands and natural gas like you say, and 3) past price related impairment recovery (although I bet they don’t change this for awhile).

    It would unlock some serious NAV on these companies to get 1) and 3) passed especially. Have not heard timing or if any of it will be official outside of SEC memos. Let me know if you hear anything and I’ll make a note to dig around.

    I actually bought a small notebook to keep track of stuff you guys ask about so I don’t let stuff fall through the cracks…still owe Scoop an answer on profit taking and someone a read on PXD.

  24. 24
    Dman Says:

    Go NFX!

  25. 25
    zman Says:

    RS – UNG – No changes. We’ve got a lot of company and I’m going to hang tough a little longer.

    Site slow due to internet bottleneck somewhere. They tell me they’re looking into it. If it becomes too much of a problem we’ll jump to the backup site for comments. Just check it and its fine.

  26. 26
    zman Says:

    oil through $100 in a hurry… anyone see the news?

    D – and APA, and OII, VLO, RIG etc, etc, etc.

    FTO call in 5

  27. 27
    zman Says:

    only recent oil news I see is increased shipments of fuel oil to N. Korea in exchange for cooperation over nukes. See no news out of Nigeria or Turkey but I’d bet this dollar plus bounce stems from that region or an OPEC comment.

  28. 28
    zman Says:

    FTO conference call

    Management saying they are very disappointed with 4Q results and it was there own fault – operational problems (fire). Very happy with the year as a whole.

    sweet / sour differentials very high

    cracks in Wyoming were negative 27 days in the quarter.

    I think this is the right approach, assume responsibility and then say how you would have done without the problems.

    Rapidly buying back shares ~ about 7% of outstanding over last 14 months

    Just listening to this I’m going to hold off on buying.

  29. 29
    zman Says:

    go OII go!

    RE Oil:
    Iraq now demanding Turkey get out. Iraqi cabinet has denounced the incursion.

    Turkey said the operation would only end “once its goal has been reached”

  30. 30
    zman Says:

    wheat up 6.5% today alone. Gotta be a helluva trade in tofu or some other substitute, lol.

    anybody here subscribe to PSW? Just curious how mad Phil is about where energy stocks are now?

  31. 31
    Nicky Says:

    Morning all. nat gas still defying fundamentals – now apparently ignoring the very reason it rallied which was cold weather. If as you say Z the 6 – 10 is warmer than normal this could get very ugly when they pull the plug.
    RBOB not going with this crude rally at all. WTI a move under today’s low of 98.52 will hint the upside is done, below 9687 will confirm it.
    Broader market – playing out as predicted late last week with a cycle high due anytime in the next two days. This could be an important top. Levels to watch for resistance at 1380 spx.

    CNBC saying the move in oil is weather related – what page are they on?????

  32. 32
    zman Says:

    That WLL chart is pretty sweet. Like I said before, I’m not a follower of the stock but that’s pretty tempting just knowing the plays they are involved in and having heard good things about management in the past.

    Tempted to take a $65 April call for a 50/50 pure gut/Texana play.

  33. 33
    zman Says:

    Nicky – they’re very NYC centric – storm coming from Chicago to Cleveland and then on to Buffalo – they can smell snow (which really doesn’t increase demand as its not that cold a storm – close to freezing but not into the single digits or teens…that’s what really moves the needle.

  34. 34
    zman Says:

    If you want a laugh listen to the replay of the FTO call. Very humble, honest but very upbeat…I’ll be an owner but not today.

  35. 35
    Sambone Says:

    Wheat = GRU, which I also just bght

  36. 36
    xweto Says:

    FWIW< NGas hourly chart showing a large neg divergence between price action & MACD, sign of weakness; also today’s sticks look like a test of 2/24-5 highs near 9.30+ is failing … now starting to drop with “vigor”

  37. 37
    zman Says:

    Anybody still having problems getting in? Do we need to switch to the backup site? Feel like I’m alone in here on a day when the stocks are absolutely killing it.

    HK through $18, HAL keeping on rocking, APA, OII rocking,

    and nat gas is up but half off its gains as crude toys with falling back through $100.

  38. 38
    zman Says:

    Thanks xweto!

    Sam – we’re setting ourselves up for $10 bread. And the early demise of everyone living on a fixed income.

  39. 39
    Nicky Says:

    Nat gas starting to come under pressure. Support at 9160 and then 9080.

  40. 40
    Nicky Says:

    WTI looking very spiky – if this should start to come off with any purpose then watch out below…

  41. 41
    zman Says:

    ZTRADE: Half Out HAL March $37.50 Calls for $0.95, up 111%.

  42. 42
    Popeye Says:

    I could not refresh for about 20 mins, fine now.

  43. 43
    ram Says:

    RIG common has gone up 10% and the options are up over 200%. Any thoughts?

  44. 44
    zman Says:

    Popeye – thanks for letting me know. I feel like the EIA/IEA yelling at OPEC that my connection is slow. Lots of noise but get the sense that they will do what they will do.

    Taking some profits now.

    Scoop, if you are out there I am still planning on getting to this but thought I’d turn the subject into a weekend post. I don’t know why its hard to put down on lcd monitor but it is.

    Ram – RE RIG thinking I need to take half off table here. It looks like it goes to 145 soon but the move is crude inspired.

  45. 45
    Nicky Says:

    This thrust for wti looks like we are now in the final leg. Minimum upside would be 101.32 with a possible target out of what looks to be a triangle coming at 101.80.
    Warning – this move is on low volume.

  46. 46
    zman Says:

    If you have not book marked the backupsite please do so now:


  47. 47
    Nicky Says:

    Products totally underperforming compared to wti – in particular rbob which is barely positive!

    Dow has resistance at 12735. Volume is implying higher highs still out there.

  48. 48
    zman Says:

    Ok, D, now NFX through $54, its make or break time for the chart, and I’m down about 2% since taking the options the day before and the day of the call. My expectations for the calls were pretty low hear after watching them go to near 0 so now I’m think getting out, especially if it won’t get through $55 with gusto. Just feels good to be alive on those at this point.

  49. 49
    zman Says:

    Nicky – so is there any linkage between the broad markets and crude anymore. Here we are soaring, can’t even credit ABK today, and oil is soaring as well. Unreal.

  50. 50
    Nicky Says:

    It appears that wti is back to following the Dow Z. No idea why but then there is no fundamental reason for the Dow to be up on what was atrocious data. IBM the rescue story today.

  51. 51
    Nicky Says:

    Its a recipe for a disaster – crude at 101 plus plus. They saw the results of this in the PPI figures this morning. But for now we have a market in denial.
    Next resistance level for spx is 1386.
    When this next cycle tops and it could do so either by Friday or go into middle of next week at a push then the next cycle should take us down very hard into the end of March/April. The January lows at the least should be tested.

  52. 52
    zman Says:

    ZTRADE: Out IOC March $20 calls for average $3.75, up 29%…not exactly the killing I was looking for but ok and we didn’t get killed. I’ll look at Aprils on a dip because frankly I think people will get tired of waiting on well news.

  53. 53
    Nicky Says:

    Of note is that the Nasdaq continues to underperform. It would need to take out 1825 to look bullish – for now the triangle remains intact.

  54. 54
    zman Says:

    Nicky – agree with you with the recipe. I’m an oil and gas stock bull as you know. But $100 oil is bad for business from a fundamental and a trading perspective. On the fundamental side you have incredible pressure on the economy. This pressure is really no greater than it is at at $98 or $95 but the perception can be a punishing to stock as the reality. From a trading perspective, you get the sea of green and sea of red days as the market decides it either loves or hates energy. Very bad if you get in on the wrong side of those days and in this case I’ll agree with Cramer, pigs get slaughtered.

  55. 55
    zman Says:

    Drybulk intra day update:

    Dahlman Rose (pretty well respected firm for shipping) analyst comments:

    market shrugs off rise in BDI index and DSX’s charter contracts announced above. He also cited a charter yesterday that was signed on a Capesize vessel at $100,000 per day for 3 years which is coming off a five year contract at 79,000 per day.

    This guy saying sector may be poised for another run as spot rates will rise with the increase in charter activity.

  56. 56
    zman Says:

    ZTRADE: Entering DRYS March $85 CALLS for $4.10

  57. 57
    Dman Says:

    Z – I hear ya on the NFX. When it retreated slightly from $54 I freaked out & took a small gain in the March $55. Then it moved back thru $54, so I guess I get the credit for that, lol. Still got some June $45 so no complaints.

    I gather you plan on holding the HK calls thru earnings?

  58. 58
    zman Says:

    HK – yes, very much plan on holding through earnings. There, that should put the nail in the coffin…much like me taking a little more DRYS.

  59. 59
    Sambone Says:

    Uncle Phil


  60. 60
    zman Says:

    wishful thinking watch:

    oil is now 101

    ng is up on 3 to 4 cents…were it not for the crude move we’d be down. When this turns I’m looking for massive profit taking to make prices look like a feather in a vacuum.

  61. 61
    Nicky Says:

    Bernanke speaks tomorrow and Thursday…..

  62. 62
    Dman Says:

    Well, sooner or later the trend of “run up into earnings and …splat!” has got to change šŸ™‚

    Besides, HK has had a fairly modest run. That’s what I’m telling myself, anyway, as I see it now have a bit of a pre-earnings wobble.

    On the market vs. WTI thing: the idea seems to be: If the market is going up, US economy is OK so demand stays OK so WTI goes up. If WTI goes up, that *proves* there can’t be a recession, so the market goes up. Like it? One or more of these might get disproved soon enough, but by then some other theory will be operating.

  63. 63
    zman Says:

    Nicky – gee, thanks for the warning.

    Dman – agreed on the market vs WTI mechanism right now. Positive correlation has been in place for months now.

    HK I think outperforms and guides higher, they should have a lot to talk about on the call, not all of it shale either.

    I’m taking profits in break outs because we are on a rare roll and after all the subprime sliming I took last fall I don’t care to give back these kind of profits. When your trading account is up 25%ish in 3 weeks and its just over 50% cash, well …that’s probably not sustainable.

  64. 64
    zman Says:


    Out RIG March $140 calls for average $6.70, up 200%. I may be leaving a little on the table as it looks like it’ll go $140 to me but this did better than I could have hoped in such a short time following the conference call and I’ll be looking to re enter longer dated options on a nice fat red day.

  65. 65
    Nicky Says:

    Just thought I’d give you the heads up with his past history!

    Looks like Dow and Oil will turn top together within the next week….

  66. 66
    zman Says:

    Nicky – re 61. I was being serious. I generally don’t know it unless you tell that someone from the ivory tower clan is going to speak but Ben is a buzzkill and I appreciate the warning!

  67. 67
    zman Says:

    These were sold earlier and listed on the backup site but apparently the comment did not post here (although the email went out)

    ZTRADE: Sold the APA $110 March Calls for average of $6.80, up 94%.

  68. 68
    Nicky Says:

    Z – why are products not going with this crude rally? I mean distillates are but only a bit. Normally if crude was up 2 they would be up 10? and rbob is barely positive. To me it just means there is nothing but speculation behind this run up. Am I wrong?

  69. 69
    Nicky Says:

    Well best way he will stall the rally and possibly absolutely kill it dead.

  70. 70
    Sambone Says:

    I guess Uncle Phil got stopped out.

  71. 71
    zman Says:

    N – there’s a lot of gasoline in storage relative to year ago and 5 yr average levels. Could be constraining the move in the unleaded contract (I show it up 2 cents) relative to WTI.

    Buzzkill Ben, sounds like the name of another good watch for this site, lol. Somebody ought to chart his public appearances vs the market.

    Sambone, yes, PF has been rather short crude, eh? heh, heh, heh.

  72. 72
    zman Says:

    Sam – thanks for reminding me about PF. Just sent his broker who used to harass me a message asking him if he’d like to subscribe to the site, lol.

  73. 73
    Nicky Says:

    Z – I hardly dare mention nat gas….

    I can tell you without even looking at a chart that every appearance he has made for the last 6 months has resulted in a triple digit loss……

    Z – re products – wondering whether it was signs of a divergence…..

  74. 74
    zman Says:

    Nicky, hear ya. Let’s just refer to it as methane or CH4, lol. Interesting.

    Re Products: it does appear to be diverging…can’t say as much for HO as that makes a little sense that it would do better but gasoline, yeah, we need to see a pickup in demand or further deterioration of capacity (which we may again get tomorrow as I look through the EIA nightlies…you’d think we’d get one from looking over those docs but the reporting is sketchy so its not that easy to tell. Don’t know if the market is looking for another big drop in capacity. Anybody see that?

    Yona, if you’re out there have you seen a gas number yet. I’m ballparking Thursday at 200 Bcf but I haven’t yet run through all the math.

  75. 75
    Nicky Says:

    i saw 172 bcf somewhere..

  76. 76
    zman Says:

    Service suddenly on fire again. Dman’s FTI is zooming, OII not too shabby either.

  77. 77
    Nicky Says:

    WTI not even showing signs of a pullback – makes you wonder whether someone knows something about tomorrow’s inventories…

  78. 78
    zman Says:

    check out the last minute effort to preserve the natural gas charts.

  79. 79
    Dman Says:

    Cramer sez today is a markup day. It does kinda feel like that.

  80. 80
    zman Says:

    DOE tells the Senate it has no plans to stop refilling the SPR at a rate of 70,000 bopd today and that stocks in the reserve will reach a record 700.7 million barrels by the end of March.

  81. 81
    zman Says:

    TLM having another strong day. Chart looks more and more interesting. Still holding the April calls. Earnings later this week.

  82. 82
    Nicky Says:

    Re 80 – that is either absolutely crazy or we will look back and say it was cheap at 100 to fill it up. If its the latter then heaven help us all.

  83. 83
    zman Says:

    Wow – NFX. Actually positive on those now, lol. Certainly feels like a markup day which makes me a little nervous.

    NG ended flat.

    Bicky – but those guys don’t have a clue and don’t care. Its the attitude that bugs me. The conflict of saying 70,000 bopd is nothing (which they basically said) contrasted with the constant begging OPEC to produce more. Its such a mixed message.

  84. 84
    zman Says:

    I’ll be on my mobile for the next hour and commenting as aaatest. Please give me the occasional update.

    NG red. shhh.

  85. 85
    bill Says:

    >”ethanol is not cheap”

    Are there any good plays in that sector in your opinion

  86. 86
    Sambone Says:

    Oil Market Eyes Nigeria Unrest After Election Result


    LONDON — Anxiety over security of Nigerian oil supplies will hold prices near $100 a barrel for days to come, market participants said Tuesday.

    News Tuesday that the Nigeria Elections Tribunal upheld President Umara Yar’Adua’s 2007 election victory is expected to provoke further unrest in the country, Africa’s largest exporter of crude and the source of around 7% of total U.S crude imports.

    International observers widely condemned the way the April 27 election was conducted amid allegations of vote rigging and intimidation. Yar’Adua’s victory was contested by two opposition candidates alleging widespread electoral fraud.

    A report published this week ahead of the special tribunal by the U.K.’s All Party Parliamentary Group on Nigeria was deeply critical of the Independent National Electoral Commission’s conduct so far, and called for reform of the body which should have overseen the electoral process.

    An appeal of Tuesday’s ruling is likely, although analysts are wary that the result could trigger a violent response. “What should keep the oil markets on edge is if this whole process breaks down, and takes on a more violent turn, just like we saw in Kenya,” said Edward Meir, an analyst at brokerage MF Global in New York.

    Africa’s most populous country is bracing itself for unrest following the result, with the number of army troops in the important oil-producing Niger Delta region increased significantly.

    Sebastian Spio-Garbrah, analyst at Eurasia Group said he expects localized incidents of violence to flare-up, and noted police forces numbers have been increased in a number of urban areas.

    “It is likely simmering tensions in the Niger Delta could also rise in tandem with an overall rise in national political tensions,” the analyst added.

    The front-month Nymex light, sweet, crude oil futures price rocketed to an all time high of $101.32 a barrel Wednesday, partly propelled by renewed threats of violence from leading militant group the Movement for the Emancipation of the Niger Delta, or MEND.

    Although the Nigerian government swiftly moved to deny rumors MEND’s leader Henry Okah was shot while being detained in government custody it failed to allay market participants fears.

    Okah, thought to be MEND’s leader,was arrested at Luanda airport in September last year, for allegedly transporting guns to South Africa.

    “The extradition of the MEND leader, from Angola to Nigeria is a point of worry,” said Olivier Jakob at Petromatrix, and had stoked oil market fears “due to the possible escalation of violence in the power game between the MEND and the Nigerian Federal Government.”

    More than 500,000 barrels a day of Nigerian crude oil production is currently thought to be shut-in largely as a result of militant activity.

    Nigerian crude output volumes received a boost after Royal Dutch Shell PLC (RDSB) was able to restore some production from its Forcados crude facility earlier in the month, but total amount shut-in still represents around 20% of Nigeria’s output capacity, based on the International Energy Agency’s latest estimated effective production capacity of 2.47 million barrels a day.

    Further cause for market concern surrounds the possibility of curtailed output from the Bonga facility where planned March maintenance could raise total shut-in output by up to 225,000 barrels a day.

    —By Angela Henshall, Dow Jones Newswires

  87. 87
    redjack Says:

    A..re # 24…I was the one asking about PXD. They may not be a candidate because of low option volume. However here is some news from today about them …

  88. 88
    aaatest Says:

    Bill – ADM, MON, POT, AGU…think those are better way than the producers

  89. 89
    redjack Says:

    Z..re PXD..I don’t know how far you go back, but Pioneer was formerly Parker & Parsley in Midland. They were one of the largest independents in Midland.

  90. 90
    Sambone Says:

    3:20 pm EST

    Nymex Crude At Record On Dollar, Inflation Impetus


    NEW YORK — Crude oil futures closed at a fresh record high Tuesday as a weaker dollar and inflation fears drew speculators into commodities.

    Tensions in such oil exporting nations as Nigeria and Iraq also emboldened buyers of crude, analysts said.

    Light, sweet crude for April delivery settled $1.65, or 1.7%, higher at $100.88 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange closed at $99.45 a barrel, up $1.76, which exceeded Brent’s previous settlement record of $98.66 a barrel reached last week. Brent settlement prices were not immediately available.

    Oil, a significant factor behind inflation, has also been the target of buying among investors seeking a shield from creeping prices. Inflation worries were given voice Tuesday when the Labor Department revealed wholesale prices increased 1% in January, more than double the rate anticipated.

    “All we’re seeing is speculative money coming in here and bidding up prices,” said Mike Zarembski, senior commodities analyst at brokerage optionsXpress Inc. in Chicago. “It doesn’t matter if it’s crude or cotton or wheat: there’s a lot of money fearing inflation factors.”

    A report of weaker-than-expected U.S. consumer confidence and comments from Federal Reserve Vice Chairman Donald Kohn indicating the central bank might seek to cut interest rates again knocked the dollar close to all-time lows against the euro. A softer greenback gives world oil producers an incentive to raise prices for dollar-denominated crude, and blunts the impact of high prices for buyers using other currencies. Analysts said the dollar’s move helped lift oil back above $100 a barrel.

    “We do not see a scenario where the U.S. dollar breaks to new lows and crude oil does not thereby rally to new highs,” said Walter Zimmermann, a vice president at brokerage ICAP/United in Jersey City, N.J.

    The Nymex contract settlement was $2.88, or 2.8%, off oil’s inflation-adjusted record price of $103.76 a barrel, reached in April 1980. Its intraday high remains $101.32, reached last Wednesday.

    Developments in oil supplying regions Tuesday did little to damp the runup. In Nigeria, an elections tribunal upheld President Umara Yar’Adua’s contested 2007 election victory, but two opposition candidates who both lost in the election said they would appeal the decision. Nigeria is the fifth largest supplier of U.S. crude, according to the Energy Information Administration.

    Turkey’s incursion into Iraq in pursuit of Kurdish rebels, along with international tensions over Iran’s controversial nuclear program, also added support for prices.

    The market is now expected to turn to the EIA’s weekly report of U.S. petroleum inventories, due out at 10:30 a.m. EST Wednesday. Crude oil stocks are expected to have grown by 2.4 million barrels in the week ended Feb. 22, according to the average of analysts surveyed by Dow Jones Newswires, marking a seventh straight week of growth. Gasoline inventories are seen increasing by 400,000 barrels, while stocks of distillate are expected to have fallen by 1.8 million barrels.

    “Tomorrow’s inventory reports are going to be key,” said Zarembski of optionsXpress. “We’re expecting another increase in crude oil supplies. If the market shrugs that off and moves higher, I think we’re maybe set for a run at the $104 to $105 area.”

    Front-month March heating oil futures also closed at an all-time contract high of $2.8150 a gallon, up 2.97 cents or 1.1%, amid chilly temperatures in the U.S. Northeast. March reformulated gasoline blendstock, or RBOB, rose 86 points, or 0.3%, to $2.5505 a gallon. Options on both contracts expired Tuesday.

    —By Gregory Meyer, Dow Jones Newswires

  91. 91
    Dman Says:

    Market slipping a bit into the close. NFX still holding above $54. OIH +1.6%

  92. 92
    Sambone Says:

    Zman update;
    Dow up 87
    S&P up 6.15
    Oil – 101.04
    XOM – 89.63
    COP – 84.43 up 2.18
    Ngas 9.17 down .01

  93. 93
    Sambone Says:

    Tini time!

  94. 94
    bill Says:

    drys,exm,& nm down today heavily

    this guy is pretty good, here is his explanation on todays action


  95. 95
    Nicky Says:

    Oil flying after hours….

  96. 96
    zman Says:

    unreal re oil in the after market, got it up $2+ now at 101.23.

    Still happy to have taken profits today.

    Sam – thanks very much for the update.

    Redjack – I worked for the former CFO of Parker and Parsley after the merger with Mesa at a boutique energy consultancy in Austin.

  97. 97
    T-Tupp Says:

    does anyone know of a good site that tally call and put volumes for the day or whatever, and maybe separates it by exp. month?

    its easy to do with a few active strikes, but other issues like XLE say, has and exorbitant amount of active stirkes so it is hard to see the forest from the trees.

  98. 98
    T-Tupp Says:

    oh z btw, i guess DRYS is #1 in IBD’s list of stocks. i apologize in advance if it was mentioned in comments- i haven’t finished reading everything from today….

  99. 99
    zman Says:

    Thanks T re DRYS.

    Have you checked options express for that feature? optionsxpress.com

    Wow. Corn, wheat prices look like a moon shot today.

  100. 100
    PackMan Says:

    Zman –

    Thanks for your comments from my request last night. Very helpful. With XLE, I need to pay attention to the components, I am so used to associating XLE w/ XOM and not the rest. Started small shorts by selling the Mar 82 calls today, which hopefully will prove to be a safe, although I go in and out on this stuff.

    Would love to see XOM move higher so I can sell 95 calls. Would be very happy to go short XOM at 95+.

    RIG APA, wish I had followed you on some of those e-blasts … you have been rocking ’em.

    UNG opened a short position by buying APRIL 43 puts for 1.65, so I hope you are right about this.

    Also took some SU April 95 puts today.

    Any thoughts on EOG, which is going parabolic it seems ?

  101. 101
    zman Says:

    Pack – understand wishing to have caught a few more names to the upside but you can’t kiss all the girls, right?

    Re EOG, they have an analyst meeting on the 28th which may be a buy the rumor, sell the news event. Aside from commodity price rallies we all are well award of, they have benefited from the move in NGL pricing (mostly out of the Barnett) which has been very kind to them; higher gas prices in Trinidad, and increasing oiliness in from the Bakken play. I’m not just tripping over myself to short them.

  102. 102
    PackMan Says:

    I just need to kiss some period … LOL.

    Thanks for the color on EOG.

  103. 103
    T-Tupp Says:

    xle 82$ calls didn’t have any volume today so how could you have sold them lol

  104. 104
    zman Says:

    Hey T – I show xtgcd (March 82 calls) had 273 volume.

  105. 105
    T-Tupp Says:

    ah. must have add a strike for rig/gsf or that other merger in service land (i forget the names)

  106. 106
    bill Says:

    on drys


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