Wednesday – Oil Inventory Preview Plus

Posted on by zman

 

In Today's Post

  1. Commodity Watch
  2. Holdings Watch
  3. April Scud Watch - not a bad month
  4. Technical Opinion on the Energy Sectors
  5. Stocks We Care About Today - (CHK), some new ETFs, solar earnings on the way ...
  6. Odds & Ends

Commodity Watch:

  • Crude Oil advanced to a new record of $113.79, up $2.03 yesterday. Not a lot in the way of hype or real news beyond the Mexico weather related export point closure news so I'd say the move is almost purely technical. We are highly likely to get a rebound in imports in today's report on storage from the EIA which in turn is likely to yield a build in crude stocks, a bigger than expected build in crude stocks, which may or may not let the wind, at least temporarily, out of crude's sails. I know that's wishy washy but recall that two weeks ago, a similar resurgence in weekly imports resulted in a massive crude stock build but that crude actually rallied when presented with a giant build of 7.4 mm barrels (see first graph below). Of course, with the ongoing closure of those export points south of the border, the import pendulum is likely to swing back in the other direction next week. This morning oil is trading up slightly.
  • Nigeria Watch: Agbami field could start production of 250,000 bopd as early as June, slightly ahead of the previously conceived 3Q08 start date. (TOT) operates and (PBR) has a 20% interest in this light oil field 70 miles off the coast of Nigeria.
  • China is a Hydrocarbon Black Hole Watch: From Bloomberg ~ PetroChina Co., China's biggest oil producer, will buy 50 percent more diesel in May than in April to meet fuel demand in the country. China's imports of diesel jumped 49 percent in March while crude purchases climbed 25 percent.

Crude Stock Build Vs Expectations Vs Change In Wednesday Price of Crude. In the preceding paragraphs I said a build in crude stocks may or may not result in crude softness. As you can seen in the following graph, almost without regard to change in crude, other forces have determined the Wednesday move in price. 

exp-vs-actual-vs-crude-graph-041508.jpg

Note that 6 out of the last 8 reports have yielded higher closing prices on the report day while actual builds exceeded estimates in only half. Clearly market participants are finding ways to "justify" higher oil prices despite the large builds which normally pressure crude ... not elevate it by 13% over the last two months. Clearly crude storage and the change in crude storage are not the only determinants of crude price direction however they are important and especially so the longer larger than expected crude builds, signaling weak end product demand, are ignored by crude prices. With that said, I still think this market has $115 written all over it and a test of $120 may be in the offing as soon as next week if imports from Mexico continue to swoon.

China Hedging The Dollar Watch: Oil and oil companies are seen as a currency hedge for China, the country with the largest cash reserves on the planet. I think their version of the SPR is not so much for national defense as it is a monetary decision. Same goes for their minority stakes recently taken in (BP) and (TOT). With so many yuan chasing so few barrels its not surprising to me that oil's move up is more than can be explained by simple dollar weakness.

Expectations For Today's EIA's Oil Inventory Report (from the Bloomberg survey) 

exp-041108.jpg

 

  • Natural Gas followed crude higher yesterday rising $0.15 to close at $10.20 but failed to make a new high. This morning gas is trading flattish but is likely to continue to mirror moves in crude.
  • Bogus Comment Watch (AKA, the How To Talk Your Book Watch): Oft quoted energy trader Addison Armstrong speaking on Fast Money last night said natural gas supply was weak so that the fundamentals are behind higher gas prices but that he was worried about gas’ inability to breach $10.30 for a third time. That's just wrong. You don’t have a supply problem if production is up 4.1 Bcfgpd vs LNG imports down 2 Bcfgpd with a flat to up import picture from Canada and flat demand. You just don’t…talk about a perma bull. Very close to taking May near the money UNG puts.

Holdings Watch:

CALLS: 

  • (HAL) - Half out April $43.50 calls (HALDV) for $2.34, up 113%. The other half goes over the side before (SLB) reports Friday morning. At present I plan to continue to hold the (HAL) May $45s (HALEI) through or at least closer to their earnings on Monday
  • (HK) - Sold the May $25 calls for $0.75, up 36%. This one was still out of the money after a pretty good run up and I decided to pull it off the table. Still holding calls in the May 20s, May 22.50s and June 22.50s.
  • (DO) - Entered the May $135 calls for $3.40 after a broker downgrade of the offshore drilling group which I happen to disagree with. After the recent change to a variable rate dividend linked to dayrates this stock should become a little more attractive to a wider audience of fund managers plus DO has lower exposure to the international jack-up rig market the analyst was whacking the drillers for.

PUTS: No trades yesterday.

Scud Watch: Each expiry I have two or three (sometimes 5 or 6) 100% losses. I call them Scuds and while they are obviously not desirable they are part of my trading style. What about using stops you ask? From time to time I do but many of my ideas need more time to percolate with the market and stops would shake me out of many of my winners well before their time. This April's scud list looks to be limited to:

  • (UNG) $44 and $45 strike puts - I think gas will fall but not in time to save either of these,
  • (APC) $70 calls that were ill-fated from day one as a too far out of the money option on a great stock with a more modest trading personality, (in essence, I over-reached and would have been fine in a more near the money or slightly in the money strike).

Back From The Dead Scud Watch:

  • (TLM) - will sell for a good-sized loss but not a wipeout as a sudden spike presents an opportunity to raise a little cash.
  • (APC) $65 calls, added after the $70s will be retired if all goes well at not too big a loss or gain.

Technical Opinion On The Energy Sectors. I'm no Certified Technical Analyst but I am a fair hand at reading a chart, especially an index chart. 

  • XOI - 1,432. Range bound due to the refining side of the equation involved in this oil index. Upstream outperformance is likely to outweigh downstream (refining and market) underperformance which has been pretty well telegraphed by the Majors. In the event oil remains $110 plus I think it could have another 30 points of upside in the index (February resistance level). If gasoline begins to outperform this index/these stocks could go another 100 to 150 points higher in the near term (by late May).
  • XNG - 656 (new record). Gassy stocks continue to put on a show...getting a little more cautious. New index highs every day combined with new shale announcements on a similar schedule should give this group reason for pause. Valuations are not yet extended, however after such a run profit taking may be severe when it sets in. I may do a little hedging here with (DUG) soon. 
  • OIH -193 - Looks like a breakout in the making. Higher commodity prices and technology opening up new resource plays has yielded higher utilization/activity which in turn should stabilize and even increase day and service rates. This group has only recently come out of the penalty box and valuations are inexpensive for many of the abandoned names like the land drillers (holding (NBR) now and will add more). Stalwarts (SLB) and (HAL) should say good things about out quarter activity levels on their upcoming conference calls.

Stocks We Care About Today:

(CHK) and (OGE) Make Plans To Process Higher Colony Granite Wash Volumes. (OGE) is building a natural gas processing plant to accommodate volumes of 120 MMcfgpd by 2009. (CHK) said this recently announced shale play is now producing 55 MMcfepd gross (that's up from 40 on March 23) from 18 wells and that they have 12 rigs running there. Chesapeake still saying they have a location inventory of 250 horizontal wells in the Colony Granite Wash play and a total of 650 locations in the combined Granite Wash Shale Plays (Colony (West OK) and Mountain Front (SW OK, TX Panhandle)) of the Anadarko Basin. For a backgrounder on (CHK)'s recent shale announcements click here.

(EXM) Acquisition of  Quintana Complete.  Combined fleet of 47 ships, nearly half Panamax. Panamax and Capesize dayrates continue to trade in a tightening range ... look for more on the dry bulks in coming days.

New Agriculture ETF's: (DAG)- double long and (AGA) - double short. So no more complaining about grocery store prices as now everyone can hedge a trip to the store.

New Solar ETF (TAN): Touted as the first pure solar ETF, (TAN)  -  The fund will attempt to replicate MAC Global Solar Index (SUNIDX) which contains 25 solar names. I'm not saying this is the case here but when the number of ETF's begin to blot out the sun it's probably a bad sign for the groups they are in. Solar unlike many of the recent ETF's pitched toward investors is not a commodity. Solar is driven higher primarily by high oil prices and European legislated utility construction. Solar is more like semiconductors and overcapacity is coming. 

Solar Earnings Begin Thursday: I'm currently away from the group but will be listening.

  • SPWR - 4/17 - 1:30 pm EST conference call ... may take a smallish call position today.
  • ESLR - 4/17 - 5 pm EST conference call ...will not touch this one.

On the hole, sector earnings have been subject to minor (one to five cent) reductions to '08 and '09 estimates in the month leading up to 1Q08 report season. (FSLR) is the outlier with a similar sized increase in estimates and it continues to trade at premium multiples as analysts habitually raise their price targets (many now in the $300s). Is a company with expected sales in 2009 of $1.7 B worth $20 billion + in market cap? Probably not but this is a momentum group and it will run as long and probably a little longer than oil does.

solar-multiple-041508.jpg

Odds & Ends

Analyst Watch: nada

 

212 thoughts on “Wednesday – Oil Inventory Preview Plus”

  1. 5:59 am EST

    Nymex Crude Sets New High At $114.41/Bbl

    By Angela Henshall
    Of DOW JONES NEWSWIRES

    LONDON — Crude oil futures surged to fresh highs in London Wednesday, the ICE Brent front-month contract touched $112.16 a barrel and the Nymex Light Sweet crude contract hit $114.41 a barrel on growing concerns over tighter supply

    “The bulls are still very much in control, and (I) can’t really see that changing in the short term,” said a trader based in London. “Tricky markets at present: The U.S. dollar seems to be the main driving force,” the trader added.

    At 0945 GMT, the front-month June Brent contract on London’s ICE futures exchange was up 54c at $112.12 a barrel.

    The front-month May contract on the New York Mercantile Exchange was trading 56 cents higher at $114.35/bbl.

    The ICE’s gasoil contract for May delivery was up $13.75 at $1,053.50 a metric ton, while Nymex gasoline for May delivery was up 140 points at 289.50 cents a gallon.

    Further volatility is anticipated ahead of this week’s U.S. inventories data due at 1430 GMT expected to reveal a significant build in crude stockpiles according to a Dow Jones Newswires survey of analysts.

    Crude oil inventories are expected to rise by 1.7 million barrels, according to the mean of 16 analysts’ forecasts, while gasoline inventories are seen falling by 1.7 million barrels.

    Stocks of distillates, which include heating oil and diesel fuel, are expected to fall by 1.5 million barrels and refinery use is expected to rise by 0.7 percentage point to 83.7% of capacity.

    —By Angela Henshall, Dow Jones Newswires

  2. EIA Sees OPEC Oil Revenue Up 45% In 2008

    Dow Jones Newswires

    NEW YORK — Organization of Petroleum Exporting Countries crude oil export revenue may grow 45% to $980 billion this year from $676 billion a year ago amid record high crude oil prices, according to the U.S. Energy Information Administration.

    In 2007, the EIA said, OPEC members saw a 10% increase in oil export revenue. Saudi Arabia, the world’s largest oil exporter, had 29% of OPEC’s earnings, equal to $194 billion, the EIA said.

    The EIA projected that OPEC oil export earnings could dip to $880 billion in 2009.

    The EIA said OPEC output this year is expected to average 32.05 million barrels a day, up from 30.9 million barrels a day a year ago. In 2009, EIA sees OPEC output averaging 30.84 million barrels a day.

    In 2007, Qatar had the highest per capita net income from oil export revenue of OPEC members, at $28,994, followed by Kuwait, at $21,858. Indonesia, a net oil importer, but still a member of the exporters’ group, had a net per capita oil export outlay of $18.

    —By David Bird, Dow Jones Newswires

  6. Thanks Dman

    PQ through $20

    TLM pulling my $20 calls out of the ashes at the last minute…nice.

    COP going for $82

    APC resurrecting those $65 calls as well

    NG trying to trade off but nothing means anything until the EIA release in an hour.

  11. Dman – I think it does it, today or tomorrow…unless oil tanks on today’s crude build and sinks gas…see the chart in today’s post of recent predicted vs actual which shows that even a big build may not be enough to sink crude.

    In a vacuum I think the momentum is there and the stock is still cheap and the plays are lining up for them to see mid $50s over the summer.

  14. Scoop – did you go long options there? I’m happy with the common but don’t see the need to chase this spike.

  15. Don’t know if anyone else is knee-deep in DCR like moi…but other sites offering some interesting perpectives on what it means if it “termination triggers” with a close today over $111 in crude. Consensus is that DCR effectively becomes a put option for crude at $120 with expiry on June 26. Hmmmm.

  16. Kaman – you like DCR over DUG?

    Someday we are going to have a lot of fun trading TAN contracts.

    CHK within a hari of $50

    Looking at a second slug of May DO

  18. Efferson on CNBC talking about refinery utilization being down 10% YoY but actual production of gasoline, which is not off that much is more important. Also, she said the Mastercard survey said last week was flat demand to year ago. I had seen down 6.8% but that may be the prior week. Flat demand would be welcome news for refiners with gasoline prices up some 40% YoY at the pump. Looking at TSO calls but not buying until I see the numbers.

  19. 9:36 am EST

    Crude Flat As Market Waits For Inventory Data

    By Brian Baskin
    Of DOW JONES NEWSWIRES

    HOUSTON — Crude oil futures are trading flat after setting a record for the second day in a row, as the market’s attention shifted from the weak dollar to upcoming U.S. oil supply data.

    Light, sweet crude for May delivery traded 4 cents higher at $113.83 a barrel on the New York Mercantile Exchange, after setting a record of $114.53 in electronic trading. June Brent crude on the ICE futures exchange traded 5 cents higher at $111.63 a barrel, having set its own record of $112.35.

    May crude traded as high as $114.53 in electronic trading, topping Tuesday’s record by 45 cents. The new high came shortly after the dollar reached a new low against the euro, typically seen as a cue for investors to increase open interest in commodities as a hedge against inflation. The dollar remained close to its low as Nymex pit trading opened, but oil prices fell from the early morning highs. The market is waiting for oil and product inventory data from the U.S. Energy Information Administration, expected at 10:30 a.m. EDT.

    Analysts polled by Dow Jones offered an average prediction of a 1.7 million barrel build in U.S. oil inventories for the week ending April 11, along with a 1.7 million barrel draw in gasoline stocks and a 1.5 million barrel decline in distillate inventories, which include diesel and heating oil. A few analysts saw potential for a much larger build in oil inventories, however, following a big draw in the week ending April 4 on scarce imports.

    The “bias is for a larger than expected crude oil build as last week’s draw (on low crude imports) likely gets reversed,” wrote Dan Pickering, of of Tudor, Pickering, Holt & Co. Securities Inc., in Houston.

    Others expect the market to focus on the product inventory figures, as heating oil in particular has exerted a strong influence over the entire energy complex lately. Demand from Asia and Europe has kept interest in heating oil futures high long after the end of cold weather in the U.S. Northeast, usually the most important market for the fuel.

    A “possible bullish surprise” could therefore be in store should distillate stocks fall by more than expected, wrote Jim Ritterbusch, president of Ritterbusch & Associates, a trading advisory firm in Galena, Ill. He added that “any unexpected stats (are likely) to be discounted quickly with the market quickly re-focusing on financial type guidance.”

    Financial-type guidance — meaning the dollar’s movement against the euro — points to higher oil prices, said Nauman Barakat, senior vice president at Macquarie Futures USA in New York. Concerns about inflation voiced by E.U. economic officials Wednesday dampened speculation that the European interest rates would be cut, which many see as one possible prerequisite for the dollar to strengthen.

    Front-month May RBOB recently traded up 5 points lower at $2.8805 a gallon, after hitting a record of $2.8950 earlier in the day. May heating oil traded 2.47 cents, or 0.8%, higher at $3.2986 a gallon, and is approaching the record high for heating oil of $3.3204, set April 10.

    —By Brian Baskin, Dow Jones Newswires

  21. Nothing out new on RIG I can find – likely just a hangover from that downgrade. Recovering now….

  22. NFX becoming a horse, has $60+ written all over it. I think people are starting to think about their oiliness in the Uinta and the potential for them to be the next company to announce a big shale play – the Mancos Shale, underlying 130,000 acres of their Rockies territory.

    Thanks Isle – many sets of eyes better than my four. Agree with your surmise.

    Drybulks starting to creep higher.

  23. Z et al: I do not like DCR at all….I’m just knee deep in it, if you catch my meaning. The argument I hear against DUG is that its more weighted on the oil-service comapnies rather than crude itself. No, the compelling argument right now is June USO puts vs DCR.

  24. Fascinated by the slow drift higher in PQ.

    Sick about not having taken the short on LNG – just getting crushed.

    NG down 11 cents pre oil number to 10.09. I think it could be in for a fall and am looking at going long MAY or June $50 UNG puts following the oil number, especially if oil rallies.

  26. I’ve been hoping for a viable way to play solar for the long term upside and the volatility on the way – minus the extreme risk of your fave little company being vaporized overnight. Maybe the TAN could help.

    But, ah… were all the good acronyms taken? We want to take solar seriously and they call it TAN ??

    One thing I want to check out is whether it is all PV or if they have some solar thermal. I suspect there isn’t much in the way of public companies in the solar thermal space, but plenty of startups like Ausra.

  27. CHK at $50+

    Dman – I read that its 25 companies, $100 B + mkt cap, median cap $1.2 b and it runs the specturm from photovoltaic to installers.

  30. EIA website looking hinky for the report…its like they aren’t yet set to publish the special advance file for the report in 5 minutes….could be some wild trading if they mess it up.

    Uop – you are correct, they show up in the pull down window on my system but not in the trading window. Looks like May or July. Probably go with May near the money puts.

  32. Data point…DCR rallying about 5% and at 80% of normal daily volume already (first hour of trading)…K

  33. PQ en fuego now at 20.25….love it when a plan comes together.

    CHK moving on up as well.

    2 minutes to the numbers now.

  36. inventories DOWN – crude going to launch —-imports did not rebound.

    refiners fell to 81.4% utilization, gasoline demand strong.

    looking at TSO calls for a trade and possible entry.

  38. ZTRADE: Entered May TSO $30 Calls (TSOEF) for $1.25 on a drop in utilization and a big draw on gasoline inventories.

  39. oil at 114.60 and moving higher.

    ng off 2.5 cents and climbing with oil. Getting close to pulling trigger on ng but want to see crude at 115 first.

  40. No reprieve with those numbers although odd to see distillates build. And Z you reckon more pain with next week’s numbers….
    That said after a 77% rise in a year one would have to say some of this in the price surely. And of course no mention of the 3 months where we got big builds week after week and still they pushed the price up with worries that turned out to be unfounded be it Turkey or Iran. (to date anyway).
    Finally all the markets working together today – dollar down and finally the v is underway. Metals in their 2 up and now into the target region.

  43. N – yep, more pain next week as imports will likely stink then too.

    Texana – that sounds more like Hackett (APC) than Papa (EOG) to me but best of luck!

    Uop – I killed the COP calls a little early earlier.

  44. ZTRADE: Doubled HAL $45 May calls (HALEI) for $1.70, averaging up. Will toss the remaining April $42.50 calls soon.

  45. Eventually we are going to see the opposite happen to what we expect. ie for months the inventory data has been good and the market has gone up. Well once it turns the data can be bad and it will still fall. The market will just ignore the bad news and fall. Again the focus will probably be on the $!

  46. Distillates now lower than where they were before inventories were announced.
    RBOB needs to take out 28700. WTI needs to take out 11313 and preferably in a straight line!

  48. that would get eog closer towards 50% oil that they desire. Wll already holds avg 20% of parshall field &ami with eog. The combo would make them the dominant player in the best oil play in us. also wll has tremendous co2 oilfields in tx & ok with production ramping up. clr has already traded 1.5 mil shares . musings, looking back apc pulled off a major coup

  49. Texana – Hackett is scary smart. He scooped KMG and Western for a song.

    ZTRADE: Call me stupid but I dipped a toe and purchased May UNG $50 PUTS (UNGPX) for $1.30.

  50. This is fairly key action in wti – do they just fill the gap that was left on the data or are we looking at a more signicant top. It certainly looks spiky and has the potential….

  51. Housekeeping Watch: if you don’t have a gmail account I’d get one if you want emails in a timely fashion. As you know, I use gmail for the blast and it shows up on our other PC’s immediately.

    I also checked into voice blast which would send trade alerts to your phone but given my volume it would cost about $15 extra per month. If enough people want that we will look into it.

  53. ZTRADE Error. System defaulted to April on me so now I have a 2 day option at UNG $50. Will be buying the May $50 puts momentarily.

  54. Thanks UOP. I use 2 trading systems and one defaults to near month always.

    ZTRADE: Just took UNG $48 PUTS (UNGQV) for 1.80.

  57. I made a mistake and now own the $50 Aprils puts and $48 May UNG puts. In addition to the complete losers in April 44 and 45 puts.

  59. Refiners moving up with the utilization number sentiment…the fall into the 81%s represents discipline. Meanwhile, the big draw on gasoline and the not too bad demand numbers will aid them. I probably should get more involved in the group but I’ll be patient and wade in slowly. No one should be expecting good numbers from 1Q reports so the stocks may go up on earnings misses in the space.

  61. Zman;

    this anticipated and delayed drop in price of NG:

    I have may puts,

    do you expect that the event has a better chance for may or is june also realistic, probably not, its almost summer by june FGS.

  62. YOY CL – 18745
    RBOB + 18744

    Dist -11248
    Total inc. SPR -11895

    Dist. shows WOW diesel inv. up and HO inventory DN.
    Would that indicate along with HDD that NG will be a draw tomorrow. What’s thinking of UNG Put just yet

  63. Z – re #60 well, as Maxwell Smart would have said “Would you believe I was *going* to ask about NFX? You don’t believe me? OK then, would you believe …”

  64. NG running strong now, and it busted 10.31 which was the triple top level. That’s bad for the very term puts. We could see a draw tomorrow yes. Could be +/-5 Bcf of flat. Then warming trend combined with inching higher LNG should take NG lower, that’s my theory at least.

    oops – oil going red.

  65. Right here and now for the bull/bear battle in rbob and wti – distillates doing its own thing today.

  67. PQ through 20.50!

    SLB doing very well before earnings Friday., anyone see comments today? Again, I think they say good things about the second half which will be good for them and for cheaper names like HAL on the conference call Friday.

    Oil suddenly down $1+

  68. Its done. The move is done….imo of course! But the charts have set up perfectly – the spike up so typical for a v is clear to see and now we have the reversal.

  69. 11:22 am EST

    Crude Rises On Big Gasoline Inventory Draw

    BY BRIAN BASKIN
    Of DOW JONES NEWSWIRES

    HOUSTON — Crude oil futures briefly entered record territory on a surprisingly large draw on gasoline inventories, as well as an unexpected decline in crude supplies.

    Light, sweet crude for May delivery recently traded 43 cents, or 0.4%, higher at $114.22 a barrel on the New York Mercantile Exchange. June Brent crude on the ICE futures exchange traded 44 cents higher at $112.02 a barrel.

    May crude jumped to a record $114.95 a barrel after the data came out, with the market reacting to the unexpected draw on oil inventories and much larger than expected decline in gasoline stocks. After some choppy trading, the May contract settled into a narrow trading range about 70 cents below the latest record. Analysts zeroed in on the large drop in gasoline inventories, which combined with the lowest refinery utilization rate in more than two years could indicate tight product supplies in the future.

    “Products are what’s really driving the market right now,” said Mike Zarembski, senior commodity analyst at brokerage optionsXpress Inc. in Chicago. He added that the low refinery utilization rate is also a cue to send oil prices higher, as “despite (low) refinery demand for crude oil, we’re still seeing drops in crude inventories.”

    Oil inventories fell by 2.3 million barrels in the week ending April 11, according to the U.S. Energy Information Administration, compared with an average analyst forecast of a 1.7 million barrel build. Gasoline inventories fell by 5.5 million barrels, outpacing an expected 1.7 million barrel draw, while distillate inventories grew by 100,000 barrels, compared with a forecasted 1.5 million barrel decline. Refinery utilization sank 1.6 percentage points, where a 0.7 percentage point growth was seen. The refinery rate is the lowest since March 2006.

    The data surprise comes after the dollar hit a new low against the euro, which sent oil prices to an all-time high earlier Wednesday.

    “All in all, the numbers are look bullish to the complex, particularly in view of today’s exceptionally weak U.S. dollar,” said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Ill.

    Front-month May RBOB recently traded 2.91 cents, or 1%, higher at $2.9101 a gallon. May heating oil traded 1.51 cents, or 0.5%, lower at $3.2588 a gallon, reacting to the small but unexpected build in inventories.

    —By Brian Baskin, Dow Jones Newswires

  71. Zman:

    strange, now oil is dropping and NG still rising.

    NG; your theory says may rather vthan june ?

  73. uop – nat gas well off its highs now. may hold up into tomorrow and then the whole complex can fall hard.

  74. Natural gas bulls in a battle to hold the even line on natural gas. Oil may surprise you Nicky as I think THEY want $115, could go for it which will take NG back to those highs. Hope not, but its definitely conceivable.

  75. Z – we got to 11486 – it may have been close enough. Its hard to argue with the charts when you see such a classic spike and reversal but only time will tell. Would be good to see a close below yesterday’s low which would give us a key reversal although I never think they mean quite as much in the energy market which is so crazy volatile and often reverses such moves the next day.

  78. CLR back to flat on day, EOG down a dollar, if I was a day trader who thought oil might recover to green by the close of Nymex …

  83. Zman, did you send out the ZTRADE in post #79? I got the last one in post 70, but not this one…using gmail.

  85. No, I didn’t bother. I listed it as a scud in the post today and getting 10 cents for it seemed kind of like extra junk in people’s boxes after the 7 blasts I’ve sent out today.

  87. Re APC, I just feel that the Aprils are out of time. No reflection on the stock, just cleaning house. I may take a little more off the table in other names that I like as I’m getting a little more cautious and want to raise a little cash…we have had phenomenal run…no need to try and knock it out of the park every day, it’s a marathon, not a race , yada, yada, yada

  88. Thanks MLT and Sam for the PBR article. I would say of course its going to take a lot more data to delineate the find. I would also say that that is a tight hole and PBR has said nothing except that they found oil in the first well and the second is drilling. The size is probably somewhere between the analysts’ 600 mm and the 33 billion barrel claim although I’ve seen numbers approaching 40 from some sources. Time will tell and PBR is expected to announce an evaluation plan soon.

  89. BossmanG – no and I should probably have sent it but its like cleaning out your jeans pockets and finding a dime. You take the dime but you don’t yell out C-note to your wife. Actually, you don’t do that anyway as she’d just confiscate it.

  90. FYI: ZTRADES coming down the pike soon on the rest of that HAL April position. May hold the TLM until tomorrow as I just cannot believe my luck there.

    Thinking of lightening PQ into this run a little. Did anyone see any broker comments there. It’s cheap but the May calls have done a great job, especially the $17.50s (which have very little premium in them) and I may want to add to the the longer dated calls for the conference call.

  95. CHK at all time high today, volume on course to be high. To the JP Morgan downgrade I just gotta say, nice job.

    HK – just taking a breather, I think and it is not as cheap as some of the others on forward P/CF basis. When the cheap names start to work better (CHK, PQ for instance) it is a sign that momentum in the group is slowing. I may sell a little there as I’m fully loaded on the stock. If you look at the chart it has been almost nothing but up since CHK verified the Haynesville play. I’d like to pare it back and then re add at a lower price prior to their 1Q call. If it goes to 23 but fails to breach you’ll see a few calls get sold by me.

  103. usually when I start to get this giddy, making too much money feeling it is time to pull more chips off the table.

  104. Zman;;agree with 103,
    I see with the market so far up today that the CHK, COP,HK, PQ all are levelling and hitting a top.

    Either take off 1/2 or cover (I know you don’t do that). I cover only of course if I want to protect and expect a reversal and further rise.

  106. oil up $0.30, still think they want $115. Next week imports thought to be down as well so no help there.

    Uop – see yesterday’s post on west coast and PacNW crack spreads…There is little expectation here so it may be bottoming. I won’t fall in love just yet but the big draw in gasoline is more price supportive of RBOB than is the draw on crude…if you look around they are all up nicely, TSO is just doing the best (now up 9%) as their regional crack is better. Sorry for you folks that live in CA though, going to be very expensive this summer.

  109. Don’t watch it. My UNG puts are a small hedge to a much larger long position. I take a lot of solace from the rest of the portfolio going through the roof. The thing that concerns me is the ease with which everything is going up (TSO up 10% now), DO moving higher, all the E&P and service. Can’t last, never does, and the more days we string like this the harder the profit taking will be. Natural gas is out control and I’ll get hosed on my accidental trade. But this too will change.

  111. Offering some PQ May calls … just not getting a response and the premium is shot…will reload with higher, longer strike calls on a retrenchment if I get these sold.

  113. PQ conference call – When: Tuesday, May 6, 2008, 9:30 a.m. Eastern time

    Z – If gas closes under 10.30 then it tanks on a 25 bcf injection tommorow?

  115. V – if we get a 25 Bcf “injection” tomorrow, which goes up against a 26 Bcf “withdrawal” last year I would be very happy with my puts, although it might beat my E&P calls about the head a bit. I have not seen consensus yet but surely that’s not it. Did you pull 25 Bcf injection out of the air?

  116. Zman:

    TSO, the takeover chatters might not understand the factors of ref.utilization, crackspread etc.

  120. Uop – Right, they only understand that management blew a minority stake offer a little back for $60 something dollars. And they see the hammered airlines doing it and think it would make sense. I say, better do it before the election if you want to make sure you can.

  121. 15 Bcf, really….hmmmm. Weather would not say so but maybe with the drop in New England cold and a build in the producer region it is possible. This is the time of day on Wednesday when I start honing my number there. I will say that the Street on average is more right than I am of late. Hmmmm.

  122. ZTRADE: PQ – Out May 17.50 Calls (PQEW) for $3.30, up 89%. Still holding the 20s and will add July options (no Junes available) on a dip.

  123. Sane – any API numbers. EIA shows gas demand was up week to week and, get this, ahead of last year’s numbers.

  125. Thanks Sam. If 115 goes we could be at 120 in a heartbeat. Its starting to feel like it is never going to fall!

  127. Cramer projecting XTO will run up into the low $70’s, but no time limit given. Talk about the ultimate hedge

  128. Nicky – you saw 123 right? Implied demand is ahead of year ago levels for last week. I know the EIA’s weekly numbers are sometimes hocus pocus but RBOB usually tracks them for lack of a better reference. Agreed crude goes $115, then shot at $120, the first test of that should see a couple of trades there and then a $10 drop.

  129. Z – # 120 Refiners take their strategy cues from airlines? Can’t say they don’t think laterally, I guess.

  130. Scoop – they scooped that Marcellus acreage yesterday in my opinion given the proved reserves it came with. Should have bought it yesterday but so many girls….

  131. Dman – I was saying takeover rumor mongers would make the leap quickly from one lagging industry that just saw a merger to another.

  133. HK waking up now, could be a run on $23 in which case I raise more cash if it hits but fails to breach that level.

  135. Well my own take is if they can’t do something about energy prices the broader market and the overall economy is in real trouble. Something needs to happen and very fast.

  138. Nicky – is they the government and by energy prices do you mean gasoline/oil. If so they are completely powerless to do anything near term.

  139. Agreed Sam but they can take it a lot higher first. I thought today looked hopeful but I was wrong! Any targets yourself?

  141. Not totally Z. There can be intervention by central governments in the currency markets and I think that is on the cards. They can also alter the margin requirements for energy – they have only done it for nat gas so far. I think that will happen too!

  143. Yes I know Z – just wondering what Sam thought. I had thought the spike to 114.86 would be close enough and fake everyone out.

  144. China appears to be the biggest financial buyer, I don’t think they care about margin requirements. How do you defend the $ without killing a weak economy. Bernanke’s plan all along has been to export the U.S. out of a recession. Alter that in an election year and hand over the keys to the white house.

  148. The crowd may be in, but what if they just arrived? The party might still be warming up. I say that having lightened up today on CHK, FTI & yesterday in HK, CLB & OII. All higher now from where I let some go, except CLB about level. Still got some of each so no regrets but…

    …now looking at NFX. Must … try… to… hold …

  149. Well the weaker dollar looks like it is killing the economy to me with commodity prices through the roof. He has a major inflation problem on his hands now.
    I still think much of the price is being run up by speculators and has nothing to do with demand out of China. How many times do we have to be told there is plenty of crude out there. Inventories have been sitting at the high end of the range for months – nobody cared they just ran it up more. Oil has just become the one way bet for everyone. You hear every man and his dog saying they have to be in and long…

  150. Zman:
    the NFX charts look great and point to more bullishness,

    waiting for a ndip or is it too late?

  151. Dman – I never regret taking profits. I sell it and its out of my head. Emotion no place in trading and all that. I also “walk into and walk out of” positions as you’ll note. And I layer in longer dated positions with some nearer term sales. Marathon, not a sprint. Sorry to be kind of preachy on that but sometimes people swing for the fence…and break their bat.

  152. Much of the crowd have just arrived I think DMAN – the rest have been in for 15 months and seen a 77% run up. Like the dollar shorts this is a very crowded trade.

  153. Uop – If so I’d take longer dated options. Notice I’m not in the near term ones…but the July’s This stock is streaky and just had a streak. Hmmmm. I like them a lot for catalytic news on earnings…but it has had a great run. On the other, I have long thought NFX not long for this world as a standalone. Lot of good stuff there including the stuff I talk about a lot and a good swath of Gomex deepwater projects, a smallish Asian play etc…

    Go HK Go.

    Uop – thanks. Got a link to that? Who was the source.

  155. Z- here’s what I saw on another board…

    Tesoro-TSO calls active on unconfirmed takeover chatter
    TSO is recently up $1.93 to $27.91 on unconfirmed takeover chatter. TSO, an oil refiner, is expected to report Q1 EPS on May 8. Crude oil futures are recently down 0.46% to $113.27 according to Bloomberg. TSO call option volume of 15,809 contracts compares to put volume of 1,133 contracts. TSO May option implied volatility of 76 is above its 26-week average of 54 according to Track Data, suggesting larger price fluctuations.

  156. N – Throw a dart on a price. The crowd is here. Been there, done that. I’m putting stops in. When the crowd exits, it won’t be pretty from our patch. Just look at the chart on COP.

  157. Nicky:

    where does the big money go?
    not into S investments but where they can protect themselves. Oil and commodities.

    Reason for $ decline is: our low interest rate, our huge deficit and national debt. Reasons for that is clear I hope.

    Until we get our house in order, the S will stay low or even get lower.
    Good bye my vacations in Europe.

  158. Nicky – I’m talking about buying barrels and socking them away, not demand just for consumption. They’ve got their own SPR started. This is like Goldman Sachs last year renting tankers in the Gulf and filling them at $70 and selling that oil at $90. Like you say, the move in oil is not justified by the decline in the dollar. Just thinking out loud. Their demand is also rising quickly though. But when I talk about the crowd, I’m talking about in the oil and gas equities and not the commodities.

  160. HK at $23.

    DO up 4.37 and I didn’t get a lot but that kind of “you are wrong Mr. Analyst” trade is my favorite.

  162. XOI at resistance level mentioned in today’s post.

    OIH heading towards all time high.

    XNG – wow, holy smokes, getting too hot to touch.

  163. Z – Crowd is in equities AND hot commodities. Lots of cash is pushing it. More buyers than sellers. What’s working in the overall market? Commodities, Gold, Oil, and short the US$. That’s it, so the fundies, etc. have to play somewhere or they won’t get their bonus’s this year.

  164. Agree crowd in equities too…did not mean to imply they weren’t, just saying when I talk about it I’m talking about where my bread is buttered – equities. Even the equity option open interest is way up in many of may favorite names.

  166. Rumors of a TSO takeover again? The last time, I went long in the $ 50’s.
    Oh joy! What me cynical?
    apbd

  167. Off subject – Beige Book

    Reports from the twelve Federal Reserve Districts indicate that economic conditions have weakened since the last report. Nine Districts noted slowing in the pace of economic activity, while the remaining three–Boston, Cleveland, and Richmond–described activity as mixed or steady.

    Consumer spending was characterized as softening across most of the country, with some Districts reporting year-over-year declines in retail and/or auto sales. In contrast, tourism was generally described as strong, with a number of Districts noting particular strength in foreign visitors. Reports on nonfinancial services varied by District: demand for transportation services was generally characterized as weak, while business and health services continued to expand; other service industries were said to be mixed. Trends in manufacturing also varied across Districts. Reports on real estate and construction were generally anemic for the residential sector; activity in the commercial sector has slowed. Financial institutions in many Districts indicated some deceleration in consumer loan demand, tightening in lending standards, and deterioration in asset quality. Most Districts reported improved conditions in the agricultural sector and robust activity in the energy industry.

    Labor markets were mostly described as weakening since the last report, though a few Districts reported ongoing shortages of skilled workers and some Districts noted wage pressures. Increases in input costs were widespread, accompanied by somewhat smaller rises in selling prices.

    Sambone saids; “Wow, I feel better now that tourism is up”.

  168. Popeye – I see it, EXM took in QMAR and now look at them, wow.

    A – good to have you back. RE: TSO It was a better short higher. Honestly I kind of like them here but it is just one of my toes so far.

    Man, I love Wednesday’s lots of chat, thanks for the assists on news front all today, by the way.

  169. uop – agree but no trade goes on for ever. If you look at a $ chart and an oil chart you will see that oil has way outperformed. I posted on this yesterday.
    And you are also presuming that the troubles in the US are not going to spill into the rest of the world. Well I don’t buy that. In the UK yesterday the housing data reported was the worst in history! Their consumer debt is worse than here. They are already lowering rates. Trichet alone is fighting inflation but I think the consensus is that Europe too will follow. Spain has seen one of the biggest housing bubbles in history. I also think the Fed is near the end of the easing cycle after which I think your $ short trade is over short term at least. It remains to be seen whether lowering interest rates at the price of inflation is the way to go.

  170. Z – re #151. I got no problem with preachy when it’s practical accumulated experience.

    I find that turning over positions regularly helps me stay objective and especially with the selling it’s always good to keep in practise, so it’s no big deal to let go of a big winner. That’s the theory anyhow. I do note that you have no issues with turning over positions 🙂

  171. Re #163 – perfectly summed up.
    In the end the whole darned lot is going to fall in unison but that’s for another day! There will be no safe haven.

  172. Dman – my accountant thinks I’m nuts with the turnover but what works, works.

    Efferson saying NG bullish over thoughts Canada NG imports to the US will drop. I’ve been waiting for that to happen for three years. She really needs a basic math course and maybe one in how to analyze versus report what the bullish trader over here shoulder just told her. Next she’ll be hyping hurricanes 2 months ahead of their potential arrival.

  174. # 173 – Remind me when the moment comes Z!
    It will be fine because we will be able to be short anything!
    Please please lets hope they have got rid of her by hurricane season. We aren’t even going to get time for a shoulder season at this rate!

  175. Z #151 You have a great attitude. I still regret selling APA April $120c’s @ $4.40 for a 50% profit. I for one welcome your ” preachy comments” as this is a way for me to learn the art of the trade. Thanks

  176. Nicky – re 174 – WILL DO!

    Scoop – Its all going into the subscribers section of the FAQ, now long overdue because I’m a wordy so and so.

  179. re #172:

    With AECO calendar strip prices above 9 there will be no slowing of canadian imports, imo.

  180. Scoop – I keep a spreadsheet, I update it often, it is what you see on the options holding tab. The trades go from a tab called open, to a tab called closed. The option tickers go off my blotter the day after I sell them due to the way my broker software works. On my market watch, (different system entirely) I pull them off a minute or two after closing them out. I don’t think about them again in context of the last trade but if I like the stock again, I don’t think twice about rebuying the same option (new data, decision). Seemed like a lot of work to keep track of it this way at first but it keeps me out of trouble.

    If I look back at the trades on a shoulda,woulda, coulda it’s unfair to me in the past who did not know the market wouldn’t go the other direction. I’ve been doing this since 1992 (not options at first) and I’ve read some market psych stuff and this works for me.

    Also, I never, ever, never, go to $0 cash and usually not close to it. Never be in the position of having to sell something because you want to buy something else.

    VTZ – agreed. As to depletion, I think things will heat up again up there in the not too distant future and that capex will rise there too although slower than in the states, part of my reasoning in owning NBR.

  181. Nicky:
    sorry, a correction.
    your 169,

    the UK and the USA are the 2 mortgage driven economies, nowhere else you can get money without a substantial downpayment,
    as it is and was possible to get a mortgage without downpayment, that is why so many people bought and now cannot pay anymore.
    The system is the problem and its time to change it.

    Spain and the UK are having a bubble, but there are more important economies in the EU.

  182. uop – but I wasn’t just talking about a housing bubble. I was talking about a world slowdown. And the strong euro is going to kill the eurozone..
    it is 20% more expensive there than a year ago.
    And yes i don’t disagree with your mortgage downpayment information. But to think they will change the system is to believe they won’t do anything they can to recharge the housing market. I have lived through more booms and busts in the UK housing market than I care to remember. Every time the banks say never again as people dump the keys to their houses on the desks of the banks and walk away and every time the banks go back and do it all again. So until the next time…

  184. 3:30 pm EST

    Crude Settles At Record On Gasoline Supply Fear

    By BRIAN BASKIN
    Of DOW JONES NEWSWIRES

    HOUSTON — Crude oil futures ended higher Wednesday on product supply fears sparked by a government report showing a big draw on gasoline inventories and low refinery runs.

    Light, sweet crude for May delivery closed up $1.14, or 1%, at $114.93 a barrel on the New York Mercantile Exchange. June Brent crude on the ICE futures exchange closed up $1.02 at $112.60 a barrel.

    May crude had three record-breaking runs Wednesday, the first during morning electronic trading after the dollar hit a low against the euro, and the second following the release of U.S. oil and product inventory data by the Energy Information Administration. The data, showing a surprise draw in oil stocks and a large decline in gasoline inventories, quickly sent the front-month contract to $114.95 a barrel. Traders and analysts also noted that refinery runs hit a more than two-year low, which combined with the gasoline draw created fears that the products market would not be adequately supplied heading into the summer driving season.

    The refining figure was what ultimately sent futures shooting up for the third and final time, to the intraday high and current record of $115.07 a barrel, said Peter Beutel, president of Cameron Hanover, a trading advisory firm.

    “A lot of people are looking at this utilization number and just trying to figure out how on earth we can be (so far) below the 7-year average for this time of year,” Beutel said. “We’re going to need the gasoline this summer.”

    Oil prices have risen on weakness in the dollar, which has caused some investors to put money in commodities as a hedge, as well as concerns about tight supply capacity in the face of rising demand. Recently, heating oil and gasoline have led the energy complex, with low refinery utilization in the U.S. and strong demand for distillates from Europe and Asia sending product and crude futures to regular records.

    But Wednesday’s gains were not secured without a fight, as the May contract quickly fell mid-day from nearly $115 to the intraday low of $112.19 before eventually climbing back up to set a fresh record just before closing.

    The EIA data showed a 2.3 million barrel decrease in oil inventories for the week ending April 11, compared with a mean analyst forecast of a 1.7 million barrel build. The 5.5 million barrel draw on gasoline stocks more than tripled the analyst consensus forecast, while refinery runs fell to the lowest point since March 2006.

    Those looking to send prices lower also found support in the numbers, however. Much of the draw in oil inventories came on the West Coast, a market isolated from the rest of the country. Stocks actually grew at Cushing, Okla., the closely watched storage hub, as well as on the Gulf Coast, home to about 30% of the nation’s refining capacity.

    “Sometimes it can take a while to digest the report, you get an opposite reaction to the knee-jerk reaction,” said Brad Samples, an analyst at Summit Energy in Louisville, Ky.

    Ultimately, the gasoline inventory data and earlier support from the weak dollar were enough to send futures higher at the end of the day.

    “We need a steady dollar and we need refinery utilization at 90% of capacity right now in order for this market to have any chance of selling off,” Beutel said.

    Front-month May reformulated gasoline blendstock, or RBOB, closed up 5.80 cents, or 2%, at $2.9390, a record. May heating oil settled up 91 points, or 0.3%, at $3.2830 a gallon, also a record settlement.

    –By Brian Baskin, Dow Jones Newswires

  185. HK nicely through $23 and trying to hold, go higher.

    APA – $140 – that almost makes me sick that I got out but nah.

    HAL marching on $45. Yes, I’m out the Aprils but this close in to expiry that gets to be like roulette. Still have the May’s.

  186. Z – re #180

    Since the labour market is so tight in Alberta, cost increases are a guaranteed reality if things pick up in a big way.

    Do you ever look at the big canadian drillers?

  187. ZTRADE: Entered NBR June $37.50 Calls for $1.30. Still holding the May $35s.

    Last trade of the day I promise.

  190. The YOY increase in SPR matches within 300K the YOY decrease in crude inventories.
    How would market react to a temporary halt to SPR deposits and an announcement that withdrawals made be considered.

  193. MD – I’ve given that one some thought as I get asked about it all the time. My sense is that the verbal statement from the U.S. would very temporarily impact prices, perhaps sharply for a day or two. If they did it, a little longer. Then OPEC would adjust rates lower in short order, perhaps but tanker tracker firms would know rather quickly maybe 2 weeks or so later and prices would recover. It’s a battle the U.S. could not win. I personally think they should not release for this without a cooperative effort with the refining sector. That might provide summer relief at the pump. Especially for diesel it would be a good idea. But just to release barrels…not effective. I do think that filling it up further at these prices is absurd.

  194. VTZ – I remember saying stay away from them last Fall and I have them on my land driller list and they may indeed be the big % gainer if things turn up there. Need to do more work on that idea.

    Hey Ram – we cannot be far from a blowoff. It seems to me the cheaper names are outperforming now…NFX and HK no longer what I’d call cheap but they do have catalysts approaching. If they run like this into earnings I will be MUCH lighter weighted coming into their conference calls or at least longer dated than May.

  195. Question on SPR. I thought they had basically filled it before Katrina. When she hit, the Prez released from the SPR. I thought that I read the refiners had to pay to replace the oil, not the US taxpayer. Did I miss something?

  197. Sam, as I understand it there are the “replacement barrels” you are talking about which I think was 13 mm and the other input barrels which are just further adds. It was near being filled but the Prez has talked about doubling it.

  204. Just a bit of useless information but wti is now up 5 days in a row and is up 11 of the last 12 trading sessions.

  206. Thank you Nicky. Does it look like the S&P will have to break the 1380 to run into the 1420 area? I hope you are well.

  209. Thanks to all of you for the education re “keeping your fingers on the pulse of the energy patient”. I’m learning a lot.

    Backing out to a longer view, just my perspective as a student for a few decades.

    – We are totally screwed on rate of production capacity globally, we peaked in May 2005 subject to having a higher month going forward.

    – What would have been shortfalls have been made up through drawdowns, increased refinery throughput efficiencies and GTL

    – Can’t see China slowing up on purchases of crude and/or production. We see individual, obviously well backed Chinese buying leases locally. Just makes sense that they’d want to dump depreciating surplus dollars into an appreciating proxy currency that they need – crude.

    – I look for a trading range towards mid fourth quarter for crude at 117-135/bbl

    – I absolutely concur w/ Matt Simmons the rusting of infrastructure. It is everywhere here (NW LA) and folks are just only beginning to buy new infrastructure. Human assets are even worth. Besides loosing a generation of workers during the bust, the average guy I can hire is an 8th grade dropout, who I can’t fire because I can’t replace him with anyone better. Hence the need to come up with a lower maintenance, lower manpower way to produce shallow wells.

    – Iraq is a lost cause. I doubt we’ll ever see 4.5 MMBOPD again continuing to spend $5K/sec over there for my lifetime.
    Turn E&P’s loose over there and the opportunities for sabotage and the cost of protection skyrockets. Withdraw and it gets worse. hard to win against an enemy whose idea of victory is to die.

    – Frankly, I fully expect resource wars within the next ten years, over or otherwise. Screw with Iran and they shut off exports for even a day and we spike to $175+ and we’ll be asking them what we can do to help with their nuke program.

    – So, I’m gonna make hay while the sun shines, produce and sell all I can, finish my 2,000 biodiesel reactor and stay as liquid as I can.

    Over and out and thanks again,

    JR

  210. JR – thanks for the late night musings. I had thought the resource wars were 25 years away but now I’m not so sure. Actually thought about writing a fiction piece but that’s all a bit depressing and the cloning technology isn’t there yet so until I give up sleep entirely that project is on hold.

    I rarely look out to the long term as I buy and hold stocks and its not that useful for the options trading but when I do I see minor dips followed by bigger runs up for years.

    Matt is right. Although we get wrapped up in the day to day and sometimes minute to minute machinations of the oil markets (doing that with options can be profitable in my experience) there are big, long term deliverability issues from Russia, to Mexico, to Saudi (when you look at light vs heavy) just to name a few.

    We need to work on improving domestic recoveries to buy time for technology to figure out hydrates and for nukes to be built in mass, to increase solar efficiency (now most thin film running 10% or worse conversion) etc … My point is, the problem has to tackled from both sides … expanded hydrocarbon recovery and alt resources

    AND

    more efficient consumption. GM should not be allowed to have any car in their fleet get MPG under 30. If you have to make a HUMMER out of carbon fiber to get the weight down, so be it, but don’t let them sell 6,000 pound plus size vehicles that get crappy mileage and give the business owner a tax credit. I think oil goes higher in the 1, 3, 5, 10 year+ horizon because the U.S. has no energy policy, not even a comprehensive plan. And yet we all want to drive.

  211. And I completely agree re the currency hedge with crude trade from China. Goldman did it before with tankers for a physical arbitrage last year and now it’s China’s turn. I bet China has more money and more staying power than even mighty GS.

  212. There are some rapidly ramping, very robust thin films with a good track record, SIT BIPV from UniSolar – not the most efficient in conversion, but (if this is not outdated, I’m about a month behind in my reading) best at off peak, performs better than lab, self-anneals with heat, blah, blah..

    I’m amazed at the rate China has ramped their PV production.

    As to liquids, I’ll be wanting to make some bets on celluostic ethanol. I did a MEOR project here in the oilfield and became really interested, again, in using microbes to produce beneficial endproducts. (For Microbial Enhanced Oil Recovery is was surfactants and their ability to chomp off a two carbons at a time to make the oil less viscous, thereby improving the adverse mobility that has us producing such staggering amounts of water. For celluostic, it will be some organism that can produce the enzyme we need to make celluose (the mirror image molecule to the more commonly fermented sugar) a suitable biological feedstock.

    The totally ED mileage mandates will be overridden by $5/gal gas I expect.

    Well, beer thirty for me now,

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