18
Apr
Friday – Expiry Watch + SLB Reports A Brick But Sees Bright Outlook
SLB missed which is not entirely unexpected. Guidance/general feel of their outlook is much more important than the quarter that's in the bag. I'll likely be adding to the May $100 calls today or the May $95s if the minor drubbing the stock is taking in the premarket persists into the conference provided that I like what I hear on that call. Otherwise, I'll be looking to remove the last two viable April options from my books (TLM and the $50 UNG puts) later today. Earnings start to gear up next week with more service names followed by the beginnings of the producers later in the week before the real onslaught of 1Q results hits in the following week. Have a great weekend if I don't see you in comments!
In Today's Post:
- Commodity Watch:
- Holdings Watch:
- Earnings Watch: (SLB)
Commodity Watch:
- Crude Oil:closed down $0.07 to $114.86 yesterday in boring trading. Despite constant calls for its demise I think traders will take it higher on the most minor of disruptions at present. This morning crude is trading of $1.50 to $2.00 in a bout of early morning technical profit taking as the dollar makes small gains on the Euro. It's not surprising given the recent run in crude but I don't think it's the beginning of "the end" for crude by any stretch although the bears will be coming out of the wordwork today.
- Mexico Exports Watch: 2 of the 3 oil export ports which send crude to the U.S. reopened on Tuesday. The status of the third port is not yet clear however its likely we are in for one more weak week of crude imports.
- Refinery Restarts: COP restarting a New Jersey gasoline unit today and I've seen a number of units restarted in the last few days so we may have seen the lows on utilization. While this taking gasoline prices lower early this morning which is weighing on crude, it will result in higher crude demand in a week or so.
- Natural gas eventually traded off 4 cents to $10.34 after the EIA reported natural gas in storage increased by 27 Bcf, well above the consensus which called for an injection of 16 Bcf. If you missed last night's gas review post click here. This morning gas is trading off $0.10 to $0.15 on a percentage mirror of crude.
Holdings Watch:
CALLS:
- (PQ) - Entered PQ May $22.50 Calls (PQEX) for $0.35.
- (SLB) - Entered SLB May $100 Calls (SDBET) for $1.95.
PUTS: No trades yesterday
Earnings Watch:
SLB - misses 1Q08 (not entirely unexpected) buy argues for higher growth later in 2008
- EPS of $1.06 (from continuing ops) vs expectations of $1.12
- Revenue came in at $6.29 B vs consensus of $6.32 B.
- Operations show YoY and sequential improvements in North America and YoY improvements in Latin America, Europe, and Middle East / Asia.
- Wester Gecko, their seismic division, results were off due to the timing of Gomex lease sales.
Guidance: they see strengthening growth as the year continues due to:
- thin excess global oil supply,
- bigger than expected drawdown in U.S. natural gas inventories
- they therefore see capex on the part of the Majors and E&Ps remaining higher for a longer period than previously thought.
Buyback Reloaded. SLB has 36.9 mm shares out of a previously approved 40 mm shares for $2.73 B. They upped the ante to $8 billion worth of additional shares (84 mm shares, or 7% of the outstanding at current prices).
Conference Call: 9 Est. Key things to listen for will be their North American activity outlook (U.S. but also Canda) and thoughts on when seismic will ramp back up.
Reporting Monday: (HAL) - before the open - and (NBR) after the close.
Odds & Ends
Analyst Watch: RBC takes price target on (SPWR) from $80 to $99 (with the stock at $86.80 following yesterday's earnings), RBC also cut (LNG) price target from $50 to $20 - talk about asleep at the wheel...take a look at the daily chart on that one. (ZOLT) target trimmed from $45 to $40 at Jesup.
Housekeeping Watch: I'll have a short "What Up With The Bakken Piece" out hopefully Sunday. Lots of maps to help get your bearings and lots of participant impact stats as well.
SLB – conf call started, they’re reading the press release highlights now. Hoping the stock stays off until open but it is moving up slowly.
April 18th, 2008 at 8:08 amHAL off early on the SLB which may also be an opportunity.
April 18th, 2008 at 8:10 am5:28 am EST
Crude Edges Lower In Light Trade
Dow Jones Newswires
April 18th, 2008 at 8:19 amFrom Market Talk
0920 GMT [Dow Jones] Crude oil futures drift lower in thin volumes, the market is taking a breather after a series of record highs this week. Little fresh news to steer prices — although traders eye reports of possible fresh militant violence in Nigeria — while market offers little direction from steady dollar Friday. “Oil has been taking so widely its directional clue from the dollar that when the dollar does not move, oil does not know where to go,” says Oliver Jakob of Petromatrix. Profit taking ahead of the weekend risk to prices later Friday, traders add. Nymex May crude -35c at $114.51/bbl, ICE June Brent -32c at $112.11/bbl. (NHE)
SLB – they read the statement in the PR regarding growth getting stronger in 2008…not exactly blowing me away.
Q&A starting.
April 18th, 2008 at 8:19 amI am having trouble getting the SLB c call up on my computer. Could you please make note of why their margins are slipping? I’ve read analysis that they are losing pricing power. Thanks
April 18th, 2008 at 8:20 amSurge In Natural-Gas Price Stoked By Global Trade
By ANN DAVIS andRUSSELL GOLD
Of THE WALL STREET JOURNAL
Americans feeling the pain of record gasoline prices now face the likelihood of another fuel shock, from natural gas.
Prices in the U.S. have risen 93% since late August as power-hungry nations like South Korea and Japan compete in a global natural-gas market that scarcely existed a half-decade ago. Still, U.S. prices are as low as half the level of some overseas markets, suggesting they have much further to rise.
The global appetite for natural gas has profound implications for a U.S. economy already tipping toward recession and struggling against inflation pressures. The fuel heats half of U.S. homes, generates 20% of the country’s electricity and is used to make everything from fertilizer to plastic bags. In March, rising natural-gas prices contributed to a higher than expected 1.1% increase in producer prices, according to the Labor Department.
U.S. natural-gas output has actually been rising in recent months, and not everyone agrees that prices are destined to surge. However, a significant number of financial players are now betting on an increase.
On Thursday a report by the Barclays Capital unit of Barclays PLC warned that, partly because of rising natural-gas prices, the U.S. could start to see spikes in electricity costs in as little as a year. “Power is at the cusp of its next boom cycle,” analysts said. “When power markets tighten, prices do not notch up, they skyrocket.”
On Thursday, natural-gas prices on the New York Mercantile Exchange fell five cents per million British thermal units, or 0.5%, to settle at $10.383, ending a three-day upward march. That’s 33% shy of the record close of $15.378 on December 13, 2005, when a cold snap jolted the market.
What’s new is the global price competition. Prior to 2003, gas was primarily a regional commodity, consumed near where it was produced and transported by pipelines. Often, it would be simply burned off as waste at oil wells, since transportation was so difficult.
That changed with development of cheaper methods for supercooling and transporting the fuel across the ocean in liquefied form, which requires 1/600th the space. The global trade took off.
Today, a tanker of liquefied natural gas, or LNG, pulling into port in Japan can command close to $20 per million BTUs, roughly double the price of the U.S. benchmark. As a result, the U.S. is having trouble attracting the imports it needs to supplement homegrown production.
Last weekend, Cheniere Energy Inc. inaugurated a massive new LNG terminal on the Texas-Louisiana border capable of accommodating six tankers a week, making it the largest terminal in the U.S. However, observers expect few tankers to dock there until they can obtain higher prices for their cargo. Cheniere’s stock is down 70% from its 52-week high; earlier this year, it put itself up for sale.
For the moment at least, the import slowdown means the U.S. has a glut of LNG import terminals like these. From California to New England, proposals for such facilities have faced staunch community opposition. This month New York Gov. David Paterson said the state wouldn’t issue a permit for a proposed terminal in the Long Island Sound, arguing that it wasn’t appropriate for the environmentally sensitive area.
Overall, U.S. imports of LNG have slid over the past nine months to a five-year low, and natural-gas inventories are running relatively low. Deutsche Bank commodities chief David Silbert says that if the U.S. is unable to attract LNG supply this summer, prices could spike up sharply within a few months if a hot summer were to reduce the ability to build a cushion of gas going into next winter.
As the odds increase that the U.S. will pass climate-change regulations that raise financial penalties for burning coal, cleaner-burning natural gas is gaining favor as the fuel to power electric plants.
Overall, gas demand from the U.S. power sector grew by 10% last year, according to the Energy Information Administration. By 2025, the U.S. could see domestic production lag demand by 15 billion to 20 billion cubic feet a day, Linda Cook, executive director of gas and power for Royal Dutch Shell PLC, told a recent energy conference.
The increased global trade in natural gas was driven partly by huge investments since 2003 in facilities to liquefy gas for export — chilling it to negative-260 degrees Fahrenheit — as big Western oil companies saw a business opportunity and ramped up spending on LNG infrastructure. This created economies of scale and further drove down the price of producing and shipping LNG long distances.
This triggered a revolution in gas markets. Previously, countries like Nigeria, which has ample natural gas, had no easy way to sell it due to a lack of pipelines to markets needing the fuel. Same was true for Qatar, also home to enormous gas reserves.
Early thinking assumed the globalized market would cause prices to fall because countries tight on supplies could more easily import. Former Federal Reserve Chairman Alan Greenspan, in 2003, predicted LNG would create a “price-pressure safety valve” to stabilize prices in the U.S.
But the market is evolving differently. One key change involves the way LNG sales contracts are written. Until recently, buyers were in the driver’s seat: They were able to strike long-term deals and lock in their costs for many years. A seller like Indonesia, for instance, might have agreed to ship LNG to Japan for 10 years at relatively rigid prices.
Today, however, sellers have the clout. They are demanding that contracts be loosened to let them divert their output to markets where prices are higher. (In return they generally agree to share the profits with the customer).
This free-for-all has let suppliers shop their product to the highest bidder, adding to price volatility.
One example: When an earthquake last summer forced a massive Japanese nuclear plant to close, utilities there ramped up natural-gas use. Prices soared in Japan, which in turn drove up prices in far-off European countries, including the United Kingdom.
This kind of situation can trigger domino effects world-wide. Late last year, the global scramble for scarce LNG worsened as a drought hit Spain, cutting its ability to use hydroelectric power. Spain normally leans on neighboring Algeria and Egypt for LNG imports — but in February those countries were busy shipping to Japan where prices were twice as high as Spain.
Spain turned to Trinidad for imports. But that has meant less gas for the closer — but lower-priced — U.S. market, which in the past has taken most of Trinidad’s output. Trinidad’s shipments to the U.S. through the first two months of the year are down 31% from the year-earlier period, according to government data.
Not everyone agrees U.S. natural-gas prices are certain to rise. Domestic producers such as Chesapeake Energy Corp. have made significant strides tapping into new sources of natural gas, sending U.S. gas production up 7% in January from a year earlier, to 68 billion cubic feet a day.
Chesapeake Chief Executive Aubrey K. McClendon sees production continuing to grow, holding U.S. gas prices between $7 to $10 per million BTUs and avoiding the need to increase imports. And Michael Stoppard, a senior director of energy consultant CERA, predicts world LNG supply will grow by 30% in the next two years, making more chilled gas available for the U.S.
Nevertheless, more financial players are lining up against the bears, saying low prices won’t last. They point out that, even as U.S. production increased in 2007, prices still rose 19%.
Meantime, as Asian buyers grab more LNG from the Atlantic basin, U.S. prices, though at 27-month highs, still look cheap. Energy hedge funds in Houston and New York have placed a flood of bullish bets on U.S. gas prices for delivery several years from now, say some of the traders and their Wall Street brokers.
One argument underpinning that bet: U.S. gas is far cheaper than it has historically been relative to crude oil. Until 2004, the price for a barrel of oil was roughly the same as the price of 6,000 cubic feet of gas, the equivalent amount of energy. Now oil is almost double the price of gas on that basis, Lehman Brothers analysts point out.
In a twist, the effort to build alternative-energy projects like solar arrays and wind farms also boosts construction of gas-fired plants. Because wind is unpredictable, it’s often necessary to build back-up generators, and gas-fired plants have an advantage in that they can be started up relatively quickly, says Doug Kimmelman, senior partner with Energy Capital Partners, a private-equity firm focused on the power sector.
In addition, regulatory approval and construction times are shorter for gas plants than coal or nuclear. For reasons like these, new gas-fired power plants continue to be built or planned.
April 18th, 2008 at 8:23 amtater – varies from area to area. For instance, in Mexico, they were ramping rigs into deeper, hotter, areas. The upfront costs were higher which depresses margins. In seismic, it was revenue volatility due to weather, the timing of lease sales. They sound like they really expect it to improve going forward.
The difference from December notes is that they were thinking all of 2008 would be a transition year but now see it more as 1H08 is the transition (for their business and service in general) and that the back half of 2008 is the ramp INSTEAD of 2009 being the ramp.
April 18th, 2008 at 8:23 amSLB Q&A
Saudi Arabia – mobilized equipment, will be big, little impact this year, bigger in 2009.
SLB “very comfortable with full 2008 Wall Street expectations”
Margins offshore – “they’re fine…going forward quality of revenue will improve but it depends on success of exploration wells”
“growth to significantly expand in 2H08” – most significant change from December call is North America – strong statement for HAL and NBR.
April 18th, 2008 at 8:25 amThanks, got on now. “Big difference between margins on a successful exploration well and an unsuccessful well….” I love those kind of helpful statements.
April 18th, 2008 at 8:31 amTater: I love how the Goldman analyst said “thanks, that’s very helpful” – yeah, right.
My sense is that these guys are bagging the Street. After last quarter reports bashing they are not going to guide the Street higher but instead just keep them where they are and then beat.
Pricing bottoming in stimulation – that’s not a small deal.
April 18th, 2008 at 8:33 amwell that was a short window of red on SLB.
Going bid some NBR.
April 18th, 2008 at 8:37 amGood question on the amount of bidders pre vs. post lease sale
April 18th, 2008 at 8:40 amZTRADE: Added to June $37.50 NBR Calls for $1.55
April 18th, 2008 at 8:41 amTater – what did he say, had to grab the phone for a sec.
April 18th, 2008 at 8:42 amSLB rallying now. It’s hard to understand why people dump shares pre market on a number without reading or listening. Always amazes. Maybe you’re right, maybe not but wouldn’t you want to know before you just punt on a number. Maybe knowing that the outlook is more important than the #, lol.
April 18th, 2008 at 8:45 amHe said basically that yes it does matter, but that he is comfortable with the end result anyway.
April 18th, 2008 at 8:46 amI’m now pretty full on NBR … SLB call continues to go well.
April 18th, 2008 at 8:52 amHAL now running in trail of SLB, NBR should follow.
April 18th, 2008 at 8:52 amHmm, the Haynesville Shale just moved to the other side of the state. Guess I missed that : )
http://money.cnn.com/2008/04/17/news/economy/natural_gas/index.htm?source=yahoo_quote
April 18th, 2008 at 8:52 amJay – how’s that?
April 18th, 2008 at 8:53 amoh, I didn’t see the link on my crackberry. , lol. Maybe you should try to sell that guy some leases “on the cheap”.
April 18th, 2008 at 8:54 amSharon Efferson – could see gas prices on fire this summer due to hurricane forecasts. Does she get a percentage from T. Boone or what?
April 18th, 2008 at 9:05 amz- did you see the LNG article in the WSJ this morning?
April 18th, 2008 at 9:08 amReef – no, LNG the company or the commodity.
April 18th, 2008 at 9:09 amSLB up $2…I wonder how those sellers down at 92 feel with the stock over 97 now?
HAL a rocket ship now.
NBR in the green
April 18th, 2008 at 9:10 amFront page, the commodity. Looks like George Kaiser had it backwards. LNG will not come to US, rather than lower NG prices, will raise them.
April 18th, 2008 at 9:12 amScoop – they may be pinning you on PQ
April 18th, 2008 at 9:13 amSLB topping $98.
Reef – reading it now.
April 18th, 2008 at 9:21 amMarcellus-Haynesville(Bossier)-Barnett——Wild Idea of the day…US is exporter of NG
April 18th, 2008 at 9:23 amAubrey said the same, also jokingly, on the 8 shale play conference call.
April 18th, 2008 at 9:24 amZ, any idea what is driving DRYS today?
April 18th, 2008 at 9:26 amReef- did you see the 5,000 acres in Tarrant Cnty CHK is picking up for $17K/acre last night.
April 18th, 2008 at 9:26 amz-But I am not joking…
April 18th, 2008 at 9:26 amTarrant- in the core area, that seems like the going price
April 18th, 2008 at 9:27 amPopeye – no, strong market maybe. I’ve taken a little hiatus from the group and am not chasing into earnings. Rates have been forming what in a stock would be a flag with decreasing volatility. Have no idea if the idea translates but I’m going to schedule a lunch with my shipping expert soon.
April 18th, 2008 at 9:27 amI’m sure the JP Morgan egghead is calling them idiots this morning…He, unlike Aubrey, lacks vision.
April 18th, 2008 at 9:28 amGood morning
April 18th, 2008 at 9:29 amVery hard to stay long HAL when looking at the chart
makes me mighty nervous
DO breaking out. I love nothing more than going against a analyst recommendation and being right.
April 18th, 2008 at 9:29 amLNG prosess question. Is a facility a one way operation. Can it receive only or could it liquify?
April 18th, 2008 at 9:31 amDenise – when in doubt sell half. I think they are in front of a shift in N. American gas activity that will drive the Gas rig count up 100 to 200 rigs in the next 12 to 18 months. That’s a lot of pressure pumping , drilling etc etc.
NBR by the way is great play on the Bakken. Hope to have my piece out Sunday but their rigs are the no kidding around size 1,000 horsepower variety you need to drill 10,000 feet down and then a mile over the section. They have 15 rigs in the play now working for the likes of EOG, WLL, CLR, HES, MRO, COP(Burlington) and the play looks to be accelerating so NBR is going to benefit from increased natural gas AND oil.
April 18th, 2008 at 9:33 amSLB tapping on 99 now.
Reef – I’m sure it would take a massive refit but you would have the port/mooring part of it as well as the pipeline infrastructure and permits so its a lot better than greenfield. But I don’t think any of the old ones or the new ones can flip a switch and reverse the process.
April 18th, 2008 at 9:35 amSold 1,200 to close long position in GSG (ETF commodities, heavily weighted in crude) Sit and watch the fed for a bit.
April 18th, 2008 at 9:36 amI am having a seriously good day. This kind of activity does not last and while I’m enjoying it I am looking to raise cash in the near future and play with more house money.
April 18th, 2008 at 9:37 amSLB at $100
April 18th, 2008 at 9:43 amFor all Marcellus fans, here is an opps……
ATN Atlas Energy Resources announces its decision not to proceed at this time with offering of Class B units (41.26 )
Co announces it has determined not to proceed at this time with the previously announced offering of its Class B common units, as set forth in its preliminary prospectus supplement filed on April 17, 2008 with the SEC, in order to allow investors sufficient time to become aware of information relating to certain non-cash balance sheet adjustments resulting from its natural gas and oil derivative contracts.
April 18th, 2008 at 9:44 amThanks Eli
April 18th, 2008 at 9:45 amUncle Phil
http://www.321energy.com/reports/flynn/current.html
April 18th, 2008 at 9:47 am10:02 am EST
Nymex Crude Pulls Back After Strong Week
By Gregory Meyer
Of DOW JONES NEWSWIRES
NEW YORK — Crude oil futures surrendered more than $1 a barrel Friday as traders took profits and the dollar registered gains.
Light, sweet crude for May delivery was recently down $1.35, or 1.2%, at $113.51 a barrel on the New York Mercantile Exchange. June Brent crude on the ICE futures exchange was trading $1.19 lower at $111.24 a barrel.
Nymex crude Thursday closed more than $4 above last week’s closing price. The urge to take profits, along with Thursday’s expiration of options on May Nymex crude futures, cooled the market, traders said.
“Options went off the board yesterday, which let some air out of the balloon,” said Peter Donovan, vice president at Vantage Trading on the Nymex floor. “It’s also Friday. After being up four or five bucks, it’s time to give a little something back.”
Oil fell as the dollar gained strength against the euro, which was recently $1.5757 from an all-time high of $1.5985 Thursday. The greenback’s weakness has helped support crude’s months-long rally, for reasons including the fact that it softens the blow of high oil prices for buyers using other currencies.
“We believe the oil price remains mesmerized by the course of the U.S. dollar.,” Deutsche Bank commodity analysts said in a note Friday. If the euro should climb to $1.62, it would imply oil prices jumping to $118 a barrel, Deutsche Bank said.
Oil has also derived strength from outages and uncertainties in exporting regions.
In Nigeria, where some 500,000 barrels a day in capacity remains offline because of sabotage and security concerns, the Shell Nigeria Joint Venture received a report of an explosion in the Cawthorne Channel area of the Niger Delta Thursday, a spokesman for the joint venture said. The Cawthorne Channel is located in the southern part of the Delta, near the Bonny Light crude oil shipping facility.
The report follows a claim earlier Friday from militant group the Movement for the Emancipation of the Niger Delta that it had sabotaged a pipeline at Adamakiri, located in the Cawthorne area.
Some analysts warn prices could decline in the second quarter amid signs a slowing U.S. economy will eat into demand. Among them is Goldman Sachs, which foresees a potential short-term price drop but a rebound later in the year. The bank raised its year-end target for the benchmark oil price to $115 a barrel from $105 a barrel, and now says oil prices will average $105 this year.
“We reiterate…that the window for a price pullback to around $99 a barrel is rapidly closing as we expect that expansionary fiscal and monetary policy measures, along with a stable price environment, will support a recovery in US oil demand,” and strengthen prices for crude futures scheduled in later delivery, Goldman said.
Front-month May reformulated gasoline blendstock, or RBOB, declined 3.88 cents, or 1.3% to $2.9190 a gallon. May heating oil fell 2.77 cents, or 0.9%, to $3.2397 a gallon.
—By Gregory Meyer, Dow Jones Newswires
April 18th, 2008 at 9:48 amZ….what about SLB. This is a gift I’m having a hard time holding on to.
April 18th, 2008 at 9:49 amK- I’m taking half off the table soon and playing with house money.
April 18th, 2008 at 9:49 amZTRADE: SLB – Half out of the May $100 calls picked up yesterday for $4, up 105% with the stock up about $5, I will take longer dated called on a pullback next week.
April 18th, 2008 at 9:53 amI’m going to take half of the May HAL calls off the table today with the stock up around $2 and earnings before the open. I will also likely add longer dated calls here today.
April 18th, 2008 at 9:58 amRe #52 – Are you thinking the same way about DO?
April 18th, 2008 at 10:05 amZTRADES:
HAL – Out Half HAL May $45 for 3.05 for 97% gain to average cost. Will be looking to add longer dated calls today on a pullback.
DO – Out half DO May $130 Calls for 7.30, up 115%.
Time to play with more house money and less of my own money.
April 18th, 2008 at 10:05 amJason – great minds!!!
April 18th, 2008 at 10:06 amNatural gas up $0.20 so all three sets of my UNG puts are toast.
April 18th, 2008 at 10:09 amWhat about nfx? That’s a keeper until earnings?
April 18th, 2008 at 10:09 amzman:
going out to june with HAL and SLB ?
everything up but HK down ?
April 18th, 2008 at 10:11 amzman:
who owns the house money ?
April 18th, 2008 at 10:12 amZ…I get july for HAL, and Aug for SLB…..No Junes available
April 18th, 2008 at 10:13 amVTZ – I think so unless it really runs into them making earnings impossible to justify the price. Those guys are very smart and I think they will not only scream about 6 mm/d IPs in the Woodford, but more Uinta oil than people are thinking. Then there’s the Mancos shale… and maybe a deepwater update (been awhile)
Uop – its a nickel. RE HAL and SLB, yep June, just waiting to see if we cool at all. HAL getting close for me to a trigger.
CNBC says MEND blew up a shell pipeline.
House money – as in when you take the money from the casino and then play with it instead of your own. Hate to use a gambling metaphor but it sounds cooler than saying I’m playing with my profits.
April 18th, 2008 at 10:13 amThank K – hadn’t had a chance to even look yet, fingers on fire.
April 18th, 2008 at 10:14 amSLB – over 101. My scale in and scale out methodology may leave a little on the table but it keeps me out of trouble too.
I started the process of lengthening into this rally some time back and am happy with where a am on NBR. I may add more HAL but I won’t lengthen SLB until a little later in the day if it keeps going ballistic.
April 18th, 2008 at 10:18 amZ – PQ not acting real well. Were you able to read the UBS report that put them at HOLD? Any revelations? At 3.9X 2009 CFPS, it is awfully cheap. The UBS analyst must see something else he does not like?
April 18th, 2008 at 10:30 amCWEI up 6% 62$ a triple in a year?
April 18th, 2008 at 10:31 amZMAN – HAL 47.5’s at 2.50 or so is where I am looking.
April 18th, 2008 at 10:32 amIsle – no, did not see it. I think the characterization is unfair though as it is within a hair of its all time high…not acting real well….today? ok, sure, I think it is noise. Volume low and people have to wonder about the report to so it put the brakes on the move. Would love to see it if anyone has it?
April 18th, 2008 at 10:35 amReef – yes, those or the 50s, pullback happening now although not much of one on the SLB and DO.
April 18th, 2008 at 10:37 amI guess their PQ target was $20 that I found puzzling – yes it has been a nice mover.
April 18th, 2008 at 10:38 amCwei- riding the Leor/ECA bossier buyout
April 18th, 2008 at 10:38 amELI – if you are around, I never got the PQ piece. Love to see what the justification is for the luke warm rating and target.
April 18th, 2008 at 10:40 amWas just looking at my cash position. Ah the dangers of trading quickly and doing too many things at once, did not sell half my SLB calls at 4, bought 50% more. Taking them out now.
April 18th, 2008 at 10:43 amReef- you liked what you saw the other day at CWEI?
April 18th, 2008 at 10:46 amYes- I think the Bossier asset get sold for more than current market cap
April 18th, 2008 at 10:47 amHAL may announced a $200 mm plus acquisition on Monday – Expro (EXPRF)
April 18th, 2008 at 10:48 amReef = Wow
April 18th, 2008 at 10:48 amanother WTF- REXX at $22.69
April 18th, 2008 at 10:54 amzman:
for hal, if there is an acquisition, does this not mean it will drop?
April 18th, 2008 at 10:56 amZ-#75 how would that affect the stock price
April 18th, 2008 at 10:56 amNot necessarily. 1) its a pretty small nibble for them 2) its a high end well flow processing company so its synergistic and scalable. I’m taking July HAL $50 calls if they will come down to my price.
Hey look, even PQ and HK up.
April 18th, 2008 at 11:00 amReef – no way I can justify REXX up there. Hypey, hypey, hypey.
Was just on the phone with a fund manager friend who always puts the fear of hot money leaving into me. I do agree with the point that as the broad market starts to look better than money flows will come out of energy and into things like C and Wachovia etc. Times will not always be this good for the group and we are due a pull back. The question is when does it start and it is a craigy looking top or a nose dive. Also, how much money has retreated to the sidelines that feels like it has missed the energy play and could serve to boost/extend our runs. Again, we aren’t expensive … not at $9 NG and $90 oil, let alone $10.50 NG and $115 oil. Things that I think about late at night and why I constant take profits and extend careully up and out in a market like this.
April 18th, 2008 at 11:05 amPQ on UBS – ok, like I thought they are basing the $20 on NAV. They are a bit behind the times on the transition from offshore, thinking (guess this 42 page doc took awhile to write, lol). They point to a couple of points of upside potential but give them no credit for it and say that further guidance will be helpful. Do you want to be spoonfed?
They go on to say their NAV includes 200% reserve replacement (that’s probably light) but does not incorporate accelerated activity, exploration success (I agree to some extent there re Pelican Point) or downspacing (oh come on!).
Anyway, this is a CFPS growth story with large unbooked reserve potential ….they acknowledge management has id’d 6.5x reserves in its acreage relative to its booked reserves.
Finally, their price deck is low in my opinion and will likely come up but they are assuming production growth at the top end of management’s range which actually gives them a CFPS estimate for 2008 well above the Street. My thought is that they will get the spoonfed guidance they are looking for on the call and will eventually end up raising their rating as they grow more comfortable with the name.
I see nothing revelational here after a 10 minute read of this fairly cookie cutter, number laden report but will continue to look. I’m holding what I’ve got.
April 18th, 2008 at 11:20 amHK – I’ve seen references to UBS new price projection for HK linked to 2008 earnings of $3.20 but I can’t find it in print anywhere. Can anyone confirm that’s their estimate and if so how they reconcile it to the $0.69 average analysts’ estimate for 2008 posted on HK’s own site?
April 18th, 2008 at 11:24 amHK – meant to link it to the $35 UBS projection.
April 18th, 2008 at 11:24 amJust can’t get HAL to come in on a day like this…being patient, canceled $50 July call order and will wait for it to drop.
Elwode, that’s their CFPS estimate (and it is actually 3.25), their EPS estimate is $0.80
April 18th, 2008 at 11:25 ammorning all. have CNBC finally started some responsible reporting. Miss Epperson calmly reporting that this pipeline in Nigeria is insignificant and the reaction overdone…
April 18th, 2008 at 11:25 amThanks. Still a nice bump up.
April 18th, 2008 at 11:26 amElwo – and again, UBS price deck is probably light on both oil and natural gas.
April 18th, 2008 at 11:27 amZ-just read an interesting opinion on the long euro/short dollar trade is looking done
this would support your fund mgr friend’s opinion a rotation out of the energy space is likely or probable
April 18th, 2008 at 11:27 amDenise – he by the way is in here and is a huge fan of Doug Kass’
April 18th, 2008 at 11:28 amBloomberg reporting hal in talks to acquire expro and would top Candover Partners 3.2b offer
April 18th, 2008 at 11:31 amZTRADE: HAL July $50 calls (HALGJ) for $1.75. May add more lower, this was done with the stock up $2 and earnings are Monday before the open.
April 18th, 2008 at 11:31 amDenise, thanks, reading it now
April 18th, 2008 at 11:32 amMr K is good-but no idea of his market thoughts gone for Passover-this must be the Gentile site!
April 18th, 2008 at 11:34 amEven Cramer mia
$3.2 B. oops, that’s bigger than the story I saw or what I show their mkt cap to be. Seems to be well know for days now and not holding the stock back but again, a lot bigger acquisition than I was thinking. Unlikely to take my second piece on that as you may get a kneejerk on Monday lower…but again, well known to everyone but me on the size.
April 18th, 2008 at 11:35 amDenise, the charts support that too. Take a look at the metals today. Gold and silver look to have put in a reversal. Its too early to confirm and the $ does look in need of one more move to the downside – it certainly would look odd if the rally continued in the $ from here. But ultimately the $ downleg is on borrowed time and we are in for a sharp reversal. Metals and energy will turn with it.
April 18th, 2008 at 11:37 am11:46 am EST
Nymex Crude Hits Record On Supply Threat
By Gregory Meyer
Of DOW JONES NEWSWIRES
NEW YORK — Crude oil futures reversed early losses and sprang to a new record above $116 a barrel Friday as the traders fretted over supply concerns in Nigeria.
Light, sweet crude for May delivery was recently up 70 cents, or 0.6%, at $115.56 a barrel on the New York Mercantile Exchange after rising to $116.10, a new intraday record high.
June Brent crude on the ICE futures exchange was trading 55 cents higher at $112.98 a barrel, also hitting a new intraday record at $113.57 a barrel.
After selling off early, the market started digesting unconfirmed reports of an explosion in Nigeria, Africa’s largest oil exporter. Oil’s months-long rally has derived strength from outages and uncertainties in producer nations.
“Any kind of geopolitical tension is going to pump up the market,” said Mark Waggoner, president of Excel Futures in Huntington Beach, Calif.
In Nigeria, where some 500,000 barrels a day in capacity remains offline because of sabotage and security concerns, the Shell Nigeria Joint Venture received a report of an explosion in the Cawthorne Channel area of the Niger Delta Thursday, a spokesman for the joint venture said. The Cawthorne Channel is located in the southern part of the Delta, near the Bonny Light crude oil shipping facility.
The report follows a claim earlier Friday from militant group the Movement for the Emancipation of the Niger Delta that it had sabotaged a pipeline at Adamakiri, located in the Cawthorne area.
Front-month May reformulated gasoline blendstock, or RBOB, was down 3 points to $2.9575 a gallon. May heating oil rose 1.65 cents, or 0.5%, to $3.2839 a gallon.
—By Gregory Meyer, Dow Jones Newswires
April 18th, 2008 at 11:38 amNot sure whether anyone in here is interested in the metals but this could be the start of a very sharp C wave lower for gold and silver. If so gold will move towards $800 very fast.
April 18th, 2008 at 11:39 amHey Nicky, hard to believe #86
Holdings Wiki tab updated
April 18th, 2008 at 11:41 amI am Nicky-I also bought a little uup today-
April 18th, 2008 at 11:43 amThx
bexp3d.com is having a good conf call giving great detail on bakken play
April 18th, 2008 at 11:46 amAye Z – I am sure it won’t last. Someone must have given her some valium.
I continue to look for the elusive top in energy. If higher highs are in store possible target areas are 117, 118.90 and 119.65. A break of today’s lows at 112.72 would be the first indication of a top being in.
Nat gas still looks bullish (heaven knows why fundamentally!) – 10.70 area may be it.
April 18th, 2008 at 11:47 amtexana – they’re not in Parshall or Sanish are they? Or are they 60 miles to the West in the HES, MRO, COP, CLR area?
April 18th, 2008 at 11:48 amWow NBR up a whole buck now. May not sound like a lot but on this stock that’s a move.
April 18th, 2008 at 11:50 amNicky – maybe the check from TBP bounced. Nahh, not possible.
April 18th, 2008 at 11:52 amBroader markets – this move up has been on very low volume so beware! Resistance at 1399 give or take a couple of points. I still think the SPX is ultimately targeting the 1416 – 1435 region before this rally is done but this cycle is due to top out on Monday so we may see another pullback and then a further run at the target areas.
April 18th, 2008 at 11:53 amNicky – agreed re broader market. I am concerned that energy (equity) names are seeing a bit of a speculative blowout. If we get an intraday reversal you will see me raise scads of cash as the selling will last for days. I don’t think its Monday obviously but I think it is approaching.
April 18th, 2008 at 11:55 amDenise re gold – it would be good to see a move below 907.30 now as we could then count five waves down from the 95.20 high.
April 18th, 2008 at 12:03 pm956.20 high that should have read.
April 18th, 2008 at 12:03 pmMonday may only be a short term top Z.
April 18th, 2008 at 12:04 pmTexana – cheapest play in the Bakken is NBR, the biggest rig operator there.
April 18th, 2008 at 12:07 pmUp 500 on the Hal blast
thank you z,
buy on the blast and ask question’s later
April 18th, 2008 at 12:12 pmBill – its been a good little run but very volatile. Started a new account for a relative in late Feb and took it from $20K to 25, back to 13, now over 55.
April 18th, 2008 at 12:17 pmMake sure you relative only looks at it once a year :))
April 18th, 2008 at 12:18 pmToo right!
April 18th, 2008 at 12:19 pmI don’t love my relatives that much!
April 18th, 2008 at 12:22 pmapbd
will you adopt me
April 18th, 2008 at 12:23 pmA – I saw your Christmas card so I know you are lying, LOL!
April 18th, 2008 at 12:23 pmScoop – Sorry, full house.
April 18th, 2008 at 12:24 pmz are you betting on some more upside for hal mon morn? think she stil has some more steam after this run/.?
April 18th, 2008 at 12:25 pmMay take EOG off the table as I have a little more E&P exposure than I need right now and I get cheaper exposure to Bakken via NBR.
T – I think so, yep. SLB seemed pretty comfortable with considerably higher N. American rig count in coming months.
April 18th, 2008 at 12:27 pmhttp://www.bloomberg.com/apps/news?pid=20602099&sid=awRCRh04Ag.U&refer=energy
Joke article?
April 18th, 2008 at 12:28 pmRE #111. If the CC’s of all the players in the Bakken keep an upbeat tone to future development, then NBR could have room to run it seems.
April 18th, 2008 at 12:29 pmZman,
Missed your NBR call, its around $2.05…do you still recommend adding? You bought at $1.55…
April 18th, 2008 at 12:31 pmor wait for a small dip
Oil Bears Talk Of Bubble, Lonely Voices Amid Red Hot Rally
By GREGORY MEYER
Of DOW JONES NEWSWIRES
NEW YORK — As crude oil prices edge further into uncharted territory, life as a bear has become lonelier than ever.
Benchmark crude futures have registered an electric performance so far this year and now — near $115 a barrel — hover well above some of the highest near-term forecasts among market professionals. The speed of the ascent has caught many market participants off guard and forced banks and brokerages to repeatedly revise their oil price outlook.
Yet some analysts continue to cry foul, warning that oil prices are teetering close to a steep fall — at least back nearer $80 a barrel. For these observers who see the world’s oil supply-and-demand balance loosening and weighing on prices, the red-hot rally is nothing short of astonishing.
“I personally think this is the mother of all bubbles,” said Michael Lynch, president of Strategic Energy and Economic Research Inc., a consulting firm in Amherst, Mass. He expects prices to pull back to $80 a barrel by late June, and in the long run step down to $50 as pent-up supply in Iraq, Nigeria, Venezuela and other underproducing exporters starts to flow.
For Tim Evans, an energy analyst and inveterate bear at Citigroup in New York, that bubble is “still expanding,” filled with sentiment that seems to ignore signs of what he views as a supply surplus through the end of this year.
“There’s no supply-demand deficit,” Evans said.
The case for lower oil prices is straightforward: the prospect of a deep U.S. recession or even a marked period of slower economic growth in the world’s top energy consumer making a dent in energy consumption. Year to date, oil demand in the U.S is down 1.9% compared with the same period in 2007, and high prices and a weak economy should knock down U.S. oil consumption by 90,000 barrels a day this year, according to the federal Energy Information Administration.
The International Energy Agency, the Paris-based energy watchdog of the world’s richest nations, last week lowered its forecast for world oil demand growth by 460,000 barrels a day and now envisions it will total 87.2 million barrels a day this year, nearly 1.3 million barrels a day more than last year. The IEA also sees supply from outside the Organization of Petroleum Exporting Countries growing by 815,000 barrels a day, about 50% more than 2006 and 2007 levels and the strongest growth since 2004, leading bears to contend the world is amply supplied.
All About The Dollar
The bulk of the oil market doesn’t seem bothered by this argument. Buyers have been emboldened by what they see as faltering supply, with OPEC members holding oil production steady and supply from outside the cartel, while growing, still up more modestly than earlier expected.
On top of supply and demand considerations, funds have entered the market for reasons unrelated to powering cars, jetliners or generators. As the dollar weakens against other currencies, investors have snapped up crude and other hard assets as a hedge against its decline. Oil is priced in dollars, meaning exporters are encouraged to adjust prices upward for crude. When they recycle their profits into euro, it pressures the dollar further.
While the Federal Reserve’s aggressive interest-rate easing cycle is aimed at stimulating the economy at a dangerous impasse, the oil market has taken its monetary policy cues squarely from the weak dollar. As fears gather that the rate cuts are leaving the U.S. economy extremely vulnerable to inflation, the rise in the price of oil is also seen by some as an early harbinger of those gathering prices pressures, reminiscent of the commodity price spike in the early 1970s.
Then there’s the China factor. Bulls point to the pivotal role played by strong demand for a slew of commodities from emerging economies, principally China. Oil demand growth in the world’s most populous nation has become a “security blanket” for those pushing prices higher as U.S. demand flags, said Paul Ting, president of Paul Ting Energy Vision Inc., a research and consulting firm in Short Hills, N.J. The IEA predicts China’s oil demand will rise 4.7% to 7.9 million barrels a day this year in spite of a slowdown in the U.S. economy.
Just as demand from the Asian giant has been a big force behind the rise in oil prices this decade, evidence that the U.S. slowdown is chilling China’s export-heavy economy is a major potential tipping point that bears think could send oil prices sliding. Thus far, that evidence hasn’t appeared.
“China’s export sector can arguably weather falling U.S. demand, as long as demand elsewhere remains buoyant,” the IEA says in its latest oil market report.
Sowing Seeds Of Collapse
In the U.S., stockpiles of gasoline have declined five straight weeks, while stocks of distillate fuels, which include heating oil and diesel, have fallen in nine of the last 10 weeks, which some say points to a market with shrinking wiggle room and another reason for high prices to hold.
While acknowledging the uncertainty of non-OPEC production, Lynch at Strategic Energy argues the dynamics of supply and demand justify a price of $30-$40 a barrel, while jitters in unstable exporting regions might reasonably double that price.
“But $114? I mean the run-up in in price we’re seeing in the last six weeks or so has happened while the fundamentals have generally speaking gotten bearish,” he said.
The benchmark crude futures contract on the New York Mercantile Exchange first touched $100 a barrel on Jan. 2 and has reached ever higher since. Nymex crude has risen 20% this year and 88% since the start of 2007, settling at $114.86 a barrel Thursday after touching a new record intraday high of $115.54. On Friday, the front-month contract was trading roughly flat at $114.82 after several record-breaking sessions for energy contracts.
Kyle Cooper, director of research at IAF Advisors in Houston, expects prices to eventually fall 50% from their highs, but is reluctant to say when, noting that investment is unlikely to stop flowing into the oil market while the Fed is still cutting interest rates.
Even with red flags on the horizon and oil prices shattering predictions, the rally has generated a sort of self-fulfilling momentum.
“We’re stuck in this rut of an upward market until something major changes in the macro picture,” said Adam Robinson, an energy research analyst at Lehman Brothers. After revising up, Lehman sees the Nymex benchmark crude averaging $89 a barrel this quarter and $93 in 2008.
To Evans, of Citigroup, those factors are already here. Higher prices are sowing the seeds of their own collapse, he says, as consumers start cutting back and producers search for oil that once was too costly to extract. Even OPEC members, whose steady output has helped install a floor beneath crude prices, may be tempted to leak more barrels on the market.
“We can’t expect OPEC to be disciplined with their production at these prices,” Evans said. By his reckoning, oil should be trading between $70-$80 a barrel. “We don’t need any further evidence for this market to turn lower,” he said.
—By Gregory Meyer, Dow Jones Newswires
April 18th, 2008 at 12:32 pmVTZ – certainly a joke article.
Bossman G – I think it has good long term potential as I’m holding May and Junes but we don’t use the R word around these parts.
April 18th, 2008 at 12:33 pmNBR is cheap to the group, has rigs available to be deployed as plays in N. America heat up.
ZTRADES:
Out TLM April $20 calls for average $0.50, down 74%.
EOG Getting out around $8.
April 18th, 2008 at 12:43 pmZMAN – Even if the momentum leaves the E&P guys, the suppliers to these CO’s should still have legs as their backlogs swell.
April 18th, 2008 at 12:45 pmRam – agreed. I am consoled by the fact that the group is moving up with the broad market and not down against it. My smart friend has proposed, and rightly so, that the energy names in aggregate will be a source of funds when the market decides to really like the financials and other beat up sectors. Much like everyone’s house served as their back up check book until 2006.
April 18th, 2008 at 12:54 pmLook at HAL on a monthly chart. Big breakout from a base that started back in late 2005. Could be some legs here kids.
April 18th, 2008 at 12:58 pmPaulson ethanol comments killing corn. That should be bad news for AGU, TRA at least from a sentiment standpoint
April 18th, 2008 at 1:00 pmsorry, meant Bodman, not Paulson in 131
April 18th, 2008 at 1:03 pmNot sure what Bodman said exactly but CNBC reported he said U.S. should move away from corn based ethanol. How he figured that out I have no idea.
April 18th, 2008 at 1:05 pmOn a life cycle basis the energy use to create corn based ethanol does not make sense, especially when you consider you could use the land for other profucts.
I believe he is implying that they should be using waste products not food products.
April 18th, 2008 at 1:07 pmCrude trying to close at high of day
April 18th, 2008 at 1:10 pmVTZ – exactly, cellulosic, there’s a nice plant running down in La.
The nitrogen consumption of corn is such that if demand for corn were to decline a bit while natural gas (fertilizer’s #1 cosst) were to stay up here then you are looking at a double whammy for TRA, AGU.
Oil running into the last half hour of NYMEX trading, up 1.30 at 116.11
April 18th, 2008 at 1:11 pmZman:
did I read this correctly:
there are comments to lighten up on
some E&P, oil/gas related companies,
even metals and agri was mentioned.
I see that soon money will go into financials and other beaten down areas, mthe $$$ have to come from somewhere: rotation out of sectors which had a runup.
April 18th, 2008 at 1:13 pmLot of volatility for opex day.
April 18th, 2008 at 1:13 pmUop – that’s the risk but so far it has not materialized and today would have been a very good day for it to have started using the SLB “miss” as an excuse to pound the group and shift to others sectors.
On E&P, they are not overvalued BUT they have had a good run and could see some profit taking as earnings come out.
Service stocks seem to be a little less further along in the near term move to me.
I have been long E&P and very light in service so I’m transitioning to: 1) a little more cash and 2) a little less E&P and a little more service/driller weighting. Plus I added that small slug of TSO this week in the refining patch. Have not yet decided if I’m around in that patch through earnings.
April 18th, 2008 at 1:17 pmCLR down 3%, another day like that Monday and I take some calls.
April 18th, 2008 at 1:19 pmNew highs for rbob. If they close energy up here broader market may see some profit taking – something has to give here.
April 18th, 2008 at 1:25 pmzman:
i have:
E&P: CHK, PQ, HK
Explo: HAL, SLB
Ref: TSO, COP
these are all green,
NG:only RED: UNG,
April 18th, 2008 at 1:25 pmOIL: short: DUG, USO, also RED.
on these I wait for action.
Nicky – you would think so.
April 18th, 2008 at 1:27 pmVery scary stuff. Well we had our one of only 2 down days in nearly two weeks yesterday so i guess be very thankful for that 12 cent fall I think it turned out to be.
April 18th, 2008 at 1:29 pmzman, regarding your long stock positions, do you have a timeframe for holding in mind or just keep holding until fundamentals/markets materially change? It looks like all your investment-grade holdings are doing very nicely? Thanks.
April 18th, 2008 at 1:30 pmZMAN – Where you thinking May or June on CLR?”
April 18th, 2008 at 1:33 pmSeymoujs
I will hold the NFX and HK until they are gobbled up. The others I may retire if I think a medium term top is forming – like 6 months and I just don’t see it now.
The SD and CLR aren’t cheap now but I think they will be. SD will sneak up on people.
April 18th, 2008 at 1:34 pmZ – how come i cannot see yesterdays posts?
April 18th, 2008 at 1:34 pmRam – May for their earnings call. Maybe some June at the same time to hold after punting the Mays.
April 18th, 2008 at 1:35 pmNicky – dunno, what do you see? Did you try clicking on Thursday on the calendar in the left sidebar? I just looked at both.
April 18th, 2008 at 1:36 pmCLR is as bad as PQ in trying to split the spread. A real Knucklehead at the options desk for CLR.
April 18th, 2008 at 1:43 pmSorry found them now… oil going for 117 after the close.
April 18th, 2008 at 1:50 pmActually, CLR is worse!
April 18th, 2008 at 1:55 pmRam – I end up waiting hours on names like those. What’s worse is when they are going down. Rapacious.
April 18th, 2008 at 1:57 pmI am more likely to add to NBR than anything else right now but I’m done positioning for the day…I think.
April 18th, 2008 at 1:59 pmAnybody have a good source for pretty current sector money flows? Used to know one but can’t remember it.
April 18th, 2008 at 2:01 pmNicky, note the change on the day in the crude and natural gas contracts. Just move the decimal point over on crude one space to the left and you get the change on natural gas. With a few exceptions, its been like that for weeks now. Completely screwy.
April 18th, 2008 at 2:11 pmIf we get a greater than 50 bcf injection this week comign up are people still going to be able to continue driving the NG bandwagon?
April 18th, 2008 at 2:16 pmZMAN – Any last thoughts on HAL before earnings?
April 18th, 2008 at 2:19 pmVTZ – search me?! CNBC citing LNG, Canada, conveniently leaving out domestic supply which is booming. May as earnings roll out people look at the YoY growth of the top 10, 20, 50 gas producers and say, “wait a moment!” but the traders will be sputing off about hurricane forecasts.
April 18th, 2008 at 2:19 pmThe nat gas story is just absurd Z. And I don’t understand why again everybody seems so bullish. Dennis Gartman again reiterated he was long last night – why I ask myself???
Okay broader markets. Potentially bullish count is this. We correct from here towards the 12750 area. We then take off in a very powerful move up towards about 13500 on the Dow. This move is negated with a move under 12567. A move under 12646 would be an early warning sign.
April 18th, 2008 at 2:22 pmHAL – I’m holding the rest of my May position which is up about 100% and today’s buy of the July’s which is flat. One of the things SLB said is that they are seeing cost pressure coming to a stop on pressure pumping. If HAL confirms I think the stock goes higher.
Nicky – it seems to be a lot easier to make a good trade if GE gets your back via CNBC, lol.
April 18th, 2008 at 2:25 pmRegarding bullish count equivalent levels in spx are a correction in spx in a 3 wave move to 1375 area. Then up we go. Early heads up this count is wrong would be a move below 1366 and a move below 1357 eliminates it.
April 18th, 2008 at 2:30 pmOne thing I’ve learned in my time on and off the Street is not to beat your head against a wall. I know I’m right on supply in natural gas. At least more right than the bulls in the press. Fine. And they keep taking up. Rules to live by: Don’t trade angry. Don’t be impatient. The market will figure this out and if it does from $12 instead of $9.50 it will just have further to fall.
April 18th, 2008 at 2:31 pmRefiners not enjoying this rally, oil outpaced gasoline 3 to 2 today…VLO signaling a retrenchment, TSO flat and i’ll hold through the weekend to see how it reacts to west coast cracks on Monday.
April 18th, 2008 at 2:33 pmThat’s how I feel about the whole energy market Z!
April 18th, 2008 at 2:33 pmNivky – when you say energy market you mean the commodities right, not the equities.
April 18th, 2008 at 2:34 pmWhy is HK missing the rally?
April 18th, 2008 at 2:37 pmHey Z,
quite a day. Transfer of market “oomph” from E&P to service makes sense as a catch-up. If things are so red-hot in shale-land it must go thru to the drillers eventually & the market has to anticipate that.
Regarding blow-off versus craggy-top versus still somewhere on the slopes: interesting than no gaps-up to be seen in NBR, HAL, SLB. If those gaps start appearing next week it would start to feel more bubbly.
Main headline on Yahoo Finance talks about GOOG & C, not energy names.
Realmoney frontpage isn’t screaming about energy, just a few SLB articles.
It certainly ain’t an across-the-board commodity blow-off, with GLD & SLV down and miners like AUY looking sickly.
I was going to add that it is weird seeing a market going up without Cramer screaming about it… but after promising to be away from Realmoney this week, the Cramerdebeast couldn’t stay away today..
April 18th, 2008 at 2:38 pmcommodities yes Z
April 18th, 2008 at 2:39 pmDooch – same reason CLR is, they already had one and are resting, been flatlined all day.
Dman – I really separate producers from service and while I think neither group is expensive they are less cheap than they were and E&P has had a big run, due a small pull back and then higher highs is my thought.
Service may be just getting started on what will be a really good sized moved.
April 18th, 2008 at 2:42 pmScoop – I hate to ask re PQ
April 18th, 2008 at 2:43 pmMany service names nowhere near all-time highs and some that are (RIG) are *cheap*. The only flaw in the service thesis for the last few years has been North America & that seems to have resolved itself…
April 18th, 2008 at 2:49 pm3:37 pm EST
Nymex Crude Settles At Record After Pipe Leak
By GREGORY MEYER
Of DOW JONES NEWSWIRES
NEW YORK — Crude oil futures settled at their fourth record high in five sessions Friday after a flurry of buying instigated by supply worries.
Light, sweet crude for May delivery settled $1.83, or 1.6%, higher at $116.69 a barrel on the New York Mercantile Exchange and rose as high as $117.00 after the pit session closed. June Brent crude on the ICE futures exchange settled up $1.49 at $113.92 a barrel, also a fresh record.
Oil markets were rattled by a pipeline leak in Nigeria, a major exporter of the kind of light crude that underlies the Nymex benchmark. A spokesman for Royal Dutch Shell PLC (RDSA), part of the joint venture that operates the line, said the damage appeared to have been caused by explosives and a “small quantity” of production had been shut down to allow repairs to proceed.
Though involving a tiny amount of the world’s crude flow, the leak was the latest reminder of the instability that has plagued supply. The pipeline announcement followed a Nigerian militant group’s claim it had sabotaged a pipeline in the area run by the joint venture. About a fifth of Nigeria’s estimated production capacity of 2.47 million barrels a day is on hold because of security concerns.
“It just goes to show the geopolitical tensions still exist. They’re not going to go away,” said Nauman Barakat, senior vice president at Macquarie Futures USA in New York.
Still, many market participants groped for firm reasons behind the day’s swing, saying it reflected a bias toward buying into declines as recent selloffs have proven ephemeral. Oil futures have risen 15% in April and 22% in 2008, topping forecasters’ most aggressive price predictions.
“Every time it dips the buyers come back in, and before you know it you’re making new highs,” said Tom Bentz, a broker and analyst at BNP Paribas Commodity Futures in New York. “You just continue to sustain this up-move.”
The oil markets have managed to shrug off data portraying demand under pressure as the economy slows. In the U.S., the world’s largest energy consumer, oil demand is down 1.9% year to date from the same period in 2007, the Energy Information Administration reports. Some analysts speculate that fast-growing nations such as China will pick up the slack.
Oil fell early in the day as traders took profits after a strong week. Now $120 is under discussion as a price target for the market, perhaps as soon as next week.
“The inability of the market to hold its early weakness is supportive, and potentially indicative of further gains next week,” said Eric Wittenauer, energy analyst at Wachovia Securities in St. Louis.
Oil’s higher close contrasted with weakness in other commodities such as gold, silver and copper. It also ran up as the dollar made gains for the day against the euro. The dollar’s months-long decline has fueled the crude market, blunting the effects of higher prices on consumers using other currencies.
“It’s all the more impressive when energy is up despite an up day in the U.S. dollar,” said Walter Zimmermann, an analyst at ICAP/United Energy in Jersey City, N.J. “When you have a good rally in the dollar and crude oil is up, that’s significant.”
Gasoline and heating oil futures were borne along with the crude rally, both settling at new records.
Front-month May reformulated gasoline blendstock, or RBOB, settled at $2.9893 a gallon, up 3.15 cents, or 1.1%. May heating oil rose 2.49 cents, or 0.8%, to $3.2923 a gallon.
—By Gregory Meyer, Dow Jones Newswires
April 18th, 2008 at 2:50 pmAsk away; added them to the bank, broker & builder puts that I was so confident of 2 weeks ago. Lessoned learned? Just listen to ZMAN. Luckily I had GOOG calls.
April 18th, 2008 at 2:50 pmSambone – did you notice not quote from Flynn in there. Hmmm.
Scoop – I wasn’t saying that at all. Far be it from me to rub salt. Just hoping you got out at all.
April 18th, 2008 at 2:52 pmUncle Phil – I guess he’s over at Fox now, so Dow Jones don’t like him! LOL
Leaving early today, had as much fun as I can. Have a good weekend! Tini time!
April 18th, 2008 at 2:59 pmHK edging into the party. CHK: did we get the dip already? Was that it yesterday?
April 18th, 2008 at 2:59 pmBeer Thirty!
Have a great weekend everyone!
April 18th, 2008 at 3:00 pmZ, Actually I had a profitible month with the energy trades. Many thanks
April 18th, 2008 at 3:18 pmZ – I’m with scoop…unbelievable run here. I can’t thank you enough!
April 18th, 2008 at 3:30 pmGOOG April $500 calls up 72-fold today..that’s what i call a nice trade!
April 18th, 2008 at 3:35 pmZ-
Who’d a thunk it? Buying NG to store? Somebody never heard of futures?
Now if I can just leave NG puts before July with anything resembling my posterior intact I’ll be both happy and wiser. All mine, I own it no matter the outcome.
Many thanks on all the excellent work.
Much appreciated.
Let you know after the Lake O meeting.
April 18th, 2008 at 4:26 pmThree new papers from Matthew Simmons
http://www.simmonsco-intl.com/research.aspx?Type=msspeeches
April 18th, 2008 at 5:50 pmEnergy setiment:
184 posts today & counting suggests a fair bit of excitement in the energy in-crowd that inhabits the Z-universe.
But check out the “Top Ten Most Searched Stocks on TheStreet.com”:
GOOG AAPL C GE AUY POT MSFT FSLR V MO
Just one of the ten is an energy stock & FSLR isn’t exactly in our patch just now.
What does it mean? Dunno but I thought it worth mentioning.
Here’s the very peppy vid if you haven’t seen enough market happy talk already 🙂
http://www.thestreet.com/_rmswtile/video/strategysession/10412805.html#10412805
April 18th, 2008 at 6:22 pmNot sure whether anyone on here has a positive or negative opinion on Dennis Gartman but he appeared on Fast Money tonight as he has done almost every evening this week and proceeded to talk up natural gas (he is long of course) – no reasons given at all which I find maddening – just that it is going up so it has to keep going up! Also bullish on oil which he pretty much said he saw never coming down (also quite ridiculous) although I know he said last night he has no position. How can they pay these guys to come on and say nothing except buy and give no reason. What gets me about Gartman is that he is almost revered in commodity land – I don’t get it really. Nothing technical and nothing fundamental mentioned.
April 18th, 2008 at 7:32 pm