Tuesday Morning

182 thoughts on “Tuesday Morning”

1. HAL presenting at ubs in 10 minutes

2. HAL Speech notes – a horizontal well generates 6x the revenues of a vertical well for HAL. Horizontal wells now over 25% of the wells drilling (you can see this in yesterday’s post),

   In the shales, they continue to hone the completion process and are getting more touches in each well.

3. 8:02 am EST

   Crude Steady, Supply Concerns Support

   By Nick Heath
   Of DOW JONES NEWSWIRES

   LONDON — Crude oil futures were little changed in London trade Tuesday, prices sandwiched between signs that near-term oil supply/demand balances might be easing, and longer-term indications that oil markets are unlikely to receive any further supply boost from the world’s major producers.

   Also underpinning prices were a fresh round of weakening in the dollar against most major currencies, while the high price of distillates continued to funnel support into crude prices.

   At 1143 GMT, the front-month July Brent contract on London’s ICE futures exchange was down 13c at $124.93 a barrel.

   The front-month June light, sweet, crude contract on the New York Mercantile Exchange was trading 7 cents lower at $126.98 a barrel, ahead of its expiry later Tuesday.

   The ICE’s gasoil contract for June delivery was up $5.75 at $1,204.50 a metric ton, while Nymex gasoline for June delivery was up 14 points at 323.80 cents a gallon.

   Signs of an easing near-term supply outlook struggled to make inroads into high crude prices Tuesday, with many market participants looking past them to recent comments from OPEC’s President Chekib Khelil that the organization was unlikely to increase output when it meets in September.

   A recent boost to Saudi Arabian output by 300,00 barrels a day, President George W. Bush’s approval of a halt to shipments into the Strategic Petroleum Reserve Monday — worth approximately 70,000 barrels a day — and increased Iraqi exports of around 125,000 barrels a day for June have added to the appearance of a higher supply picture, said Edward Meir, analyst at MF Global in New York. With slowing, perhaps declining U.S. demand, crude balances may be easing further, he suggested.

   “However, none of this is making a dent in the recent price spiral, as participants are perhaps concluding that this extra crude will, at best, offset the supply shortfalls we are seeing in other countries (i.e., Nigeria, Mexico, and Iran),” he said.

   “In addition, slackening U.S. demand is being offset by brisk offtake in Asian countries,and to a lesser extent in Europe, where the stronger euro (against the dollar) is cushioning the price increases.”

   Continued rises in the distillate market helped keep crude oil prices aloft Tuesday, analysts said, where much of the attention is trained on increased Chinese import expectations after the recent devastating earthquake and ahead of the Olympics later this year.

   “Market participants are currently choosing to focus on the supply side, with investors doubting that robust demand for distillate fuels from Asian, Middle Eastern and other emerging market economies would be met with enough supply.”

   Meanwhile, chart watchers said that cracks might be starting to appear in the strong investor momentum that has helped propel crude to its recent, record highs, with crude prices starting to consolidate near their peaks. A slim difference between Monday’s opening and closing price levels hinted at indecision, analysts said.

   “To continue momentum, oil needs to make fresh highs as failing to do so will make the chart look a touch “choppy” and may force testing of support further below,” said Andy Riddell, energy broker at ODL Securities in London.

   He suggested without any fresh news, the trigger for the next move may turn out to be Wednesday’s U.S. Department of Energy inventory data, due to be published 1430 GMT Wednesday.

   According to the average of a preliminary Dow Jones Newswires survey of seven analysts’ forecasts, U.S. crude oil stocks rose 300,000 barrels last week, while gasoline inventories grew by 400,000 barrels and distillates rose by 1.2 million barrels.

   —By Nick Heath; Dow Jones Newswires

4. Boone Pickens Sees Oil Hitting Up To $150/Barrel This Yr-CNBC

   Dow Jones Newswires

   NEW YORK — T. Boone Pickens, the famed Texas oilman and investor who has turned his attention to other energy sources, expects crude prices to continue to rise, possibly as high as $150 a barrel this year.

   In an appearance Tuesday morning on CNBC, Pickens repeated his recent assertion that only natural gas is plentiful enough to offset dwindling supplies of oil, particularly for the U.S. He labeled ethanol “a joke” that at most could replace 5% of the country’s oil consumption.

   Pickens reiterated that his fund, BP Capital LLC, remains long on natural gas and oil. he said that only a global recession would cause the price of oil to fall.

   Pickens stressed that high oil prices are tied to depletion of supplies around the world and aren’t being driven by speculators, as some industry observers maintain. “There is no bubble,” he said.

   Last week, Pickens said his Mesa Power LLP had placed an order for 667 wind turbines from General Electric Co. (GE) as part of about $2 billion in start-up costs for his four-phase Pampa Wind Project in the Texas Panhandle. The turbines, to be delivered in 2010 and 2011, will be capable of generating 1,000 megawatts of electricity.

5. HAL sees activity levels increasing over the remainder of the year in N America. See firming in prices coming soon.

   Thanks Sam, watched oil go from down $0.30 to up $0.50 when he said oil was going “higher”

6. Man drilling for oil in his backyard
   

7. Sane, I heard about that. He’s producing about 3 bopd, which should pay out the $100,000 well cost in a little over a year. This falls into the “not in my backyard” camp, even if I had oil which I don’t, I would not put one right behind the house. Smelly, lots of things that kid and dog unfriendly, fire hazard etc.

8. CHK – long term it will probably be good for the company (I’m long) but it was more thn a debt swap. Thet are raising $800 million plus $500 million and paying off a little over $300 million – a net increase of about $1 billion, possibly for Haynesville.

9. Wow, look at crude

10. Elwo – How do you know how much was on the revolver, I would assume its quite a bit higher than quarter end numbers as they were actively buying in the Haynesville as well as in several other places. Still, they are raising some $, still, its not enough to be a concern.

    Router down in Texas, time warner, having some trouble getting to some sites.

11. Funny, oil wells in the back yard, side yard and front yard are very common around here. About 28K to drill/complete to 1,150′.

12. You know the market is gamed when you see headlines like

    “Oil Rises to a Record After Pickens Says Prices May Reach $150”

13. Jay – I’ve driven through there and know the mini pump jacks of which you speak. Can’t imagine being able to keep my 4 year old off of the thing. Like an automated swing.

    RIG presentation going pretty well, saying they see higher day rates, not too concerned about project slippage.

14. ZMAN – Thoughts on CHK for those who missed last ZTRADE.

15. Sane – no lie. Self fulfilling prophecy makes returns easier to generate. I wonder if CNBC gets a kickback, lol.

16. CLR liking that Three Forks News, up $2 at the open and this is news that can probably drive the stock north of $55 as numbers will be boosted for potential here.

17. CLR!~~~~

18. Ram – just told the wife to pick up the piece she didn’t buy when I bought the other day.

19. CHK – I’m not counting the revolver, since that can go back up as ast as it went down.They use it like checking acct. I’m just counting the pay off of their 2013 notes.

20. Elwo – Ok, I thought they said they were paying down revolved which is just swapping rate in my book as its all on the balance sheet. But you are right, they are adding a little bit of dough to the capital budget, just not sure how much

    CLR up 7%. This should be good news for WLL and EOG too.

21. DRYS getting dropped eh, same song, different quarter.

22. CLR: up 8+%, this would be a closing high, only 40 cents off all time high. They speak at UBS Thursday morning, sure to get lots of questions and will flesh out what this means to them more then.

23. 9:34 am EST

    Nymex Crude Tops $129/Bbl Amid Tight Supply

    By Gregory Meyer
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures marched to a new record Tuesday amid continued uncertainty over supply in a period of growing world consumption.

    Light, sweet crude for June delivery was recently up $2.16, or 1.7%, at $129.21 a barrel on the New York Mercantile Exchange, after making an all-time high of $129.31. The contract expires Tuesday. More actively traded July Nymex crude was at $128.78 a barrel, up $2.06, or 1.6%.

    July Brent crude on the ICE futures exchange rose $2.27 to $127.33 a barrel.

    Crude retained strength this week after the president of the Organization of Petroleum Exporting Countries said that the producer group will make no decisions on output levels before its next scheduled meeting in September. On Tuesday, high-profile oilman T. Boone Pickens told CNBC he expects crude prices will continue to rise, possibly to as high as $150 this year.

    Pickens stressed that high oil prices are tied to depletion of supplies around the world and aren’t being driven by speculators, as some industry observers maintain.

    “There is no bubble,” he said.

    Oil and other commodities have hit new records this year as investors seek a hedge against inflation. Core wholesale prices, which exclude food and energy, rose twice as fast as expected last month, the Labor Department reported. The dollar declined against the euro, which was recently trading at $1.5662 from $1.5513 late Monday.

    “The market just doesn’t want to stop,” said Tom Bentz, a broker and analyst at BNP Paribas Commodity Futures in New York. “It just finds any slightly bullish news to hang its hat on, while bearish news gets swept under the rug.”

    While OPEC President Chakib Khelil said there would be no change in OPEC output before the group’s meeting, top exporter Saudi Arabia last week indicated that it is pumping 300,000 more barrels a day in response to demand from customers. The announcement has had little impact on prices, which have settled at records for the past two sessions.

    Supply constraints come as world oil demand continues to grow. In China, the world’s second-largest oil consumer, imports of distillates including diesel and jet fuel may grow in coming weeks in part due to the massive relief and reconstruction work needed after an earthquake devastated an area in southwest Sichuan province last week.

    Front-month June heating oil, which tends to reflect global distillate markets, rose 11.30 cents, or 3.1%, to $3.7881 a gallon. June reformulated gasoline blendstock, or RBOB, rose 6.06 cents, or 1.8% to $3.2972 a gallon.

    —By Gregory Meyer, Dow Jones Newswires

24. Thanks. You called the DRYS trade correct. You hopefully saved people here.

25. Re 22 … nevermind

26. Anybody have an broad market chart thoughts?

    Ram – least I could do after missing it on the way up?

27. Gravestone doji on S&P 500

28. XCO – low volume, but movin in the right direction

29. With this large move in CLR would you sell some today or wait until Thursday?

30. RE CLR: These are pretty ridiculous returns and I’m likely to sell both of my positions down some as they have suddenly become over large, despite the fact that I think CLR goes to at least $60 and would be there now in a less broad market constrained environment.

    Listening to the SWN presentation now, nothing earth shaking, just keeping on with business as usual in the Fayetteville, I’m not going to play for now.

    Up next BHI at 9:25 cst
    NFX at 11:20 and they could have news as well but not counting on it.

    Re XCO – T Boone gave them a nod on CNBC this am and also maybe some are thinking that their Marcellus shale acreage could have oil potential too as CLR hammers home the fact that the Trenton/Blackriver to the west has oil although that’s a huge leap. Don’t know when they are speaking next but would like to listen.

31. Loop – see #30 and know that I must sell it down due to its size in my portfolio, just too big a risk for a downgrade. My $50s are up 470% which is irresponsible of me not to have sold half except I already did back on May 13. My $55s are up 164% and a bigger piece of the portfolio than I’m comfortable with. So I’ll milk both of them and sell down based on a change in direction of the tick chart at this point.

32. what a homer in CLR…sorry I didn’t get in at the start…but thankful for what I got

33. Zman — re #26
    I’m new here and don’t want to be branded as a nut, but I did read that today is a full moon. The full moon effect says that significant short-term trend changes often occur on a full moon. FWIW

34. Morning all. Some much for Cramer’s theory that high oil prices are good for the stock market!
    Pickens did say that if the world went into a recession then oil prices would fall – duh! So do high prices lead the world into recession or are we in recession and its going to result in lower prices. Either way prices are coming down.
    He also said China demand may tail off after the Olympics. That argument has been talked about for years now and they are still talking about it as if its years away.

35. Brian, its ok, we have lots of nuts.

    Morning Nicky

36. Line in the sand for the bullish oil count right now is 126.28.

37. Uncle Phil

    http://www.321energy.com/reports/flynn/current.html

38. #34
    Baaa…Baaa…Wait for it……BoooooYaaaaaaah

    People actually listen to that guy!

39. ZTRADES

    Out $50 CLR June calls for 10.70, up 511%

    Out three-quarters of my CLR June $55 calls for $7.30, 192%.

    I think it goes higher but these had become too bloated in the portfolio on today’s 16%+ run in the common.

40. z- after u mentioned QBIK i saw their recent presentation on red chip last nite and it was pretty impressive. they have 2 acreage blocks in the haynesville, one totally surrounded by CHK , and the other surrounded by CHK and GDP. and wells are being drilled all around them. int in your thoughts

41. Its amazing now how we don’t even need any bullish news out of the energy market to drive prices another 2 bucks higher. Just confirmation by either GS or T Boone that prices are going higher is enough.
    T Boone continues with his argument that demand is outstripping supply. When asked by Joe Kernan where they weren’t actually getting enough oil (Kernan said we haven’t got any shortage in the USA) I noticed TB just avoided answering. I think the guy is brilliant but he did lose some credibility when he came on CNBC in January announcing loudly that he was now short and people needed to listen as he was expecting a big drop in the price. Suddenly his arguments of demand and supply were gone. Now admits he was wrong and back with the supply/demand issue again. If he really believed that then that did not go away overnight.

42. MXC now up almost 10X in just over a month.

43. Same thing with PDO and FPP.

44. Anybody know anything about MXC (Mexico Energy Co.)? [Apologies if already discussed here recently]- K

45. nicky – would love for somebody to have asked T Boone why he changed his position on supply/demand. however his argument about using natural gas to power auto;s made complete sense , and i can’t understand why more people aren’t making same argument

46. Someone mentions the moon and then Z sells CLR. Now I know what to look for LOL.
    apbd

47. Yes agree Kyleandy – exactly the same question I would like them to have asked him. And its really why I question his credibility – that and the fact that he is on CNBC continually talking the price up. And he says there are no speculators in this market! He also went short natural gas at the time. But I agree his talk of switching to alternatives is right on. And the fact that absolutely nobody here in government is doing anything about it. It seems to me that he was saying well we will push the price up until ‘they’ take notice as he commented that by the time the election came everyone would be talking about it!

48. Nicky, Boone was short purely as a seasonal play. He’s been doing that for years & it worked until this year. But even when he was short he maintained that the longer trend was up.

49. Dman – I concur, seasonal play, he has never once said, the long term is anything but up.

    APBD – hey, you figured me out!

    Kyleandy – he’s been saying that about autos for some time and about how silly it is to use gas to make power. What was the name of that gas-for-transit stock?

    Nicky – there are separate questions for a guy like T Boone on supply / demand at present and in the future. Plus there is the where is

    Re QBIK – I have no good thoughts there, have not looked over the balance sheet or play but will get to it.

50. Looks like I picked the wrong day to quit smoking……….

51. Well if he was short nat gas it was not the right time of year and I thought he would have known that. Nat gas often has a very big run early in the year.
    Also he really doesn’nt need to come on CNBC every other week if he believes the fundamentals. He is moving the price and it is obvious. On top of that this move in energy is likely to have a devastating effect imo. Nobody is gonna thank the guys that ran this up in two years time.

52. Good morning,
    T Boone is 80 yrs old and going out on a high note! (and having the time of his life)

    Mr K shorting oih this am -latest market rating 3-2

    Z- you managed to add spell wrong!
    Thx

    My Gann/Voodoo man thinks 1380ish could be in order

53. I do a 500+% trade and I get trouble over spelling, wow..think I’ll out to the beach early.

    PQ and HK looking better.

    CLR up 19% now…well, I said I thought it was going higher.

    Getting on the Dresser presentation.

54. Z-I meant when you make a comment incorrectly spelled it now underlines the word in red(assume you added to the site)
    I was seriously thanking you!

55. xco looking better too

56. Denise, if the top is in then I think 1350 is possible.

57. And I was seriously kidding D! The underline feature has been there for awhile, must be yo pc.

    VTZ – I see it, must be the T Boone Effect, check out SU.

58. MMR moving higher – Reef – anything new there, sent you an email last night, rumor mill is whirling, results thought to be this week and not everyone is happy. I don’t think these people know anything.

59. Out CLR June 55 @$7.90-316% gain since friday! Thank you Z!!!

60. 58- Loading up on EXXI with my CLR gains.

61. z – beach in ark??????

62. ZTRADE: Entering July $70 NFX calls for $2.90. Still holding the June $60s here but not for long.

63. Kyle – um, no not those, no bueno. Going to Austin for the weekend, will find a beach around those parts.

64. Reef- I gues #60 is my answer to #58, lol.

65. z, no still seeking solid data. I am reacting to MMR move. Data may swing me out or go two fist.

66. wll headed to 100, should have gas plant runnin in the next couple of weeks. there r now flaring all gas as r other bakken players in parshall area ie eog. approx 140boe/mmcfg of strippable liquids. from this gas, &initially put about 3mmcfgpd into the line.somebody else likes it they just bo 125k sh @93.86

67. CHK down a whopping 20 cents now.

    NFX speaks at 11:20 CST at the UBS conference.

68. DRC – compression and now carbon sequestration play. Stock buy back now underway. Very interesting. Will be doing some more work here. Chart is interesting too.

    WLL – nice call Texana. I’m dumb for not owning and will take a piece soon. This is still cheap despite the recent run with a $17.30 ’09 CFPS estimate that likely goes to $20 based on price and production growth. I don’t know it well enough to buy a big chunk yet but will work it up.

69. ZMAN I have some june BTU 75’s that are getting beat up. Any thoughts on BTU?
    Thanks.

70. Oil has support at 127.40.

71. Irish – calls or puts? It’s had a great run, though not as good as some of its peers. I think they go higher but not sure on the timing. If oil pulls back after tapping $130 (it will happen) then coal is likely to come off a bit too and coal is up much more than oil or gas ytd.

72. ZMAN Thanks. It was a call and just sold it. Wanted to but sometimes need confirmation. Hate to lose money!!

73. SLB getting hit a little, anyone see any news there other than the Lehman pricing target improvement?

74. Broader market. Chances are spx will see 1395 for this first leg down.

75. Z- any thoughts on NOV these days? Tks

76. Isle – waiting on a pull back on NOV and in FTI and in OII.

77. Denise, what does Mr K have to say about his other recent energy shorts (long DUG wasn’t he?).

    I sure hope the OIH does pull back some ‘cos I need to back up the truck. I don’t find hope to be a very consistent investment tool, but still…

78. NFX on stage in 5 minutes.

    Bidding some Sept 105 WLL calls

79. um, nat gas up 42 cents. Not even tempted to short. As I was saying yesterday, I didn’t buy that the chart was broken and until we see some signs of life from LNG (none yet) and a forecast that is not so hot for the summer, gas is well supported above $10.

80. After waiting and waiting, AOG is finally popping today. I swear there is a lot of speculation in these micro-cap producers, although this one has potential.

81. ZTRADE: Bought an opening position in WLL September $105 calls for $6.20. Another way to play the Bakken and despite the run, the stock still appears to be cheap on a forward CFPS basis.

82. Z – I don’t think its over but the move in oil is parabolic and therefore totally unsustainable.
    Metals look to be in wave 2. I think I said the other day that only 3 times since 1986 has gold made a move down without oil and on all three occasions this was followed by a huge move down in oil. This is lining up – wave 2 up with 3 down to come in metals should tie in with the top in oil.

83. Nicky – near term the move up in oil has got to fade, I think they punch 130 in the head and then pull back. Of course, we get another weekly installment of the most important oil inventory numbers in the history of the world tomorrow.

84. NFX presentation on now:

    Said they will be disappointed if they don’t exceed planned 250 MMcfepd exit rate from the Woodford before year end.

    They are focusing on the S. Texas in today’s presentation.

85. Lol Z – I haven’t even seen a forecast for inventories tomorrow. Does anyone even care anymore anyway?
    I must be missing something. Our PPI shows a higher number than consensus which implies rate hikes. The eurozone has weak datatoday which should imply rate cuts. And the dollar falls and the euro rallies – what’s up? Except I see some European minister comes out and says they are gonna hike rates rather than drop them anyway!

86. Zman,any info re the inventory numbers for tomorrow?

87. On the NFX call now, back shortly

88. Interesting chart pattern on DUG’s largest component XOM setting upto a quadruple top.

89. Nicky, re. your #82 on metals. Could you take a peek at the SLV chart?

90. Dman – you want a run down of silver?

91. NFX still drilling the Mancos shale well

    Now talking about their Bakken play

92. NFX said on 3rd well in the Bakken now. Will be announcing success very shortly.

93. Best comment of the day by J Macke

    “calling oil tops has been like hunting airline bottoms in 2008, all risk no reward and plenty of horrifying and confusing turbulence”

    Dman-Doug still long Dug

94. NFX Q&A

    Predictability of the Mancos section? – they think it is distributed across their position, very fractured, gas charged,… they see it east west and north south, not like the Blackhawk section which is more regionally specific through their acreage (think plain versus shoreline deposition).

95. #94 – Is this good or bad?

96. Ram – it means that they see the Mancos shale as ubiquitous under their acreage, something they have not shouted enough in my opinion but they need to get a well into. Others are already there and results are said to be good. The good news for them is this is held by production acreage so no land rush on leases like the Haynesville and no rush to drill those leases to keep them. This is a gravy play on top of an already excellent existing play.

    I would say we have news in 2 to 4 weeks. NFX likes to bunch news so they may wait four weeks so they can announce a Bakken test or two or three and a Mancos test.

97. More NFX … remember in July they will spud a dual lateral Woodford well which means $10 million for a 9 Bcfe well on the first effort with likely improvement down the road. That compares to $6 to $7 mm now for a 4.5 Bcfe eur.

98. Good, thanks. Thoughts on reload to previous NFX ZTRADE?

99. more NFX – saying Three Forks Sanish exists below much of their Bakken acreage and they are going to be testing one in the future. This is what pumped CLR through the roof this am.

100. Ram – I’m sitting on what I have for a bit but will punt those NFX June $60s and hold the July $70s when/if it reaches $70. If it doesn’t look like a straight shot due to oil or the group relaxing a bit I will take the $60s out of play.

101. Nicky, yes a run down of silver would be good. Thanx.

102. Z – implications for XCO?

103. NFX call over, went well, lots going on they did not talk about but the coming news should provide positive catalysts. They gave away that they have successes in their pocket in the Bakken, so attach that play name to their story in earnest and you can see how people will get excited.

     Looking for the oil estimates now.

     China seen stockpiling diesel before the olympics

104. Dman – no problem. Always a couple of counts on the table of course. Bullish count has us having bottomed and now we need to keep going onwards and upwards with only very small pullbacks. Key resistance area is 17.75 which is the 50 dma.
     My preferred count is bearish and has us in a wave 2 correction which until today has lagged gold. We are in C of an ABC and it could/should end soon. I would then expect us to move down swiftly – support is obviously at 16.05 although I would think we will go substantially lower.
     In favor of the bearish count is that typically the very large move up we saw normally sees a bigger correction than the one we saw ending at 16.05 and seasonally this is a weak time of year for metals.

105. Don’t see any direct implications for XCO from what NFX talked about on the call. To my knowledge XCO is not in the Bakken, Woodford and not really in S. Texas.

     wow HK

     wow remain CLR, stock up 22%

     CHK now green

106. NFX breaching $68 from below.

107. i know u have res about bexp but they have put together huge land position in williston basin & have wi in several recent wls that ip over 1500 bopd. what r ur thoughts

108. Don’t know if you follow CNRL (CNQ on tsx) but price target increased to 132 by credit suisse earlier today.

109. BEXP – it should march higher as well. My reservations are old history and I think some of management has left since then too but I have not done the work to know. You saw I took WLL Septembers earlier I trust?

     For you new folks their are resources on the E&P tab regarding some of the players in plays like the Haynesville and I will add one on the Bakken but if you have any questions just pipe up. Thanks for subscribing.

110. I just looked and its on the nyse so I’m sure you know that it’s basically mini-suncor with E&P.

     Apparently people think that they may pull an Encana and split into both an oil sands and e&p play seeing the success of encana.

111. CHK and HK speak tomorrow at the UBS conference.

     VTZ – I don’t follow them but remember CNQ as a solid company from way back along with TLM. Anything in particular you like there? They are not listed in Stockholm too are they? There is a rumor that ONGC (India oil) is going to snap up a mid cap energy name on the Toronto with oil sands last in the near future. Actually read it in upstream last night and did not see them listed on the Stockholm but the story was very specific that the company is canadian and dual list in toronto and sweden, did an hours time looking for it last night.

112. Hey Z,

     What are your thoughts on direction for CLR remainder of week (given variables of course) but more based on runs up in past, seems sometimes they continue for a day or two.. and whether Fri pres. at UBS will do anything additional. Jefferies reiterated buy just a bit ago…
     I’m holding Sept 50’s that are house money at $16, plus I have common in acct with no tax implication, so I can trade in and out willy nilly

113. Just caught the tail end of a Senator being interviewed on CNBC regarding the attempts being made to stop the speculation in the commodities market. One of the proposals being put forward is to stop the pension funds investing in commodities – period! He commented that although the argument is that the funds have to invest somewhere when the stockmarket is down it is not right that the speculation is at the expense of everyone else.

114. I am long DUG too Dman-Doug and sooner or later we’ll be right. Trees don’t grow to the moon but I am hedged with oil shares which have gradually sold off.

115. Nicky, thanks for #104. I find metals trade very techically, so it’s good to get another set of eyes on the chart.

     Z – #105, yep I was getting my M-shales mixed up.

116. Gary – just a feeling but I think it ebbs a little higher by the close of Friday. Hard to imagine we don’t get some nailbiter profit taking and maybe even a downgrade in between but I’ll hold my house money for a while in case they really drive it up. When you look at the WLL chart, which granted is cheaper, but also not likely to grow at fast, you see what could happen on positive Bakken to the chart.

     Go NFX.

     NBR just wow, through $42.

     Don’t start expecting this kind of thing to happen everyday around here.

117. z, good play on 105s just bo more common @94.52 & bexp. wll said the other day that the bakken was biggest oil find in the us in 20 yrs. mro purchased about 50k ac north of clr on ind res recently but u have refining exposure also

118. Texana – part of this move up in COP is Bakken too, you can see their rigs to the west of the Missouri river, scattered amongst HES and CLR rigs (and soon NFX)

119. Hopefully Congress isn’t after people like ZMAN that influences oil swings. ZMAN – you might want to think about a safe house!

120. Too much interference from elected neophytes these days. Why don’t they stick to what they know, handshakes, backdoor deals and raising money while flying from one state to the next and talking about your carbon footprint?

121. 100% nomoneyback guarantee..

     Thanks for the CLR thoughts

122. Further to #113. Replayed it. Joe Lieberman was the Senator. One interesting point was that they have found compelling evidence of financial speculation in the commodities market. He commented that the supply/demand argument did not account for the huge moves. This is across the whole market ie ag too. However he singled out oil where he said demand was up 1% and oil had gone up 100%.

     Dman – what do you reckon re silver?

123. here is link to bakken play in mountrail co http://www.bakkenblog.com/. eog alpha dog of the play, has 14 of the top 15 producers in the state. they prod 446,365 bo from 31 wls in march. there top prod austin#8 made 54,029bo in mar, 5mil$ wl pd out in less than 60 days @current price hence the excitement

124. Z – RE: 111

     Just a solid company with gas that may benefit from increasing drilling in canada. Also, the oil sands play is discounted like an Encana. I was just wodnering out of curiousity as it is one of the larger and less known names.

125. Not to support oil at these prices but ag and oil are completely different issues as long as the rain rains and the sun shines.

     Texana – yep, those 3000 and 3600 bopd wells don’t hurt!

126. V – I’m thinking the Indians may snap it up.

127. Pretty big market cap but I suppose it’s possible.

128. oh yeah wll has 20% wi in all 14 of those eog top producers

129. House of Representatives has just approved legislation that will allow the Justice Department to sue OPEC for withholiding oil supplies and thereby forcing up the price.

     Are they kidding?????

130. Nicky – your tax dollars not even having a concept of work

131. Z apparently one of the options is to increase margin requirements but it would have to be across the board. It seemed they were looking at alternatives to that.
     I don’t have a view on #113. I am just looking at what may be the fundamental catalyst behind what I believe will be a big drop in commodity prices.

132. Nicky, I think the long term silver/gold trend is up but a very good metals/energy newsletter guy predicted the current weakness & expects bargains ahead (i.e. next few weeks or so), so basically he agrees with you on the short-term chart read. I’m glad you asked because I glanced again at my SLV position & it was up more so I closed it. My own chart read is just that it is heading into resistance & beyond that it’s hard to see the next move. I just try to trade the extremes in silver/gold & tend to take the money & run when a quick profit appears, since they trade even crazier than energy. When a fundie guru & chart guru both say “weakness ahead”, I don’t need any more excuses to sell 🙂

133. Thanks Dman. And yes I agree with him long term up.

134. Pretty good day. Net of commission my relative account is up 500% since mid February, just over $121K from a start of $20.

135. Nicky # 129: that is truly hilarious. So now OPEC can just disband and then who do they sue? The only country that even claims to have spare capacity is Saudi.

     So where does Sen. Lieberman want people to invest, lets see…the banking sector? His Republican allies might have a word in his ear that they would like to be able to invest in things that work, thanks very much. There is *no chance* that W will sign a law that will leave his backers resticted to holding declining assests (stocks and dollars). Oh, wait a minute, I guess it only applies to the little guy… hedge funds & wealthy folks can do what they like but pension fund holders would get to pay managers to impoverish them. Say hello to capital exodus.

136. z is alpha trader

137. Wow Z you are going have one very happy relative!

138. Zman,any inventory projections? tks

139. By Ian Talley
     Of DOW JONES NEWSWIRES

     WASHINGTON (Dow Jones)–U.S. House Tuesday passed legislation in the face of a
     White House veto threat that is aimed at prosecuting the Organization of
     Petroleum Exporting Countries and any related companies for oil market
     manipulation.
     The bill – designed to “crack down on OPEC-controlled entities and oil
     companies for oil price fixing” – passed by a vote of 324-84.
     Lawmakers are scrambling to find ways to show constituents they are acting to
     lower energy prices, but analysts say even if the bill makes its way through
     the legislative process, it will likely exacerbate growing tensions with the
     world’s largest crude producers and could cause prices to rise instead.
     On Monday, the Office of Management and Budget said in a statement the
     administration is strongly opposed to the measure and senior advisers would
     recommend that the president veto the legislation.
     The White House said the bill would subject sovereign foreign countries to the
     jurisdiction of U.S. courts.
     Specifically, the measure authorizes the Department of Justice to prosecute
     the OPEC’s member nations and related companies for anti-competitive behavior.
     The so-called “NOPEC” provision passed as part of both the House and Senate’s
     energy packages last year, but it failed to be attached the to final energy
     bill passed through Congress, because of the presidential veto. It would change
     certain laws, such as the Sherman Act and Foreign Sovereign Immunities Act, to
     block OPEC countries like Iran, Kuwait, Saudi Arabia and Venezuela from
     invoking immunity from U.S. court action relating to concerns about oil
     production.

     -By Ian Talley, Dow Jones Newswires, 202-862-9285; ian.talley@dowjones.com

     (END) Dow Jones Newswires
     05-20-08 1336ET

140. Ref #125 Is your reference to “ag” supposed to be “agriculture” or “silver”

141. still have not seen any inventory number from the press, still looking.

142. Dman – I couldn’t agree more re OPEC. This is the USA gone mad surely. I would suggest they look closer to their own back yard for a culprit anyway – ie Bernanke.

143. Nicky – re 137…I just tell them its been a good time to be long energy.

144. Tex – what’s sick is how much I left on the table with some bad timing last week in COP and some early sales all the way up. But it’s a problem to have.

     Ok, this is annoying, can’t seem to find any estimates from Bloomberg or Dow Jones or Platts on the crude, gasoline, dist expectations … everybody is writing about T Boone and the congress.

145. Z – aka Mr 500% 🙂 – you said recently that CHK’s comments regarding the tough terrain and slowness to develop in the Marcellus might have cooled the run in XCO. How do you view the fundamental implications for XCO – did it tell you anything new or is it just a matter of perceptions?

146. Z- Think rolling PBR to july is premature?

147. Dman – good catch. It’s nothing fundamental but perhaps a realization the Street did not fully make until XCO and CHK and others said, “by the way, this play will be slow to develop”. Having looked back in time at previous statements there is no change to that thinking on the part of XCO, just think the stock got ahead of itself, has rested and will hopefully move higher soon. This is a name that is fairly cheap despite the run but in which I don’t see a near term knock your socks of catalyst which may result in me taking a hit on the calls, and I will not ride them into the ground.

148. Afternoon K – I may sell it and wait a few days for oil to bounce lower and then buy those Julys. Was just thinking about it in past half hour.

     Bloomberg just sent me this for expectations:

     crude up 400,000 barrels
     gasoline up 250,000
     distillates up 1.33 mm barrels

     refining utilization up 0.5% to 87.1%

     give me a few minutes to digest it …

149. CHK really backing off and SLB continues to buck the group action, off a buck. Still no one see any news on SLB?

150. Anyone care to guess how hard the broad market needs to sell off to get the attention of the energy sector? Down 240 points & energy just sort of made a token pullback. Although OIH *is* now red… nice one Dougie .

151. Dow Jones expectations:

     crude up 500K
     gasoline up 400K
     distillates up 1.2 mm barrels

     None of these numbers look out of line with what I’d expect except the crude number paired with the rising utilization. If we do top 87% utilization and we don’t see a resurgence in imports above levels we saw two weeks ago I’d bet on a draw on crude stocks.

152. OIH is not red, OII is red.

     OIH is up 0.5%

153. DRYS getting dropped $7+

     CHK back down to the LOD on Fitch and S&P debt grading.

154. RE CHK – I bought calls earlier at a lower cost when the stock was higher. MM are not letting these go cheap now.

155. Z – no news but plotting SLB against OIH showed perfect tracking over the last month until May 14, after which they divirged. That might be due to the deepwater enthusiasm, but SLB also underperfomed HAL & NBR over the last month, so today isn’t special in that sense.

156. #152 I stand corrected & I think you are right as to the nature of my error. Even when I’m not looking I still see OII everywhere.

157. Dman – somebody somewhere of importance said something of significance early to know it down, and it stayed there, buck the group, on a noticeably green day. I’d bet it doesn’t matter but I have been planning to trade out of mine at $110.

158. Diesel and gasoline outperformed oil’s move today so the negative to neutral moves in the refining patch makes little sense from a day to day trading standpoint. I may take more FTO.

159. Zman,tks for the info

160. ZTRADE: Out the NFX $60 June calls for $8.40, up 105% since entry at the end of April. I continue to hold the July $70 calls taken earlier today.

161. OTTAWA (Dow Jones)–India’s biggest oil producer, Oil & Natural Gas Corp.
     (500312.BY), is in talks to buy an unnamed oil sands producer, the Indian
     newspaper Economic Times reported Tuesday.
     ONCG Videsh, the state-run company’s foreign investment arm, has made a 100%
     equity bid for a mid-sized Canadian company for an undisclosed sum in talks
     code-named “Project Crystal,” the report said. The board of the target company,
     which has oil sands assets and production-sharing agreements elsewhere, has
     approved submission of the non-binding bid, the report continued, citing
     unnamed sources.
     It rejected an earlier bid, deeming ONGC’s offer “insufficient…(but) invited
     ONGC for further discussion with a revised offer,” an unnamed source said in
     the report.
     The Canadian firm is listed on TSX Venture Exchange and the Stockholm Stock
     Exchange, according to the report. ONGC has yet to begin due diligence, it
     said.
     India first signaled its interest in Alberta’s vast oil sands two years ago as
     it looks to secure energy reserves around the world, but nothing has been
     announced since then. Earlier this year, ONGC’s chairman and managing director,
     R.S. Sharma, said the company was talking to Canadian companies about investing
     more than $1 billion in the oil sands.

     -By Hyun Young Lee, Dow Jones Newswires; 613-237-0669;
     hyunyoung.lee@dowjones.com

     (END) Dow Jones Newswires
     05-20-08 1502ET

162. Thanks Sam, that’s the article I was talking about for CNQ.

163. Gotta step out for 20 minutes, back before close.

164. It must be a small insitu because it says producer but I couldn’t tell you which.

165. Coul be AOS on the TSX venture… Alberta oil sands. Up 11% today on above average volume, market cap of ~500 mill

166. Ok, I’m back. Not much changed except chk and much of the service sector getting a little weaker.

167. VTZ – I was thinking they meant an E&P with undeveloped oil sand properties.

168. Could be, There’s lots of small SAGD producers/properties though. I think that would be more likely.

     I just can’t think of a company listed on the venture that has a market cap of around a billion.

169. I was just asked a question about my trading and how I go about buying options relative to the portfolio using the relative account as a for instance I responsed:

     I’m working on an FAQ section about how I trade but for now let me just say that account in question gets all the trades you see, the good and the wipeouts. I take varying position sizes but most are in the 5 to 10% of total assets range and I never swing for the fence. I also keep cash because there is nothing worse than being in the position of needing to sell one thing to buy another. Finally, I take profits. These are options which are very different from owning stocks. Options are by their nature, a withering asset. I’ll put this on the site as well. Best, Z

170. ZTRADE: Out PBR June $67.50 Calls at $8.40, up 155%.

171. Wow, just saw the WLL is moving on up. Screen clutter, time for a cleanup…organization being the key to discipline and all.

     Beer thirty for me, have a great night!

172. WLL is off the hook

173. ZMAN – Do you ever have issues with your system temp. not executing a trade because of a fault on their part. I have had at least a 10% failure rate with Wells Fargo. The last was unable to execute PBR calls and by the time I got a broker the market was closed.

174. Ram – No, the only time I don’t execute is when I try to get cute splitting the spread or offering the stock/option and there are no buyers. That’s not right if they have a problem. I’d can them for that.

175. Option Express is good but I also like Street Smart Pro from Schwab. Schwab offers very good execution through this active traders platform and if you’ve ever used their website the stand alone program is much better. Its free if you do enough trades per month, I think they say 30 minimum but I know they won’t cut you off if you do less.

176. Plane hits building in Sao Paulo Brazil

177. PBR trading at $75.25 in AH

178. New and improved ZEB Performance tab updated.

179. Thinkorswim is a very powerful option trading platform. The interface is taking me awhile to get used to.

180. zman any thoughts on KWK I am holding common bought in 2006.

181. Mimster – KWK is a great, liquids rich gas player that I’ve been away from for several months now. I missed their 1Q call but plan on listening to them Thursday at UBS conference.

182. Pingback: Plumber Shillington

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