Welcome Back Tuesday

78 thoughts on “Welcome Back Tuesday”

1. Morning all. Oil down sharply now – any news?

2. Crude falling like a stone now. Looks like one of those days where it either holds at round number supports $131, $130, $129 or it doesn’t and immediately falls to the next round number. Didn’t see a particular reason for the reversal from last night’s gains and most of the news out of the weekend would be considered short to long term bullish.

   Morning Nicky, Merrill out with a $150 oil price target, did not see the time horizon on that but that said recent price spike was completely a distillate related issue and not an oil supply issue.

3. Nicky–Am looking at my SPY weekly. With last weeks bearish engulfing, does this look like the end of leg two?

4. sd behaving

5. SD up a buck at the open in a mostly red energy space.

6. It’s not only energy involved in the sell off. Gold and silver got nailed also when the equity markets opened at 9:30. Kind of makes you wonder sometimes.

7. CNBC is blaming a rally in the dollar. When I pull up the dollar index I frankly don’t see it. This is commodity profit taking and it is pretty well contained.

   Bottom fishing in CHK is starting to occur.

8. z- I am holding SD July 55, at your prompt..

9. SD up nearly $2, anybody see a broker note?

   Reef – up about 30% since last week on SD, I’m in the July’s and will hold for a bit longer but this move is faster than expected. Those low CO2 east of Pinon w. Tx overthrust wells are getting people excited.

   CLR starting to bounce as well.

10. I try to keep an eye on the currencies, precious metals, as well as energy. One day last week, I posted a link for realtime quotes on currency, precious metals and Brent crude. I posted it after the market had closed, so maybe most did not see it. FWIW, here it is again:

    http://www.netdania.com/quotelist.asp

    Because this site streams realtime quotes 24 hr a day from markets around the world, the column titled “Change” does not represent the change from the previous day’s trading in the US. I think it represents the change based on some arbitrarily determined time, like midnight GMT. Nonetheless, I find the quotes very helpful in seeing relationships within the markets covered.

11. Re SD…Barrons online had a nice blurb 5/24, on insider buying in SD and their growth rate going forward.

12. SD is up due to Barron’s piece on Tom Ward recent big insider purchases

13. Thanks John and Isle, that’s likely it…it rose on the same at the tail of last week and its amazing how inefficient moves become during vacation season. They need to run the same article on CHK where the insider buying has been and will continue to be much bigger.

    CLR is in that insider buying by Oklahoman’s camp too.

14. X continues to fall – I said I didn’t like how it was trading in the mid $180s and punted. Now at $167 I’m waiting for the chart to grab support. If it fails $165 another $10 drop may be in the offing.

15. zman:

    where is a chart of US gasoline demand ?

16. Morning Uop:

    From last Thursday’s post, about half way down:

    http://zmansenergybrain.com/2008/05/22/thursday-gas-preview-oil-review-5/

17. Merrill took price targets on SLB up to $130 from $110 and raised BHI to Buy with a $110 target. Muted response on a red day.

    I’ll probably buy back the SLB for a third time in a month (wild trader there) and a little BHI for the first time in a long time as it will benefit from the same improving drilling trends in North America I keep harping about for NBR and HAL.

18. Z- EOG starting to look good??

19. K – Re EOG – no reason not to own it other than a full mid-cap E&P plate. It has had a nice pull back but so have all of the big caps: APA, DVN, EOG, CHK, XTO … everything but APC which I still like quite a bit even up here. But the EOG will move faster than any of those names but APA in a group recovery, especially if oil is moving back towards recent highs at 135.

20. ZTRADE: Bought the SLB July $105 calls (SDBGA) for $4.40 on a Merrill upgrade. We’ve been in and out of this name successfully a couple of times in the last month both pre and post earnings and the stock after much gyration is little changed since the day after earnings. The thesis here is right in line with the pick up in North American drilling activity.

21. Cramer just sold 1/2 his COP position = 500 shares for an 18% gain. Says it’s prudent to book profits in this market.

22. Thanks Scoop. It’s had a very good run and I’d consider another shot at it, all other things being equal, in the mid $80s.

    Nice to see HAL reverse reverse sharp at the open losses in a weak energy market.

23. MMR reversing course

24. Z, whats your feeling/thought on OII?
    Thanks.

25. Analysts are writing news out on MMR in the next 2 weeks.

    OII – I’ve got july’s and 7 weeks is a lifetime in this name given its volatility. I think hurricane hype and continued strong reports of rising demand from places like Brazil. If it takes another good size hit I will average down into lower strike contracts.

26. Natural gas hanging out up a dime close to $12 on the June contract (expires tomorrow). Imports info shows yet another week at 0.7 Bcfgpd for LNG and lowish Canadian piped volumes as well at 7.4 Bcfgpd. Until LNG volumes rebound or oil comes off substantially gas is unlikely to break down.

27. Re #26: How does the NG hedging of CHK and the current NG price play into the stock price?

28. 11:11 PDE Pride Intl: Follow up on Seadrill comments (45.10 +0.14)

    As mentioned at 11:06, Bloomberg reported that Seadrill is in talks with Pride on “attractive opportunities.” These comments appear to have been taken from Seadrill’s earnings release, issued today. The release said in April, Seadrill disclosed a 9.9% ownership interest in the NYSE listed offshore drilling company Pride International. This investment has been based on thorough evaluation of the company’s underlying values. The Board has taken the initiative to a dialog with Pride’s management in order to look for attractive opportunities for both parties.

29. Ram – it limits their upside to some extent and along with their above peer group debt level contributes to their discounted multiple to their peers. However, as higher gas takes the group up, the 30% (or so) that remains unhedged provide upside to current estimates as will their “in the bag” near term production profile. The hedge provides stability and assures their Capex is there when they need which is important in setting up their future drilling program. Also, the high prices are allowing them to lock in some pretty nice longer term prices.

30. John Kilduff says the top is in for oil -hmmmm.
    Broader market – still looking for a low in this timeframe…..

31. Kilduff – didn’t give a time frame did he? Not days or weeks or months? Funny how they comment on the commodity when it moves in the direction of their call. He’s been a bull but been making bearish noises on red days. At least the cat over at Citi has been short and wrong since around $80 and is bearish every time he gives a quote.

32. mmr up a buck, Exxi down a quarter???

33. Anybody see any comments to spook steel today. Watching X, MT and even TS get beat about a bit.

    Reef- maybe its fear over Blackbeard sending dollars out of EXXI but keeping the potential upside in MMR which is stabilized by the increased pay found at Flatrock delineation well #3. That is one big play for MMR, with some unreal rate capable there.

34. Just said we saw capitulation last Wednesday – didn’t notice it myself!

35. Nicky – me either, he’s talking his book.

    DRYS – Weekly chart formed a nice double top. Day rates inching off there and I like Bill’s concept that the Olympics could punish traffic to China for a time and depress rates and the drybulk stocks.

36. z- 33 I agree,MMR move not related to BB

37. Z re steel MT July $95Puts 1000 contracts

38. Scoop – what’s your thoughts there?

    Man its slow, even for a Monday. Must be vacation time. Oil service definitely outperforming. Getting closer to taking some PDS but not today.

    Hard to believe TLM down with a Chinese takeout rumor swirling.

39. #38 Interesting play that they did not buy any June P’s. I think its a $500,000 hedge against price erosion

40. Thanks Scoop.

    Very low volatility day, almost feels like pinning action 3 weeks to go. Lotta people off this week so little conviction in energy or the broad market moves.

41. I’m trying to figure out my Blackberry. I should have known better when the salesperson said “teenagers have no problems setting these up”.

42. Ram – I picked up a new one on Friday. Pain to get back to where I was. The most important feature I use is the email ghosting and they set that up in the ATT store.

43. I am going back to the Verizon store and let their local teenager set up my email and internet.

44. Ram – by far the smartest choice.

45. Z — re 33
    Looks like all commodities are getting whacked today. Even agriculture-related stocks are suffering. Gold and especially silver are really taking it on the chin. I did read some comments from Fed Governor Yellen today where she said interest rates had been cut enough. That may be giving marginal support to the dollar and causing profit taking in hard assets.

46. USO mentioned on another site as acting opposite the underlying. Reaction?

    Jazz

47. Jazz- I’m not sure what they are referring to.

    USO down 2.6%
    CL/N8 down 2.58% (July crude) as I type this.

48. To me crude needs to sell off into that mid $120s level, decent support at $124 vs the current $128.50 level. This would be better for the energy stocks than a re-rally to the old 135 high as it could get the broad market out of its slumber/stupor.

49. Daily chart on SD is interesting. Continuing to hold.

50. Z – Have you figured out what’s up with SD?

51. haha thinking the same thing.

52. SD putting on a good performance today. I saw the reason above. Any potential excitement from our plays this week in the DB conference?

53. VTZ – I see nothing but Barron’s article “news” which is old hat. Could be a loud mouth analyst touting the move eastward from the pinion into high rate, 0% CO2 drilling in the West Texas Overthrust and all that means for them as they are CO2 processing constrained at present. It could also be that in a market like this, what is up goes up more and what is down certainly has something wrong with it. Volume is not excessive and given the rally you’d want it to be. I continue to hold.

54. I’m going to cherish the fact that I was wondering the same thing, at the same time, about the same stock. I’m going to go ahead and assume it’s a small indication that I have a shade of your market prowess.

55. Ram – NFX could have catalytic news (Mancos / Bakken) but I think its a week further out at minimum.

    Would not look for any rate news out of CHK or HK or GDP or any other Haynesville names

    VTZ – well that can be a good thing and a bad thing sense sometimes my prowess gets thrown in front of a truck.

56. sd going orbital

57. Yeah I just looked at my book and then reality set in that my prowess is limited, haha.

58. There’s not really big volume on SD. No sellers?

59. Gasoline and distillates appear to be holding up much better than oil. Any interest in refiners? They are off rather heavily today, as well… especially VLO.

60. Antrim – VLO is easily my best pick if you have no group exposure as of today. I’m in FTO, and standing pat for now. But if I weren’t there today I’d go after the VLO and I still may this week.

61. Reg gas has gone nuts in CAL. Does anybody know if the new summer formula is priced in yet?

62. Ram – I don’t know if you guys are in full CARBOB mode or not yet as far as requirements go but I’d bet your gasoline has price at the pump has further to rally over the next month.

    Oil down $4 on just over half of Friday’s volume.

63. further to rally… any more rally we will be above $5 by July 4. Reg unleaded is $4.35 in non beach communities – $4.75 near the coast.

64. I believe we are now using summer gas formula now in CA. Watch out for the storm that went thru here during the holiday. It dropped tornadoes here so I worry what it is going to do to the rest of the country.

65. # 63 … That has to be just crushing the consumer. Entire tax “rebate” going into the gasoline tank over the course of the summer at this point.

    Thanks Popeye, will do, as we say in the south, Heaven hates a trailer park.

66. ZMAN:

    ENERGY/COMMODITY DROP DRAGS hk DOWN, IS THIS TIME TO BUY MORE?/

67. Uop – you’ll be the first to know if I take more. I’d like to hear what GDP has to say about the Haynesville tomorrow morning before adding there.

68. Seems to be some concern in the energy pits that Mastercard will report a big drop in gasoline spending tomorrow. Fall still looks corrective to me.

69. ZTRADE: Entered NBR July $42.50 calls for $1.85. I continue to hold the June $40 and $42.50 calls here.

70. Z, my mistake. I thought USO was ETF that tracked a basket of underlying. Didn’t know it reflected CL/N8 futures.

    Have to read more carefully. I actually read a description of USO before I posted.

    Jazz

71. Hi Z, quiet day. Can you please ‘splain what it means when CO2 is mentioned in a resource play. ‘cos I’ve got no idea what that’s about.

    What are you looking for from GDP tomorrow?

72. Jazz – As I understand it’s meant to mirror the front month NYMEX WTI contract until a period of just before that contract expires and then its starts buying the next month and selling the front month. It may be more complex now but that’s how I remember it after it was launched and it generally tracks but underperforms what we think of as the price of oil.

    GDP – oh, just crossing fingers for a rate. Doubt we get it as they have little interest in bidding up the price of acreage out there any more than CHK or HK does. But they have several wells drilled that they could talk about and you never know …
    Dman – those are gas wells that produce methane AND carbon dioxide, CO2. The CO2 has to be taken out of the stream before the gas can be sold so you process it and either reinject the CO2 into another zone or use it for tertiary oil recovery or sell it to someone else to use for tertiary oil recovery. Either way you can’t burn it. In the West Texas Overthrust (WTO) where SD operates there is a high CO2 cut in the wells in their cornerstone property, the Pinon field. So while production of “gas” is high, its over 50% CO2 which has to be stripped out. Moving east of the Pinon they are finding some very economic gas wells that have much less CO2 (in some cases 0% CO2)and they are bumping up their drilling activity in this area quickly.

73. Thanks Z. The Haynesville operators are in an interesting position where they have to avoid mentioning things that would jazz their stocks because it will hurt their costs to do so. So more buying opportunitues for us 🙂

74. Dman – that’s about the double-edge sword of it. Had HK not spilled the beans in March at their analyst day we might only now be learning to spell Haynesville or think of it as anything other than the Bossier (it’s E. Tx name).

    SD – Three minutes before the close, AP reporting CEO Tom Ward bought another 230,000 shares between 49.97 and 50.50. – Don’t know if that was what was in Barrons. The was spurred last week by a smaller purchase .

75. Gas in NY over $4 this past weekend. $4.10-4.50.

    NJ still under $4.

    Road traffic seemed VERY light on MEM Day weekend.

76. That 230,000 shs is an additional buy re Tom Ward and SD.

77. SWN into S&P 500 after close June 5th.

78. Thanks and thanks J11.

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