Wednesday – Oil Preview Plus Another Asset Deal


In Today's Post

  1. Holdings Watch
  2. Commodity Watch
  3. Crack Spread Update
  4. Stuff We Care About Today
  5. Odds & Ends

Holdings Watch: Wiki tab is updated.

  • (HK) - Doubled my position in June $35 calls (risky) and given the sharp reversal I'm down by nearly 50% on this one.  
  • (DUG) - Sold the DUG $27 June calls for $2.00, up 18%. Continuing to hold the $30s.

Commodity Watch:

  • Crude Oil fell $3.04 to $131.31 per barrel yesterday in modest trading. Comments issued by Saudi Arabia designed to cool prices (and to keep arms deals with the U.S. on track) and a strong dollar (engineered by words and not actions) led to the smallish decline. Monday's and Tuesday's moves look purely digestive in nature (as if the market is saying "wait a moment, the U.S. didn't attack Iran after all." This morning oil is trading up about $2 as the dollar appears to be stalled after 2 whole consecutive days of rally mode. Expect even more volatility before the EIA releases inventory numbers.
  • Saudi Watch: Saudi said yesterday it has increased oil production to about 9.4 mm bopd, up 500,000 bopd from the prior quarter and about 200,000 bopd higher than previously thought. Saudi is trying to talk, not produce, oil prices lower. Saudi has called a consume-producer meeting for June 22 to discuss high oil prices.
  • Nigeria Watch: The Nigerian oil union says that it is optimist that talks with (CVX) will avert a threatened strike later this week. 
  • EIA Says Oil Prices To Average $132 For Remainder of 2008. Wow, your tax dollars at work given that the July contract closed at $131.30 yesterday.

EIA Inventory Forecast (from the Platts survey)


ZComment: Analysts are looking for another 0.6% uptick in utilization which explains the small expected draw in products however this may not offset higher imports which are likely to continue to rebound this week as they work off extra volumes from Gulf Coast bottlenecks two weeks ago. The most import number in today's EIA release (10:35 EST, not 10:30 anymore) will still be the gasoline demand figure. Failure to ramp is understandable; further declines in gasoline demand (at a time when demand in normally moving up and to the right) could easily soften crude into the high $120s. 

  • Natural Gas fell $0.17 to $12.43 with falling crude. Gas prices remain as mired in their uptrend as LNG volumes remain flat-lined at multi-year lows. This morning gas is trading up slightly on the back of higher oil.
  • Thanks to Sambone for a set of sea temperature links which have been added to the weather tab this morning.

Crack Spread Update



Refiner Multiple. The independent refiner group continues to take it on the chin as crack spreads sink back towards early 2Q levels. Sometimes the best trade you make is the one you don't make. For the most part we have avoided going back into the group that last year knew only one direction to travel (up). This Spring we dipped a toe in VLO (three months ago) and had it ripped off. As West Coast cracks found traction we took a small foothold in TSO the following month (and lost that foot too). A small foothold in (FTO) met with better success last month (later fueled by a (SU) takeout rumor) which quickly faded when oil shot the moon but we exited with a nice gain before products started stacking up in last week's EIA report. Looking ahead the picture is still murky and apparently you never know when oil prices will surge double digits on the whim of an analyst. If forced I prefer (VLO), (TSO), and (FTO) for re-entry to the space but I'm not forced and I will be:

  • overtly cautious and
  • suspicious of analysts bearing upgrades as they have been wrong time and time again on the group this year. Not only do they seem to have an increasingly difficult getting their models close to reality but their stock timing has been somewhat off. 

The Group Appears Cheap But It Stay That Way For Quite Some Time. Also, it may be cheap for a reason if drivers start seriously altering their habits (I'll believe it when I see a string of 4 weeks in down 5% territory).  I think drivers are in sticker shock now and may be postponing non-essential trips but sooner or later, if I know Americans, they will grin and bear it  (and pump it). 


Note the deterioration in the stock over just the last week in most cases far exceeds the dip in crack spreads and the analysts continued reduction in numbers. This looks like "demand destruction" hysteria to me and is likely overdone. 


What I'd like to see is:

  • utilization discipline on the part of the industry meaning little further rise in gasoline production this summer (topping out at about 9.3 mm bpd (100,000 bpd off last year's levels),
  • gasoline demand that does not plunge through 9 mm bpd during the driving season due to high prices,
  • high levels of diesel production and export

By the way, the rallying West Coast crack spreads in the previous graphs are no fluke. Regional stocks are low for even for this time of year and if crude takes a breather (even were it to just tread water in the $130 to $135 range) refiners could see margins tick up further here. Very tempted to go fishing in the West Coast centric names but will wait for numbers for the next couple of weeks. 




Stuff We Care About Today:

BRY Establishes New Core Region In East Texas Cotton Valley For A Song.

  • (BRY) is paying $620 mm for 335 Bcfe of proved reserves (Ryder Scott engineered), or a bargain priced $1.79/ Mcfe (less gathering assets valued at $20 mm) from a consortium of private sellers.
  • Reserves are largely PUD and another buck gets it out of the grounds but at these prices that's very respectable to stay below $3/Mcfe F&D.
  • Stacked pays here (Pettit, Travis Peak, Cotton Valley Sands, Cotton Valley Lime and Bossier Sands) and yes it has Haynesville Shale potential and contains three vertical wellbores into the shale the company is now testing.
  • This is not your father's Kern County crude-centric Berry Petroleum as this establishes a new core area for them in a natural gas play (at the end of the day East Texas gas becomes a quarter of their reserves and the company will be 50/50 oil/gas).
  • Plan to stay within cash flow here
  • Did not mention acreage but expect the stock to rally into the acquisition as in "there's a new Haynesville player in town". Expect them to bring more details (acres, id'd locations, rig count plans) on the conf call.
  • Equity offering possibility mentioned in the PR which may cap the shares a bit early but will likely not be an impediment to higher prices in the near term (commodity markets willing)
  • Conference call at 10 EST. 

PBR Continues To Ramp Deepwater Plans. President Gabrielli said yesterday he sees adding 28 more 6,000 foot water depth rigs in the 2013 to 2017 time frame along with 122 support vessels and 44 VLCCs. More good news for (RIG), (DO), (NE) and for construction firms including (GLBL) and perhaps in the future the likes of (TDW). 

Odds & Ends

Analyst Watch: (CCJ) upped to Buy at UBS, (ESV) upped to Strong Buy at Capital One.

Housekeeping Watch: I will be in Honduras during the last week of June. There will be no posts during this period as I will have no access to markets, communications, air conditioning etc.



140 Responses to “Wednesday – Oil Preview Plus Another Asset Deal”

  1. 1
    Sambone Says:

    7:59 am EST

    Nymex Crude Higher On Bargain Hunting

    By Angela Henshall

    LONDON — Crude oil futures were higher in London Wednesday gaining ground after traders seized the opportunity to buy into the market at lower levels.

    Market participants leapt in after a sharp sell-off Tuesday, said Andrey Kryuchenkov, an analyst at Sucden Research.

    “(The market is) too volatile and speculators are being caught short all the time,” said Kryuchenkov. “Big players seize opportunities (to buy) knowing that the market is very nervous and sensitive to supply news or significant moves in the U.S. dollar.”

    Strong trade data from China reflecting robust demand also leant support early in the day, but the energy complex continues to be extremely volatile and a series of rapid $1 moves throughout the session highlighted how “short-term news-focused the market’s become,” said Mark Pervan analyst at ANZ Bank.

    The volatility that has been the signature of crude trading over the last week persists, although a brief pause is expected ahead of U.S. Department of Energy weekly inventories data. This may show further products stockbuilds and could see prices move lower in response.

    At 1147 GMT, the front-month July Brent contract on London’s ICE futures exchange was up $1.58 at $132.60 a barrel.

    The front-month July light, sweet, crude contract on the New York Mercantile Exchange was trading $1.88 higher at $133.19 a barrel, after briefly hitting an intraday high of $134.60 a barrel.

    The ICE’s gasoil contract for June delivery was down $10.00 at $1,251.00 a metric ton, while Nymex gasoline for July delivery was up 592 points at 337.85 cents a gallon.

    The DOE data are likely to show commercially held crude stockpiles have fallen 500,000 barrels in the week to June 6, according to the average prediction of 16 analysts polled by Dow Jones Newswires. Gasoline stocks are forecast to rise 1.1 million barrels.

    Analysts were unanimous in projecting a rise in stocks of distillates — heating oil and diesel — with the average seen at 1.6 million barrels.

    Looking further afield at physical crude supply, anxiety over deteriorating stability in Nigeria, Africa’s largest producer, also remains a major concern for following news Italian oil major Eni SpA (E) declared force majeure on its Brass River crude exports following pipeline leaks Sunday.

    More than 600,000 barrels a day of Nigerian crude remains shuttered due to attacks by militants — roughly 20-25% of the West African producer’s typical oil output — and any further threat to supply continues to send jitters through the crude market.

    The renewed threat of possible action strike by Chevron (CVX) workers in the country also looms, a strike by other members of the same union at ExxonMobil (XOM) facilities took around 800,000 barrels a day of production off the market overnight.

    As energy prices continue to soar across the globe and fuel protests increase there is a great deal of focus on an emergency summit between the world’s leading consumers and producers scheduled in Jeddah, Saudi Arabia June 22.

    Key Organization for Petroleum Exporting Countries and non-OPEC producers will be invited in addition to Group of Eight leading nations energy ministers and a mix of oil executives from majors.

    “Whether they invite U.S. banks or a representative from the speculative fraternity will be interesting to see,” said Robert Laughlin, analyst at MF Global.

    Laughlin expects to see a ratification of Saudi Arabia’s move to hike their production 300,000 barrels a day, in addition to an additional 300,000 barrels a day offered from other members such as the United Arab Emirates and Kuwait.

    OPEC Secretary General Abdalla Salem el-Badri sought to play down fears of an oil crisis Wednesday, and reiterated calls for calm. He said a brake needed to be applied to stop speculative factors driving oil prices higher beyond the fundamentals of supply and demand.

    —By Angela Henshall; Dow Jones Newswires

  2. 2
    Sambone Says:

    I guess everybody has seen this today.


  3. 3
    zman Says:

    Guy on CNBC is after my heart, commenting on the (widening) gap of analyst estimates to the oil and gas strip touting the Haynesville and specifically HK and NBR. Erin closed the segment by saying she needs to do some research on this Haynesville Shale play, lol. I got your research right here kiddo.

    Thanks Sam … prices not high enough to overcome declines at the majors. hmmm.

  4. 4
    zman Says:

    CNBC – shell extending force majeure on Bonny Light through the end of July.

  5. 5
    zman Says:

    BRY cruising pre conf call.

    May take a little taste but it is a wide spread (thinly traded) options trader.

  6. 6
    Bleemus Says:

    Hello. Just wanted to introduce myself. First day here. I assume this is the active commment section for the day. Good trading all.

  7. 7
    Popeye Says:

    I received an email from Scottrade last nite saying HK was subject to a 15% maintenance requirement. Must be the Cramer affect.

  8. 8
    zman Says:

    Welcome aboard Bleemus, you are in the right spot.

    ZTRADE: Entered (BRY) August $60 calls (BRYHL) for $3.10, small to open. Conf call at 10 EST.

  9. 9
    ellwodo Says:

    Any guesses as to whether this is a selling opportunity like yesterday morning (i.e. will be going away soon), or a more sustained move up?

  10. 10
    zman Says:

    Elwo – pretty tough to say in front of the EIA numbers but anything that would move oil higher is probably a bad thing for the group as it will punish the broad mkt and anything like a big build would pull oil lower and may pull the stocks down too. We’re in for volatility either way.

    BRY acquisition slide show:


  11. 11
    zman Says:

    BRY acreage is low at just over 4,000 net, nice comp for QBIK I suppose.

    See annual unit volume growth going from 10% to 15% due to the acquisition.

  12. 12
    kyleandy Says:

    u have link for conf call BRY. i cant copy link on their website

  13. 13
    zman Says:

    BRY Call – 3.3 Bcfe average EUR in the lime and sands, nothing for Haynesville in the numbers to date. Think potential goes to 5 ish for a vertical well with HS.

    Link: http://www.bry.com/index.php?page=investor

  14. 14
    texana Says:

    out: wll, kwk, clr hk & pva, long skf, sds, dug

  15. 15
    zman Says:

    BRY – Eastern most part of the acquisition is 3 miles to the NW of the PVA Fogle well.

  16. 16
    MMarkkk Says:

    Z – do you get eblasts from Tudor Pickering? This morning has an update on their targets for “Bossier-ville Shale” players, a new term used by Core Labs that may better describe the Haynesville/Bossier play.

    Dan Pickering is pretty connected with many of these companies and did a great job with his Barnett Shale reports.

    With only one well with public results they are relying on what is being said/implied plus discussions they are having with folks on the ground. They are increasing the recovery per well predictions and the % of acreage that should be productive. Big on most of the names being mentioned here except our “doughnut hole” play wasn’t mentioned. Did mention DVN and EP which has been kind of quiet. Playing in the background, no doubt as both own lots of acreage.

  17. 17
    zman Says:

    Tex – I hear ya.

    Mark – Dan’s smart and behind today’s acquisition. I’m not a client but see his pieces from time to time.

    What % did he go to? I was at 65% and 60 acre spacing, EURs 5 Bcfe. Any details there. I understand hi non-mention on QBIK, hard to get there without drilling and maybe he’s working on it as well…I would think CHK would want to take that in on the north and possibly GDP on the southern field.

    Group backing off pre numbers while oil surges ahead and the broad market suffers.

  18. 18
    zman Says:

    RE HS acreage I had DVN at 105,000 and EP 80,000 (means a lot more to EP).

  19. 19
    zman Says:

    BRY from the Q&A:

    BRY HS testing over the next 30 to 45 days.

    Plan to add acres, pursuing now, won’t quantify.

    Rigs at 5, seeing some tightness, think they will be able to add rigs as needed, no plan outlined for an increase.

    EIA in 30 seconds

  20. 20
    zman Says:

    oil: down 4.6 mm bls
    gasoline: up 1 mm which is in line
    distillate: up 2.3 which is a bit high

    imports: 9.7, about in line with last week

  21. 21
    zman Says:

    gasoline demand jumped to 9.4 mm bpd from 9.1 last week

    Sane, any API yet?

  22. 22
    texana Says:

    wrong on dug

  23. 23
    zman Says:

    utilization dipped 1.1%, other than the strength this brings to crude this is a “not bad” report from the standpoint of the refiners as demand didn’t suddenly die.

    Texana- it’s early.

    And suddenly they like HK and NBR again building on the CNBC guest comments early this morning.

  24. 24
    sane Says:


    Crude down 3.2M
    Gasoline Up 986K
    Distillates UP 500K

  25. 25
    Sambone Says:

    10:42 am EST

    Nymex Crude Rises Ahead Of Inventory Data

    By Brian Baskin

    NEW YORK — Crude oil futures traded higher in light volume Wednesday as traders prepared for the release of U.S. oil and product inventory data.

    Light, sweet crude for July delivery traded $2.70, or 2.1%, higher at $134.01 a barrel on the New York Mercantile Exchange. July Brent crude on the ICE futures exchange traded $2.31 higher at $133.33 a barrel.

    Futures settled lower Tuesday for the second session in a row after closing at an all-time high of $138.54 a barrel on Friday. The losses did not erase all of Friday’s record $10.75 gain, however, indicating to some that the march higher is not yet over.

    “This latest correction will most likely not mark a top either,” wrote Edward Meir with MF Global.

    The Energy Information Administration is scheduled to release oil and product inventory data for the week ending June 6 at 10:35 a.m. EDT. Analysts expect a 900,000 barrel draw in oil inventories, along with increases in gasoline and distillate stocks of 1.1 million barrels and 1.6 million barrels, respectively.

    The market has reacted strongly to inventory data over the last few weeks, as falling U.S. gasoline consumption has raised fears that supplies of both oil and products could exceed demand. Oil inventories have plunged over the same period, however, providing some support to futures.

    “If we do see another large decrease in supply we will see greater price swings and that will certainly help perpetuate the overnight (increase) we see this morning,” said Stephen Schork, editor of the Schork Report, an energy newsletter.

    Perceptions of tight supply were bolstered overnight by new cuts to Nigerian production and a report from China of another surge in oil imports in May.

    “Tight supplies continue to underpin the strength in crude,” wrote Addison Armstrong with Tradition Energy.

    Front-month July reformulated gasoline blendstock, or RBOB, recently traded up 7.07 cents, or 2.1%, at $3.3900. July heating oil traded 7.57 cents, or 2%, higher at $3.8881 a gallon.

    —By Brian Baskin, Dow Jones Newswires

  26. 26
    MMarkkk Says:

    Z – 6 B’s at 80 acre. up from 4 B’s at 80’s. Also, 50% vs 33%. If you can get 6 B’s for $7 MM you’ve got a nice well at $9/mmbtu. at $12/mmbtu you are making your banker happy!! not to mention your royalty owner!

    What is your read on the DUG options? saw you got out of $27’s yesterday. I’ve still got a toe in, but its pretty erratic…price not toe. Is it beerthirty yet??

  27. 27
    zman Says:

    Mark – thanks re those numbers. Sounds like the economics on the Woodford dual laterals NFX is about to start drill, IRR off the charts at this strip.

    Long way from beer thirty. My $30 DUG calls are shock protection, so far unneeded. Felt a near term turn in that blood red mkt yesterday so punted the $27s for a slight increase. My $30 likely to die on vine or close to it.

    Somebody tell SLB and HAL the broad mkt does not matter to them.

    Thanks for the API #s Sane, they line up better this week.

    FYI, I’m watching the HK June calls for an exit, slightly down but much better than where I started the day, I will probably wait to see if the stock can regain $36 but I’m a little overweight there.

  28. 28
    Dman Says:

    Z – with HAL & SLB, maybe it’s just the index ETFs etc pushing ’em down with the market.

  29. 29
    zman Says:

    Refiner getting woodshedded again on higher oil. Getting closer to a decision on a real re-entry, maybe one to two weeks from now.

  30. 30
    BeWater Says:

    Z, you’ve probably talked about this before, but have you considered texting in addition to email zblasts?

  31. 31
    BeWater Says:

    oh, this is js1 by the way, i just got around to figuring out how to use that wordpress thing.

  32. 32
    Sambone Says:

    WASHINGTON (AP)–The U.S. Department of Energy said Wednesday that motorists
    can expect gasoline prices to remain close to $4 a gallon through next year.
    Oil prices should remain well above $100 a barrel through 2009, says Guy
    Caruso, head of the department’s Energy Information Administration.
    Caruso told a House hearing in Washington that crude oil prices are likely to
    average $126 a barrel next year, $4 higher than this year. He said gasoline
    prices are expected to peak at $4.15 a gallon in August, but won’t go down
    much. The agency projects gasoline averaging $3.92 a gallon through 2009.
    Caruso said that oil prices are likely to stay high far into the future. He
    projected oil costing $107 a barrel in 2015.

    (END) Dow Jones Newswires
    06-11-08 1105ET

  33. 33
    Sambone Says:

    By Brian Baskin

    NEW YORK (Dow Jones)–Crude oil futures were unable to sustain a rally
    Wednesday morning on a larger-than-expected draw in oil inventories, as more
    signs of sinking U.S. demand emerged.
    Light, sweet crude for July delivery traded $3.15, or 2.4%, higher at $134.46
    a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures
    exchange traded $1.94 higher at $132.96 a barrel.
    Futures rose as high as $136.80 a barrel before falling back to levels seen
    before the inventory data release. The U.S. Energy Information Administration
    reported a 4.6 million barrel drop in oil inventories for the week ending June
    6, compared with an average analyst forecast of a 900,000 barrel draw.
    Refineries actually took less oil for the week, but have also been importing
    far less oil than in the past. Imports stood at 9.7 million barrels a day,
    compared with 10.1 million a year earlier.
    But while the import data points to falling demand in the U.S., those barrels
    are all needed by China and other emerging economies. China reported that oil
    imports rose 25% in May from a year earlier.
    “It’s a global market, and the U.S. is not the driver this year of what’s
    going on with prices,” said Addison Armstrong, an analyst with Tradition
    Product inventory levels only confirmed that U.S. demand is weak. Gasoline
    inventories rose by 1 million barrels, just below analysts’ expectations of a
    1.1 million barrel build. Distillate inventories, which including heating oil
    and diesel, grew by 2.3 million barrels, compared with a 1.6 million barrel
    forecasted increase. Gasoline demand is down 1.3% in the four week period
    ending June 6 from a year earlier, the EIA said.
    Oil prices also fell back as traders noticed that 40% of the drop in crude
    inventories came on the geographically isolated West Coast, which is not seen
    as representative of the country as a whole.
    Front-month July reformulated gasoline blendstock, or RBOB, recently traded up
    8.82 cents, or 2.7%, at $3.4075 a gallon. July heating oil traded 6.20 cents,
    or 1.6%, higher at $3.8744 a gallon.

    -By Brian Baskin, Dow Jones Newswires;
    (END) Dow Jones Newswires
    06-11-08 1109ET

  34. 34
    zman Says:

    Dman – hear ya there and OIH is off 0.5% in sympathy with the broad market. NBR still up 3+% and toying with new highs. Possibly a broker note there but I don’t see it.

    BeW – I’d considered voice blasts but its a pain and costly. I had not considered text to mobile but it is a good idea and I’ll have someone look into it.

    Sam – funny, the govt says expect to see oil at the level it’s at yesterday through the end of the year and then says expect to see $4 gas from here on out as well. Your tax dollars not at work. I wonder how much it cost to outfit the EIA with rearview mirrors at each desk.

  35. 35
    crysball Says:

    Z The BRY option market maker toys with every bid. I sold out of the money 50 puts and bot 60 calls and each time I placed a bid he moved the target……….cute.

    Incidentally, BRY is a is Kurt Wulff favorite with a relatively low McDep ratio, the asset acquisition should bring a pump from Kurt, which will filter to his subscriber base [many institutional buyers].

  36. 36
    irished Says:

    HK Well do we fold and go home with our money or take our chances on the next card???

  37. 37
    Sambone Says:

    #34, Rearview mirrors? You know as well as I do that the EIA/DOE are a joke when it comes to predictions.

  38. 38
    tater Says:

    “I wonder how much it cost to outfit the EIA with rearview mirrors at each desk”
    Sorry, but I am going to have to use that line like I made it up myself. That’s good stuff!

    Question, kind of getting a bit tight in the shorts about “sinking tides…” effecting the oily stocks. Any macro fundamental ideas on what to look for other than the obvious (lower stock prices)?

  39. 39
    Dman Says:

    I was about to start yelling at SLB. Maybe I should just buy some more instead.

  40. 40
    VTZ Says:

    Nabors hits new 52 week high, gogogo.

  41. 41
    reefguy Says:

    z bought BRY common

  42. 42
    kyleandy Says:

    i just sold 1/2 my hk so now you’ll see 36 for sure

  43. 43
    VTZ Says:

    Nabors may be making new highs here.

  44. 44
    ram Says:

    HK seems to have hit a wall at 36.

  45. 45
    zman Says:

    Irish – still debating that myself which is not my favorite use of time but there you have. The Septembers are the safe bet and I was just taking one last WILDZ before jumping ship for the last week of the month.

    Sam – I know but I saw an opportunity to take a shot and I took it.

    Tater – lower oil not necessarily lower stocks prices and I’d like to see oil back into the mid to low $120s just so we don’t knock the economy around too bad from all the inflation that is filtering through.

    Chrys – call went well but the stock in non-plussed, I’ll add more on a bigger dip or if it wakes up. Mention of equity capping like I thought in the post. Still even with a secondary they see this as accretive in 2008.

    Thanks for the assist on $36 HK Kyle.

    Nick, if you are lurking now would be a good time to comment on oil and gasoline, RBOB taking those demand numbers to heart.

  46. 46
    ram Says:

    ZMAN – I seem to have misplaced my short link that SAMB or someone else listed here. Is there an increase in the short position in HK?

  47. 47
    zman Says:

    Ram: Its on the upper right hand side of the page as well.


  48. 48
    ram Says:

    I think the short crowd doesn’t go to lunch so noon est stocks can get beaten down when the longs go to lunch. It’s an odd feeling I have.

  49. 49
    ram Says:

    Thank you.

  50. 50
    Sambone Says:

    Uncle Phil


  51. 51
    reefguy Says:

    bry action is a puzzle

  52. 52
    zman Says:

    Reef – you’re smarter than me to take the common no doubt.

    I think probs with the deal are their conservatism in talking about 3P reserves (which are > 600 Bcfe in a mumbled comment on the call) and the lack of acreage. The deal just doesn’t give them a lot of running room and you know how analysts like to be spoon fed big numbers. Only 60 Haynesville/Bossier shale id’d targets. They are already looking for bolt ons and establishing a Dallas regional HQ. They said they have plans to drill HZ wells to test HS but the analyst crowd wants them to have already spud one on the first day in, lol.

  53. 53
    ram Says:

    Wow ZMAN – the blog roll has a lot of usefull info. It’s only been a year here and now I notice.

  54. 54
    kyleandy Says:

    ram thks now u made me notice!!!!

  55. 55
    Nicky Says:

    Morning all. News alert on CNBC that CFTC and Justice Department will meet tomorrow to discuss energy market regulation….

  56. 56
    Nicky Says:

    Lurking? me? never!!!

    Crude – need to see a move above Tuesday’s high which was 137.98 to give us confirmation we are in the next leg up.

    Difficult to see the broader market not being crushed by such a move. That said I believe we are nearing the end of 5 legs dow in the broader market – maybe one more low beneath this mornings lows -which may test 1335 – 38 spx and 12050 in the Dow.

  57. 57
    Dman Says:

    FSLR up today but 25% down from highs. Bargain hunting anyone?

  58. 58
    zman Says:

    FYI, while there’s a lull, we’ve had another growth spurt in subscribers in the last month and I would just like to take this opportunity to say thanks, I’m glad you are here and please ask questions as there are no dumbs ones (ok, there may be a few but I’ll never embarrass anyone).

    There are a few things I don’t do:

    1) give investment advice. This covers any of the “should I buy this or sell that” questions. I used to be a licensed guy and I’m happy not to be now. But it would be irresponsible of me to yell “Buy, Buy, Buy” at you like some do having no understanding of your financial landscape. So don’t ask and I won’t have to say I won’t tell. I will tell you what I’m doing and often why I’m doing it and that’s how things work around here and I like it that way. In other words, just don’t phrase it like that and I have to retype the preceding paragraph.

    2) Give stuff away for free. Aside from capital withdrawals from the trading account this site keeps the lights on the exchange fees paid. So please keep in mind the mantra “what happens at Zman’s Energy Brain stays at Zman’s Energy Brain”. If you have someone in mind who should be reading let me know and if they subscribe you can get free time or cash or even a t-shirt (with nifty CH4 logo on back).

    Thanks for understanding.

    Afternoon, Nicky and thanks. Agree re broad market crushing with oil closing on , er, um…$140?!

    On the CFTC thing I would imagine GS and others are already renting new office space in Dubai.

  59. 59
    Nicky Says:

    It sure did fly last month into expiry and a repeat this month would fit the bullish count perfectly:


  60. 60
    Dman Says:

    Z, I never knew about the CH4 t-shirt! Wait while I scare up some friends to subscribe…

    Well, like you say, a bit of a lull, just another day with oil up 4%, CH4 a bit lazy only 1.5%, nothin’ to see here 😉

  61. 61
    zman Says:

    Dman – Subscriptions make great gifts for Father’s Day too.

    True, NG firmly ensconced in the up channel.

    For the most part the groups are a bit apathetic to higher oil. Bakken plays performing a little better after a short breather yesterday led by the DB downgrade of CLR. I wanted to see another down $5 day before re-entering.

  62. 62
    Nicky Says:

    Doug Kass on CNBC saying that intermediate term looks far worse than short term. Charts certainly look that way too.

  63. 63
    ram Says:

    Can I buy a t-shirt?

  64. 64
    zman Says:

    Did Kass happen to mention his thoughts on energy? Last I understood he was net short via DUG.

    Ram – Sorry, no gotta bag somebody, lol.

    Reef – Any thoughts on the retrenchment in IOC. Think it’s just disappointment over the actual rate at Elk 4?

  65. 65
    Dman Says:

    Well, lets face it Nicky, if oil stays up here the general economy is going to be kaput. But anything to do with energy and associated infrastructure will still be roaring, although probably crazily volatile. I wouldn’t be touching the finance sector with a barge pole and traditionally the market tends to key off finance, so that alone is a bad sign for the markets.

  66. 66
    kiaora Says:

    Z – Are the shirts automatic with finding a new subscriber?

  67. 67
    Jay Reynolds Says:

    Something like this for a T-Shirt:


    “This is your brain”

    “This is your brain on Z”


    contact info

  68. 68
    zman Says:

    K – either that or time or cash.

    HK – waiting on that to move away from the round number gravity ($36) it is suffering now, I say suffering but 6% rebound after yesterday’s retreat from new highs and on pretty fair volume for this time of day is nothing get upset about.

    PQ working slowly high, still think that one of all my favorite names has the biggest % move left in it.

    Hey Jay, what’s the word from ground zero NW La?

    My wife told me not to use the logo you can seen here
    on the backup site. Apparently it is cheesy.

  69. 69
    zman Says:

    CNBC reporting problem at XOM’s massive Baytown refinery. That could be the same kind of thing that catalyzed cracks in early 2007 and sent the indie refiners soaring. Having a look now.

  70. 70
    zman Says:

    I see nothing on the tape re XOM, anybody got see that? Somebody with a Bloomberg have a look please.

  71. 71
    Sambone Says:

    Off subject – For Nicky

    A little trip down Memory Lane with the Chairman, a man of great conviction. This stuff is priceless:


    “Bernanke said in his prepared comments that he is convinced that stable prices are the best way to keep economic growth strong, and that it’s important to low- and middle-income Americans that the Fed stays vigilant on inflation.

    “I think it’s a false dichotomy,” he said when asked to choose between the Fed fighting inflation or giving low rates to spur economic growth and employment. “It’s low income people who suffer most from recession. It’s also low-income people who suffer most from a high level of inflation.”

    Bernanke’s comments reassured bond traders as Treasury prices rallied and the yield on the 10-year note fell after his prepared comments were released, and then through his testimony.

    “Obviously, this reaffirms to the market that he’ll be an inflation hawk,” said Wachovia Securities economist Jason Schenker. “The discussion of the balance between employment and inflation is standard; he was reaffirming he’ll be vigilant on inflation.”

    Bernanke has long written in favor of inflation targets, which Greenspan has opposed. But Bernanke said he believes having an inflation target is a step in Greenspan’s long-stated goal of greater TRANSPARENCY to the markets about upcoming Fed action.

    “I believe this is just an incremental step,” he said.

    You can’t make this stuff up! Sambone

  72. 72
    uop Says:


    which 4 stocks are your BEST and most PROMISING for the next 3-5 months ?

  73. 73
    el_vogel Says:

    Re #30, if you can get your phone text email address you can use that – check with your service provider to find out what your email equivalent is. Z shouldn’t have to do anything.

  74. 74
    Sambone Says:

    Only thing I got on XOM is Thunderhorse

  75. 75
    zman Says:

    Sam – thanks, Crazy, oops strike that, Thunderhorse coming on line mid month, right, but nothing on Baytown, huh, maybe CNBC made it up.

    El- V … I like how you think, “Z shouldn’t have to do anything”. We were just talking about SMS mass mailings.

    Uop – good question. These aren’t the go go names but should be solid performers and the basic back drop needs to remain friendly, ie oil doesn’t go to $60 like Nicky would prefer nor NG to $6.



    ENER – for yield

  76. 76
    Hoss Says:


    Goodyear Plant in East Houston -situation stable


  77. 77
    Bleemus Says:

    Regarding SMS. Every phone has an email address for texting. For example if my number is 843-437-1674 my text email address is something like 8434371674@sprint.net.

    Just set your Profile preferences to receive mails there and voila, you have Zman text alerts.

  78. 78
    kyleandy Says:

    Z i was going to answer uop for u so “z wouldn’t have to do anything” but u beat me to it. i had 3 out of 4 (HK for NFX)

  79. 79
    zman Says:

    Thanks Hoss…Epherson said XOM Baytown problem. Didn’t mean to imply explosion.

    Bleemus… that would work except that we don’t use the site softward for the blasts but instead keep a separate record at gmail, reason being, spam filters have a field day with zman domain emails….no idea why. Interesting concept though and if you want to get sms messages you can send the address to Petra at zmanadmin@gmail.com, not to me, and we will see about getting that running.

  80. 80
    kyleandy Says:

    blee and those wud be the only mail u would get????

  81. 81
    zman Says:

    Kyle – I like them too but I was thinking raw price appreciation. HK gets near term pricey in my book in the $40s while CHK could see another $20 points and not be out of line. PQ could go 50% higher and only be in line with its peers.

    NFX – I like the stock better than the options.

  82. 82
    Bleemus Says:

    Yes it would be the only one you would get as I believe there is only one email address entry field in my Profile.

  83. 83
    uop Says:


    txs sir,
    am surprised you did not include HK,
    if a man like you does not mention HK, I have to reconsider HK ??

  84. 84
    reefguy Says:

    ioc- i think the disappointment may be the short squeeze that has not materialized.

  85. 85
    reefguy Says:

    bry- seems to be coming to the party now

  86. 86
    Popeye Says:

    Z, the data at shortsqueeze is still at least 30 days delayed no?

  87. 87
    Hoss Says:


    TLM had some news last night – contributing capital towards drilling program in exchange for potential one-third
    working interest in West Texas, Louisiana, and Arkansas assets from Hallwood Energy, L.P.

    Hallwood Group(HWG) is a Holding Company with a minority interest in Hallwood Energy, L.P.


    Anything to get excited about?

  88. 88
    BeWater Says:

    nice, i’ll give it a try. thx.

  89. 89
    BeWater Says:

    re txting, i didn’t read the followups to 77 before i wrote 88.

    If this was burger king and i could have it my way i would receive both email and text. Email is probably more useful in my case. Text would be useful if i’m away from broadband and there was a lot of action going on that might motivate me to find a pc. I am not typically at a computer throughout the trading day.

    I use yahoo email, and i believe i have to upgrade in order to forward any emails automatically to another address. That appears to be an option in my case.


  90. 90
    reefguy Says:

    cog bought Enduring Resources assets in e. tx. Private held out of Denver. Don Wolf, Alex Cranberg, etc

  91. 91
    zman Says:

    Fair warning on the HK Junes, I’m a little better than BE and this rally is a gift and I’m overweight there so they can go away any time. I will continue to hold the Sept $20s for awhile.

  92. 92
    Sambone Says:

    Off subject – Another one for Nicky

    “As we know, there are known knowns.
    There are things we know we know.

    We also know there are known unknowns.
    That is to say, we know there are some things we do not know.

    But there are also unknown unknowns,
    the ones we don’t know we don’t know”.

    —D.Rumsfeld, Feb. 12, 2002,

    One of the more intelligent quotes from Rummy which seems to fit well with the current state of economic affairs.

  93. 93
    Sambone Says:

    2:15 pm EST

    Oil Soars On Biggest Oil Stock Draws In 23 Years

    By Brian Baskin

    NEW YORK — Crude oil futures shot higher Wednesday following a report showing the fourth straight large drop in U.S. oil inventories.

    Crude Oil Stocks, Refinery Rates Slump

    Light, sweet crude for July deliver recently traded $5.61, or 4.3%, higher at $136.92 a barrel on the New York Mercantile Exchange, off from an intraday high of $138.80 a barrel. Brent crude on the ICE futures exchange traded $5.13 higher at $136.15 a barrel.

    Oil inventories fell by 4.6 million barrels in the week ending June 6, the fourth decline in a row. The cumulative 23.6 million barrel decrease during that period is the biggest one-month plunge in 23 years. Low inventory levels have added weight to fears that growing demand from the developing world is taking away the little supply cushion that remains.

    This has allowed oil prices to continue moving higher even as other commodities have faltered. Where the weakening dollar once drove oil prices higher when there was no immediate supply concern, tight inventories could now be exerting pressure on the dollar, said Walter Zimmermann, an analyst with brokerage ICAP/United Energy in Jersey City.

    “Instead of .. the dollar and gold pushing crude oil higher, it now looks like crude oil is affecting other markets,” he said. “Maybe that’s a sign that there are some bullish crude oil fundamentals at work.”

    Front-month July reformulated gasoline blendstock, or RBOB, recently traded up 16.24 cents, or 4.9%, at $3.4817. July heating oil traded 17.80 cents, or 4.7%, higher at $3.9904 a gallon.

    —By Brian Baskin, Dow Jones Newswires

  94. 94
    zman Says:

    Thanks Hoss, will look at this afternoon.

    Reef, thanks, that was the deal last week, right. Seems like COG paid up for it but there is a lot of land with the reserves.

  95. 95
    elijahwc Says:

    Re: #16 & #17: Someone requested Pickering on the “Bossier-ville”. Here you are:

    Round Two?

    · Increasing Bossier-ville shale value for E&Ps (E&P $797) – Got Haynesville and/or Bossier Shale? You need some..it’s very valuable. Latest NAV update ticks type curve from 4bcfe to 6bcfe and de-risks acreage from 33% to 50% productive. Would love more well data, but comfortable moving up given what we’ve seen/heard from publics/privates. NAV’s for CHK, HK, XCO, GDP, GMXR, STR go up by ~40%. Rolling in for APC, XTO, DVN, EP for average 7% NAV boost. More below.

    · Upgrading GMX Resources to Buy (GMXR – $54.37 – B) – GMXR has too much leverage to Bossier-ville to not have our most favorable rating. Tied with HK for second most levered Bossierville stock (50% of NAV). NAV moves +$31 to $84 (no typo) as we roll through updated type curve and acreage productivity. GMXR only has 21K net acres in play, but that’s material given only 17MM shares out. Execution will be key..GMXR has had previous difficulty with horizontal drilling.

    Increasing Bossier-ville shale value for E&Ps (S&P 1500 E&P index $797) E&P and Midstream Research Teams

    · Summary – This is the real deal. We’ve touched base with every public and private player we know and truly believe this play is indeed the next big thing (CHK is allowed a great big “I told you so” on its next conference call). Recent weeks have shown Haynesville mania in full force. Some believe results from one well by PVA literally creating billions of equity value, but we believe the crescendo of impending well news makes the Haynesville the best place to invest for potential upside, near-term news, and step change value creation. This is similar to what happened around the Barnett when EOG really highlighted that play back in 2004 and KWK, CRZO, etc…became fast followers. Best Haynesville/Bossier levered names: GDP, HK, XCO and GMXR. For catalyst-hungry investors, we strongly believe that HK and CHK will both have results out in next ~3-4 months and real upside remains for Haynesville-levered names. Not surprisingly given our conviction, every E&P Haynesville levered company is now Buy rated (GMXR upgraded today).

    · Bossier-ville properties – Core Labs coined the phrase Bossierville at a technical presentation last week. The name resonates with us as the Haynesville Shale is located between the deeper Haynesville Lime/Conglomerate and the shallower Bossier Shale. The Haynesville distinguishing characteristics are higher porosity, total organic content, and deeper depth. This combination leads to higher gas in place and we believe likely leads to higher “free gas” (vs. adsorbed gas) in the shale. Higher pressure and free gas may be leading to the higher initial flow rates, higher sustained flow rates, and shallower long-term declines. All these factors lead to our confidence in increasing our typical well profiles.

    · Typical well profiles – We would LOVE to have abundant well data and type curves. Unfortunately, that’s not the world we live in. At this point, PVA is the only disclosed initial production (IP) rate of 8mmcf/day (10-15mmcf/d expected). However, our industry moles have repeatedly confirmed rumors of IPs of 10-20+mmcf/d suggesting EURs of 4-10bcfe. Previously, we were modeling EURs of 4bcfe (gross), $7MM well costs, 80 acre spacing and assumed 1/3 of acreage was productive. We now know those numbers are too conservative and as such are increasing our type curves. Our new Bossier-ville type curve is a 6bcfe gross EUR; 80 acre spacing; 50% of acreage works for $7MM well costs. This methodology is consistent across every single company mentioned below. Over time there will be haves and have-less (probably some have-nots), but we honestly don’t know how to differentiate the companies..yet. We’ll plead here for those companies wanting to show us where we’re wrong/right on any of our assumptions.

    · How to play? – Lots of companies with acreage have not yet talked about the full extent of their Haynesville acreage, because it is simply too early to know the best drilling/completion recipe. Also adding acreage alone doesn’t create value, companies need to significantly accelerate rig count to create real asset value (watch the dayrates on 1500hp rigs, big moves coming). The most levered names to the play include GDP, HK, and GMXR with 50+% of their NAVs associated with Haynesville. XCO has the “cheapest” multiples in the play and CHK owns the most acreage with 500k acres.

    · Companies – We previously assigned Haynesville value to CHK, HK, XCO, GDP, GMXR, STR. We are now rolling in value for APC, XTO, DVN and EP. For all companies, we are now assuming the 6bcfe typical well. A summary of our assumptions and valuation for each company follows:

    GDP ($52.88 – B) – We are increasing our NAV 56% to $80 for the company’s 66k net Haynesville acres. In our modeling, Haynesville has ~415 locations developed over the next 13 years. The total value of Haynesville to GDP is $45/share or 57% of the overall NAV. This makes GDP the most levered of our coverage list to the Haynesville.

    GMXR ($54.37 – B) – Tied with HK for second most levered name; Bossierville accounting for 50% of NAV. NAV moves +$31 to $84.

    HK ($33.98 – B) – Second most levered name to Bossier-ville, accounting for 50% of HK’s NAV. HK has talked publicly of 155k net acres in the play with goal of 300k net acres. At this point, we believe their hard working land-men have taken them to ~200k net acres and we assume 50% of that acreage works. Our NAV moves +$23 to $61. Getting another 100k acres (per their plan) only moves value a couple bucks…doubling rig count and accelerating the pace of development adds $20/share.

    XCO ($29.84 – B) – We are increasing our NAV 37% to $41 as our increased type curve adds $11/share. Haynesville valuation for XCO assumes 125k net acres (101k net announced), 50% of their acreage productive on 80-acre spacing, for ~780 locations developed over the next 12 years. Haynesville represents 34% of XCO’s overall NAV.

    CHK ($58.86 – B) – We are increasing our NAV 16% to $101. CHK has been the leader in the Haynesville and has quickly amassed 500k net acres. Haynesville now accounts for 20% of CHK’s NAV. As the Great American Land grab is nearly over (CHK at 500k goal), we believe CHK will begin announcing well results potentially as early as their Q2 call. However, we believe meaningful well news/type curves will almost certainly be revealed at their first ever analyst day this fall.

    EP ($20.91 – B) – We are increasing our NAV $1.50/sh, or 8% to $27 as we roll in previously unassigned Haynesville value at our 6bcfe typical well. Our Haynesville valuation for EP assumes 27k net acres, 50% of their acreage productive on 80-acre spacing, for 170 locations developed over the next 8 years.

    STR ($67.79 – A) – Yesterday we increased our NAV by $5.50/sh (to $79) for STR’s 30k acres of Haynesville potential. Gut feel says risking their acreage by 50% too punitive as conservative company probably already heavily risking.

    XTO ($67.02 – B) – Following yesterday’s announcement, we are rolling in new value for the company’s 100K net Haynesville acres. The Haynesville exposure increases the XTO NAV by $6/sh to $102 and represents 6% of XTO’s overall NAV.

    APC ($78.23 – B) – We are increasing our NAV $7/sh to $104 as we roll in 100k net acres, 50% productive on 80-acre spacing, for 625 locations developed over the next 9 years.

    DVN ($115.90 – B) – DVN not talking about it yet, but without a doubt they are testing. At this point, we are rolling in credit for their 137K net Carthage acreage (why wouldn’t Carthage have potential in the middle of the play?). We have not giving credit for 190K net acres in East Texas that may be prime for “Bossier-ville” exposure. Our NAV moves up $7 to $152, which could prove conservative as more acreage could be productive.

    Tudor, Pickering, Holt & Co. Securities, Inc.

  96. 96
    uop Says:


    in your holdings I do not see any ENER ?

  97. 97
    zman Says:

    Thanks Eli,

    If you have the full report did he note the leverage PQ has here? By the way I have a leverage to current booked 1P reserves with underlying assumptions on the E&P tab at upper left.

  98. 98
    zman Says:

    Uop – First, I used the wrong ticker, menat EVEP.

    And I don’t own that either but if I were a yield guy that or maybe MVO or an SJT would figure into my portfolio. I just thought I’d throw out a yield name that I believe Denise brought up and I took a look at several months back.

  99. 99
    apbd Says:

    What’s this about tee shirts from Z as Christmas presents?

  100. 100
    kiaora Says:

    Great idea!!!

  101. 101
    Sambone Says:

    AP – #99, I’ll hold my breath! LOL

  102. 102
    elijahwc Says:

    Z- in reference to #64 Kass was short the OIH and owned DUG shares at the end of May… He hasn’t been talking about his DUG holdings on the Street.com much recently. Lije

  103. 103
    Nicky Says:

    Sam re 71 and 92 – thank you – priceless but at the same time terrifying. Let’s face it they haven’t got a clue how to sort this mess out. Dow below 8000 looks a total no brainer to me in the next couple of years.

    Greenspan been somewhat conspicuous by his absence the last few weeks. Many its finally sinking in that the hero is becoming a villain….

  104. 104
    elijahwc Says:

    A fun little ditty from a great money manager, Bob Marcin of Defiance Asset Mgmt. Love the last two lines.

    Robert Marcin
    Bullish Oil Inventory, Big Energy Problems
    6/11/2008 2:00 PM EDT
    After another week of surprising large oil inventory drawdowns, the story is finally coming into focus regarding supply and demand. And it ain’t so pretty. Saudi can’t increase supply much more than they have, up to around 9.5 million barrels per day. Or they would. And the demand reduction that’s occurring in the developed world is being sucked up by emerging markets, including the oil producers themselves.

    Now, I don’t know what the fair price of oil should be. There are a lot of issues involved. No doubt there is upward pressure from commodity investing. And, certainly, demand reduction is happening here, and in most of the developed world, right in front of our eyes. So things will balance out eventually.

    But I do know that big, unexpected inventory draws, in a season which usually supports inventory builds, is not a good thing. And I know that the Saudis won’t come clean with their real production data so we can prepare for plateau oil if it’s happening. That’s not good either.

    Some of the biggest oil fields in the world are in accelerating decline phase, and non-OPEC production growth is disappointing once again. If Saudi, Russia, Exxon, and Royal Dutch can’t raise production, prices will stay high enough to ration oil and gasoline. And the middle classes in India, China, Russia, Brazil, and the Middle East are not returning to mopeds or bicycles. Get used to it.

    I don’t want to sound alarmist, but it almost feels as if a geographical bidding war for energy resources is just starting to develop. I hope this observation is incorrect. But we need to prepare a “plan b” if it’s right, and that entails something other than blaming big oil and threatening windfall profits taxes.

    In fact, the moron politicians who focus on the wrong issues are exacerbating the problem. Because of their ineptitude, we have no viable energy policy and unfortuntely, no hope of one either. The nu-cu-lar knucklehead who thinks more oil refineries and Anwar are the solution is as bad as the socialist bozo who thinks taxing Exxon’s mostly foreign profits and buying hybrids will solve our energy problems.

    We really do need a politically insulated, long tenured energy Fed position that can coordinate all of the steps we need to take to secure our future energy supply. In this multiple choice essay, all of the above is the correct answer. We need more drilling yesterday and a Marshall plan for solar. We need more energy conservation, tax incentives to rapidly and aggressively develop alternatives. We need everything that’s been put forth and then some. And we need it soon.

    Until we get this done, expect to pay high prices for gasoline and natural gas. Stop whining about it and stop blaming the oil companies. Do any and everything you can to save on energy consumption. We are in this position because we are energy pigs, and we have chosen politicians ignorant enough to lead us to slaughter. We get what we deserve.

  105. 105
    Sambone Says:

    N- #103, Nope, the reason you havn’t heard from old Alan, is that nobody has paid him lately to speak. He only talks when he’s at some paid conference or something. Tell ya what, get Z man to send him a check and I bet Old Alan will tell ya how it works! LOL

  106. 106
    reefguy Says:

    gdp-Goldman circling

  107. 107
    reefguy Says:

    xco-working on psa

  108. 108
    Nicky Says:

    #104 – lol!

    Indians apparently rioting in the streets as they lift the fuel subsidies….

  109. 109
    zman Says:

    Thanks Lije for the Kass comment and I agree with all of 104, could not and have not said it better myself.

  110. 110
    crysball Says:

    Valero Energy Corp. (VL0) shut a diesel hydrotreater for maintenance at its Port Arthur, Texas refinery, a spokesman said Monday.

    Valero shut the unit for a short time and does not expect it to have a material impact on the plant’s production, a company spokesman said.

    Most of the processing units at Motiva Enterprises LLP’s Port Arthur, Texas, returned to normal Friday, the company said Monday.

    On Thursday production of gasoline and other petroleum products after operations shut down due to power failure, the company said.

    In Texas City, Texas, the ultracracker at BP PLC’s (BP)refinery went into restart mode Thursday, a person familiar with the plant’s operations said. The ultracracker was shut for welding and some minor repairs in early May

  111. 111
    Nicky Says:

    I am still looking for one more leg down in the broader market unless we get an overlap at 12264 on the dow and 1355 on spx.

    Support below 1335 on spx is at 1327 – 1330.

  112. 112
    ram Says:

    ZMAN – Still hanging onto HK JUN’s?

  113. 113
    zman Says:

    Ram – I am for now, yes but the tick chart is on a screen by itself, still mulling.

    Thanks, Reef got your email, good luck!

  114. 114
    cadillac Says:


    Your comments “may test 1335 – 38 spx” Post 56. Looks like you are going to nail that number today.

    Do you have any Great Karnack-ian forecasts for whether it is a short term bottom?

  115. 115
    Sambone Says:

    By Brian Baskin

    NEW YORK (Dow Jones)–Crude oil futures rose sharply Wednesday on a
    surprisingly large draw in U.S. oil inventories, potentially setting the stage
    for a run at $150 a barrel.
    Light, sweet crude for July delivery settled $5.07, or 3.9%, higher at $136.38
    a barrel on the New York Mercantile Exchange. July Brent crude on the ICE
    futures exchange closed $4.17 higher at $135.19 a barrel.
    Futures rose steadily on a 4.6-million-barrel decline in U.S. oil inventories
    – much larger than expected – for the week ended June 6, according to
    government data. The big inventory declines over the last four weeks – the
    biggest one-month drop in 23 years – have begun to overshadow declines in
    gasoline consumption found in the same set of statistics. While the U.S. is
    seen using less oil, those barrels are finding their way to emerging economies
    in Asia and the Middle East rather than piling up in Cushing, Okla., the
    largest commercial storage hub in the U.S.
    The thinning supply cushion leaves the market vulnerable to a supply shock in
    the event of a major interruption to production. While demand forecasts have
    been scaled back to reflect the toll of rising energy costs, growth is still
    seen outpacing increases to supply.
    “People were expecting significantly more oil than what they got,” said Mark
    Waggoner, president of Excel Futures in Newport Beach, Calif., referring to the
    U.S. crude oil inventory figures. “It’s not necessarily the speculators; it’s
    supply and demand. We have less supply. And driving season (is starting).”
    The July 4 holiday weekend is increasingly being seen as a potential
    inflection point for the market. Morgan Stanley recently predicted that oil
    prices would hit $150 a barrel by that date. With oil prices resisting any
    attempts to move lower than $131, Morgan Stanley’s call looks more and more
    plausible, said Tony Rosado, a broker with GA Global Markets LLC.
    “It doesn’t seem (the market) really wants to come off,” Rosado said.
    How many Americans take to the road the week of July 4 – and how far they
    drive – is likely to provide cues for the oil market, which can’t ignore
    falling U.S. gasoline demand forever, wrote analysts at JBC Energy in Vienna.
    “Market watchers are likely to stay focused on pump prices and their
    subsequent effect on consumer demand,” the analysts wrote. “This will be
    especially interesting around the fourth of July.”
    The rally received additional fuel Wednesday from the dollar, which weakened
    against the euro Wednesday. Federal Reserve Vice Chairman Donald Kohn said
    “some” short-term rise in inflation is acceptable given high oil prices,
    providing a counterweight to more aggressive anti-inflation comments from other
    Fed officials earlier in the week.
    The weakening dollar has helped send oil prices higher for nearly a year, and
    is widely seen as having sparked the record-setting jumps at the end of last
    week. But with tight supplies and resilient Asian demand providing an
    additional motivation to send oil prices higher, the oil-dollar relationship
    may have flipped, said Walter Zimmermann, an analyst with brokerage ICAP/United
    Energy in Jersey City, N.J.
    “Lately it looks like crude oil has been calling the shots…if crude oil is
    up it pushes the dollar down,” Zimmermann said. While high oil prices raise
    inflation fears, reducing the value of the U.S. currency, that can in turn send
    new investors into energy markets as a means of hedging against the weak
    Front-month July reformulated gasoline blendstock, or RBOB, settled 14.65
    cents, or $4.4%, higher at $3.4658 a gallon. July heating oil settled 16.24
    cents, or 4.3%, higher at $3.9748 a gallon.

    More information on settlements and highs and lows for futures on Nymex and
    ICE platforms can be found by searching for the following headlines:
    Nymex Light Crude Oil Close
    Nymex Harbor RBOB Gasoline Close
    Nymex Heating Oil Close
    ICE Brent Crude Oil Close
    ICE Gas Oil Close

    -By Brian Baskin, Dow Jones Newswires; (Tatyana Shumsky in New York contributed to this article.)

    (END) Dow Jones Newswires
    06-11-08 1525ET

  116. 116
    uop Says:


    this EVEP has hardly any volume, not for me, I want min 500000 shares a day.

  117. 117
    Nicky Says:

    spx made a lower low – it may be enough….

  118. 118
    zman Says:

    Ram – I’ll probably give my HK junes up for 2.40+.

  119. 119
    Nicky Says:

    Cadillac -yes a short term bottom. Should then see a decent 3 wave bounce…not easy to nail this low though. Looks a bit like an ending diagonal – a move above 1345 would likely confirm that….

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    ram Says:

    ZMAN – Of course now that you say that, the bid will not get above 2.35 going into the close.

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    zman Says:

    Group feeling the pull of a slipping DJIA / S&P but just barely.

    VLO / SUN green,

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    cadillac Says:


    I’m no T/A but it feels like we moved down too fast/oversold. I am hoping for a general market uptick the next couple of weeks.

    This market has been swinging dramatically. Good for traders. Makes it tough on the buy and hold types.

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    Nicky Says:

    Cadillac – yes agree. We may see a much sharper move down in July however.

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    Nicky Says:

    If I am wrong then we are already in wave iii down – arrrgh. Which is a possibility with crude heading back into the stratosphere!

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    zman Says:

    CNBC ratagain saying everything lower today. not everything pal.

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    VTZ Says:

    Did anyone see Gazprom’s 250$ oil predictions yesterday?

    I didn’t see a news link but only a headline.

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    zman Says:

    Ram – I’ll probably close the Junes early tomorrow. Nothing against the stock but that option is running low on time and I have a lump of them.

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    cadillac Says:

    I don’t think your wrong. The news will point something brighter tomorrow then its back to 1400 spx.

    I’m just glad I am heavy in Energy Stocks. Thanks to Zman.

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    Sambone Says:

    N – My guy saids that if the DOW drops below 12,000, lets say a couple of hundred points, get out of the way. This baby is going way lower.

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    Popeye Says:

    Ding Ding Ding

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    Sambone Says:

    Tini time

  132. 132
    zman Says:

    Beer Thirty, out for a bit. Too kind Cad.

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    Nicky Says:

    Samborne I don’t disagree with him. If this is a wave iii this will absolutely tank! In two months time we will be saying wow I wonder if we can get back above 11750 on the Dow! And likely we won’t! 11,700 is huge support and we could be at 10,000 in a heartbeat if it fails.

    That said I think that move is not yet on the cards. My preferred count says we retest or make a slightly lower low in July/August and then they take it back up for a very good second half rally. Then they tank it!

  134. 134
    kyleandy Says:

    z– in the next few days cud u revisit DNE hard to believe an oil/gas stock is down about 40% from where i bot it. the jeffries analyst made it a buy around 1.78 and i incorrectly figured they usually don’t recommend low price stks unless pretty good. on their web site is a new(6/10)presentation. was going to buy more, but after reading that saw nothing to be excited about. thks

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    promoting gold Says:

    promoting gold

  136. 136
    traders execute Says:

    traders execute

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  138. 138
    buy here pay here account buyers Says:

    buy here pay here account buyers

  139. 139
    he has a good point Says:

    he has a good point

  140. 140
    美国黑色星期五打折 Says:


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