Wrap – Week Ended 6/13/08

Holdings Watch: Closed positions for the week ended 6/13/08. It was a slow week for closing out positions as most of June options went over board in the last couple of weeks. Look for a little more activity in the coming week as I will be about as far away from my screens and this site as is possible without taking a trip to the ISS in the last week of this month (more on that later).

• DUG $30 calls sold for $0.70, down 42%
• DUG $27 calls sold for $2.00, up 18%

Natural Gas Directed Rig Count Creeping Towards Record Highs. Rigs drilling for natural gas in the U.S. hit a record high for 2008 of 1,504 only a stones throw from the August 2007 record pace of 1,523 rigs. I would expect this level to increase by at least 100 by year end. 

Meanwhile Oil Rig Count Remains Elevated And Likely To Go Higher. $120+ oil is definitely having an impact on rig counts which one would surmise might even lead to higher domestic production. 

Coal Hits Another Record High. The high-btu variety, Appalachian coal, is now up 100% on the year. Strange that I have not heard calls for reigning in the COAL speculators who must be behind such a move. Only the OIL speculators seem to catch Congress' impotent ire despite the facts that:

• The U.S. is the Saudi Arabia of coal, with more than a 230 year supply at current consumption levels (264 billion short tons of estimated recoverable reserves / 2007 production of 1.145 billion short tons),
• Oil is up 44% YTD, not nearly the doubling coal has seen
• The average household in the U.S. spent $95.66 per month on electricity in 2006 (the average is either much smaller or much more efficient than mine), either way that is about $1,200 per year on lights and cooling. Half of U.S. generation comes form coal and 2% comes from petroleum so a 100% increase in half of the equation means .... yep, lookout summer and especially next fall as utility rate hike requests accelerate. To round out the generation list for the U.S.:

Housekeeping Watch: I'll be in Honduras for the trading week June 23-27. The site will be up for subscriber access during this time but I will not post, comment or trade. If you're a non-subscriber reading this and wish to subscribe during this time period please know that beginning June 21, Google Checkout orders will not be processed until June 30. PayPal orders are automated and will function as usual.