T.G.I.F.

164 thoughts on “T.G.I.F.”

1. 7:58 am EST

   Crude Higher As Buyers Seize On Pullback

   By Angela Henshall
   Of DOW JONES NEWSWIRES

   LONDON — ICE Brent crude oil futures surged higher in London Friday as traders leapt at the chance to buy back in to the market after reasoning Thursday’s sell-off on China’s fuel price rise was overdone.

   “Crude futures were firmer this morning,” said Andrey Kryuchenkov, analyst at Sucden Research, “recovering from heavy losses Thursday with some investors seizing an opportunity to buy at dips, as the long-run uptrend in oil remains intact,” adding that early dollar weakening also helped leant support.

   At 1153 GMT, the front-month August Brent contract on London’s ICE futures exchange was up $2.37 at $134.37 a barrel.

   The front-month July contract on the New York Mercantile Exchange was trading $2.21 higher at $134.14 a barrel ahead of contract expiry.

   The ICE’s gasoil contract for July delivery was up $7.75 at $122.650 a metric ton, while Nymex gasoline for July delivery was up 448 points at 339.74 cents a gallon.

   Anxiety over perceived tightening global supply means the flow of oil from Nigeria is a major concern for the market and traders are watching for any news on the outcome of labor negotiations between Chevron Corp. (CVX) and oil workers union Pengassan, over fears of industrial action.

   News Thursday that a group of militants had successfully attacked Shell’s only deepwater offshore rig, shutting-in 225,000 barrels a day of production, also sent shivers through the market and continues to lend support. Earlier Friday, the Nigerian oil minister said he was confident production would be restored within days.

   Meanwhile the focus is on the oil summit between the world’s leading producers and consumers in Jeddah, Saudi Arabia this Sunday.

   Robert Laughlin at MF Global said it probably will be the most crucial meeting the market has seen in years. “Oil prices have soared and there have been many factors that have contributed to the rally,” he said, “reality suggests that global demand is still and will continue to outstrip the supply of “sweet” barrels, even at these prices.”

   Organization of Petroleum Exporting Countries member Venezuela, which firmly opposes greater output as it seeks to maximize earnings, said overnight that it had decided against sending a delegation to Jeddah.

   Asia woke up to find out China had increased domestic gasoline and diesel prices by 17%-18% overnight, in response to criticism of its fuel subsidies and high oil prices. Oil prices closed lower in the U.S in direct response Thursday marking the largest one-day decline since March 31; the July “08 contract closed down $4.75 at $131.93, a drop of more than 3%.

   China’s fuel price boost is another sign that higher crude oil prices will prompt demand destruction, said Olivier Jakob analyst at Petromatrix. “China is another confirmation that, price-wise, we are closer to the demand breaking point.”

   In market economies, consumers are driving less, and in subsidized economies, governments are reducing price protection by gradually lifting subsidies. China follows similar moves by India, Indonesia, Malaysia and Sri Lanka. Any attempts to push prices higher increases the risk of demand destruction and will make the longs “a bit more nervous and shorts a bit more confident,” according to Jakob.

   —By Angela Henshall, Dow Jones Newswires

2. ALGIERS (AFP)–Organization of Petroleum Exporting Countries President Chakib
   Khelil said Friday it was illogical and irrational to ask the oil cartel to
   increase output so as to take the pressure off soaring prices, the Algerie
   Presse Service news agency reported.
   “To ask the oil producers to increase their output is illogical and
   irrational,” Khelil was quoted by APS as saying ahead of a meeting Sunday in
   Jeddah of oil producers and consumers to discuss record high prices.

   Dow Jones Newswires
   06-20-08 0810ET

3. New Jim Kingsdale article on various Saudi scenarios to mitgate oil prices……..bottom line is their option are limited, and the most likely (increasing production in Iraq & Nigeria) is clearly beyond their ability to control and are not near term solutions. Here is the Seeking Alpha link: http://seekingalpha.com/article/81989-what-can-the-saudis-do-to-bring-down-oil-prices?source=d_email

4. Tenneco moving up in premarket on rumors US will limit imports of iported OCTG [Driling Pipe], this outcome seems unlikely in view of just concluded US/China bilaterals.

5. Z CHK just updated their investor presentation for June 08. Slide 25 shows their NAV @ 164.64 with $13 NG. @ $12 NG it is $146.11 @ $11 it is 129.22. The strip last night was 11.29. These are ALL as of 3/31/08. Nothing about Haynesville in these numbers.

6. All Eyes On Jeddah – Will Saudis Pump More?

   By DAVID BIRD
   A DOW JONES NEWSWIRES COLUMN

   NEW YORK — For consumers, will oil prices look better after Jeddah?

   The answer largely will rest on how much new oil Saudi Arabia will bring to market and how soon. After talk a week ago of a dramatic production boost to 10 million barrels a day — the most in 27 years — stoked-up enthusiasm is cooling about whether the numbers can add up.

   At 9.45 million barrels a day now, after a 300,000-barrel-a-day June rise to meet U.S. customer demand, the Saudis on Thursday shot down a statement on their U.K. embassy Web site that they’re boosting output by a further 200,000 barrels a day.

   After talks in the kingdom last week, U.N. Secretary General Ban Ki-moon said Oil Minister Ali Naimi told him Saudi output would be 9.7 million barrels a day in July — a level that would be the most since 1981.

   As the issue remains muddled, and potentially still unresolved internally ahead of a producer-consumer dialogue hastily called by King Abdullah for Sunday in Jeddah, talk has steered away from output rises.

   A White House spokesman twice this week dimmed hopes for an increase in output emerging from the meeting, where the energy secretary will represent the U.S.

   David Kirsch, head of the market intelligence service at PFC Energy in Washington, said the Jeddah “meeting is not about production increases.” But the initial talk of a dramatic boost, if not delivered, could backfire on the kingdom.

   “If they don’t announce an increase to 10 million barrels a day, you’ll have a chorus of “peak oil” theorists saying they can’t hit 10 million barrels a day,” Kirsch said, referring to analysts who subscribe to the view that global output has reached its peak and is in decline.

   What Will Flow — Words Or Barrels?

   Kirsch said the Saudis want to focus on medium- and long-term issues facing the industry, such as lack of investment in oil exploration and production, and refining and the increasing role of financial players in the market.

   What’s emerging in the run up to the meeting is a laundry list of steps taken by consumer countries, which may well form a stitched-together blueprint for a communique.

   But assembling a courtroom dossier of reasons why prices should come down isn’t likely to cut it with the market. Barrels, not words, will put pressure on the market.

   The Saudis must weigh any move with the risk of breaching confidence with fellow members of the Organization of Petroleum Exporting Countries, should they overtly announce an output rise in a consumer-dialogue context.

   Price hawk Iran, OPEC’s second-biggest producer after the Saudis, said any output changes should be considered only in an OPEC meeting, set for Sept. 9. Venezuela says it won’t attend the Jeddah talks. Both countries, which can’t increase output, would view an unilateral output rise as a direct blow to their oil revenues.

   Still, it’s significant that the words coming from consumer countries ahead of the meeting seem targeted to assuage some concerns voiced by the producer countries.

   With the Saudis and others in OPEC joining a chorus in Congress complaining of the impact of speculation on inflating oil prices, U.S. federal regulators are moving to tighten rules.

   On Wednesday, President George W. Bush called for an end to the moratorium on offshore drilling that’s been in place since 1981. If that were to happen, the oil wouldn’t flow for years, but the move signals to producer countries a long-term commitment to future oil use at a time when renewable fuels are stealing the spotlight.

   China on Thursday ordered a surprise 17% to 18% rise in retail fuel prices, which the industrialized nations viewed as a step in the right direction toward bringing prices closer to market levels.

   No Dent In Chinese Demand

   Rampant oil demand growth from China, where prices are below international market levels still, has helped triple global oil prices in the past four years.

   The move may end up being all things to all people, blessed by producer and consumer countries alike. For China, the price increase takes the pressure off refiners hurt by poor margins amid soaring crude prices. Analysts say it will encourage refiners to step up processing and crank out more products to alleviate shortages that have sprung up and also burnish China’s image during the Olympics in August.

   Economics 101 would argue that higher prices will cut back demand, but those rules don’t necessarily apply in the complex Chinese market, analysts said. Strong pent-up demand among China’s emerging middle-class means that additional oil will be snapped up quickly, despite the higher cost. Subsidies to farmers, fishermen and forestry workers also limit any potential drop in demand from higher prices, analysts said.

   Chinese refineries may need more crude and more heavy fuel oil to crank up operations and still-strong diesel demand (despite the price rise) will continue to pull in distillate fuel from around the world, with perhaps only marginal declines in imports, underpinning prices.

   Eduardo Lopez, senior global oil demand analyst at the International Energy Agency, said the West’s energy watchdog isn’t lowering its assessment of Chinese oil demand for 2008 after the price hike. IEA said June 10 it expects China’s oil demand to rise by 500,000 barrels a day, or 6.7%, to 8 million barrels a day this year, accounting for the majority of a global increase of 800,000 barrels a day.

   Widespread comment Thursday was that the price hikes wouldn’t slow the Chinese juggernaut, yet oil futures prices were pounded down, led by heating oil — a proxy for the highly desired diesel fuel — in a selloff attributed to the move.

   Crude Down From Record Highs

   Nymex heating oil futures shed 3.8%, or 14.65 cents a gallon, in the biggest fall since April 1, to $3.7135 a gallon. Gasoline futures lost 11.41c to $3.3526 a gallon, the lowest level since June 10.

   July delivery crude oil futures — one day before expiration at Friday’s settlement — fell $4.75 a barrel, or 3.5%, to $131.93 a barrel.

   The drop may have been accelerated by expiration-related trading, but, in any case, prices are down more than $7, or nearly 5%, the intra-day peak of $139.12 a barrel on June 6. A $10.75 price jump that day caused the king to call the Jeddah talks.

   How clearly the king defines the near-term Saudi oil policy — specifically output and pricing policies and targets — to the assembly along the Red Sea and the waiting world will determine whether the long rally in oil prices is finished, or just preparing to ratchet higher.

   —By David Bird, Dow Jones Newswires

7. new ETN’s

   Crude Oil
   DXO PowerShares DB Crude Oil Double Long ETN
   OLO PowerShares DB Crude Oil Long ETN
   SZO PowerShares DB Crude Oil Short ETN
   DTO PowerShares DB Crude Oil Double Short ETN

8. Z PS CHK over the last 5 years has traded at a discount to NAV of 65 – 75%. Now that it is 50%, it seems Aubrey’s prediction of increasing NAV by 40%/yr is no BS.

9. Morning all. Saudi’s already seem to be setting up to disappoint with the rhetoric. Market looks like they are gonna try and force their hand with yet another big move up today. Nothing to say we won’t be at 140 by the close by the looks of things.
   Broader market already looks in big trouble. Support is very firm at 1324 – 26.
   Rumor doing the rounds about Merril Lynch going to warn…

10. “morning surprise” yesterday after poorly trading my largest holding NBR, I quit looking at the mkt at 3:45, and prepared to go watch the RAYS complete their sweep of the CUBS. at about 1:00 i entered a GTC order to sell my remaining IOC at 36, after reading the Changewatch article someone (who i really am happy with) posted here about putting your stks with a GTC order so short sellers couldn;t use them. i wake up this morn to find out my order was executed at 41.62. it looks like IOC is going to open around 33 this morn. what in the hell happened??? it’s all good!!!!
    maybe sam or z or anyone can explain to me!!!

11. TS re cuts to OCTG imports, yeah , I doubt that too, talk about shooting yourself in the foot.

    Kyle – lot of strange trading in IOC last night, did not see any news.

12. Sambone- Thanks for flagging new ETNs…beware of any that have quirky liquidation triggers like DCR did.

13. I don’t imagine this is helping the energy shorts:

    http://www.timesonline.co.uk/tol/news/world/middle_east/article4178960.ece

    An Israeli air force drill which appeared to be a rehearsal for a potential attack on Iran’s nuclear facilities was intended as a deliberate flexing of muscles, military officials said today.

    An Israeli political official who is familiar with the drill said that the Iranians should “read the writing on the wall.”

    “This was a dress rehearsal, and the Iranians should read the script before they continue with their programme for nuclear weapons. If diplomacy does not yield results, Israel will take military steps to halt Tehran’s production of bomb-grade uranium,” the official said.

    http://www.timesonline.co.uk/tol/news/world/middle_east/article4178960.ece

14. Nicky – Dollar falling off again, seeing stories on mkt watch saying no interest rate hikes through fall from Ben.

15. K – No news on IOC. Hey if you got 41.62, take it and run.

16. Watching CHK bid up pre open. Beware pinning action today.

17. D – Here ya go on IRAN, 6-7$ gallon of gas.

    http://news.yahoo.com/s/csm/20080620/wl_csm/oresponse;_ylt=Ahd4bo5Ayj473Na6mBoaNjms0NUE

18. From the same article (#13):

    Following a meeting between Mr Olmert and Mr Bush, the Israeli prime minister said: “We reached agreement on the need to take care of the Iranian threat. I left with a lot less question marks [than I had entered with] regarding the means, the timetable restrictions and America’s resoluteness to deal with the problem. George Bush understands the severity of the Iranian threat and the need to vanquish it, and intends to act on the matter before the end of his term in the White House.”

    I believe that meeting was from June 4 and it also produced another quote:

    ‘A member of Olmert’s delegation noted that same day that the two countries had agreed to cooperate in case of an attack by Iran, and that “the meetings focused on ‘operational matters’ pertaining to the Iranian threat.” ‘

19. Z – very little chance of Bernanke doing anything with the market at these levels.

20. All three JUNES right below strike – need a major catalyst.

21. Thanks Sam, intersting article.

    Nice NFX bounce, just sold the calls added at close yesterday.

22. Nicky – agreed, he continues to be hamstrung by need for growth vs obvious inflationary pressures.

    Hear ya Ram – CHK may already be getting pinned.

23. NG- 57 BCF input Low numbers especially considering Independence Hub increased by 7 BCF per week.

24. Nicky, thanks for reminding me about the market. My screens are so full of green blinking stocks that I didn’t actually notice the little red Dow number at the top…

25. ZMAN – About what time will JUN options zero when they are slightly under strike – 1:00 EST maybe?

26. Z – a bit of Goldman follow thru today?

27. Dman – yes, me too re the broad market. “…and then they turned back to the one sector that still works”

    Ram – it’ll depend on the IV. The higher it is the later they go 0 bid.

    I plan to punt the wft in minutes, the CHK at any time. SLB and HAL will go today too but just for cash/trip raising purposes.

28. Dman – did you see the part in the post re their thoughts on China. This up on oil is due largely to that and others saying same thing.

29. Z – #28 yes & I was intrigued by those “teapot refineries”. Kinda curious about those. At least they aren’t using “mud refineries” a la Indonesia.

    The reason I have asked a few questions about how much swing Goldman has is just that I find it amazing that funds would sit around waiting for GS to tell them what to do. But realistically I know plenty of money is indeed run that way and GS is about the last major house standing in the general credibility department. But I find it hard to guess at just how big a swing they have & I gather you are saying “pretty big”.

30. Salvaged yesterday’s ZMANWILDTRADE for $.85 in @$.50.

31. funny Scoop, just came half out at $0.85 as well.

    Never doubt the vision of Nicky’s oil price calls. Oil up $4.30 and still climbing.

32. ZTRADE: Out June WFT for $0.50, down 76%. Still holding the August 47.50s.

    Half out CHK June $65s at $0.85.

33. ZTRADE: Out SLB July 105 Calls for $5.38 average, up 44%

34. #31 Yep, have learnt not to take Nicky’s calls lightly…

35. ZTRADE: Out HAL July $50 Calls for $2.49, up 42% since entry mid April.

36. LONDON (Dow Jones)–Royal Dutch Shell PLC (RDSB.LN) Friday said the force
    majeure it has declared on exports from its 225,000 barrel-a-day Bonga crude
    oil field in Nigeria will remain in place for June and July.
    The measure provides the company with legal protection if it isn’t able to
    meet its contractual obligations.
    Shell spokesman Rainer Winzenried said that talks are ongoing with personnel
    who work at the offshore facility to agree when they will return to work.
    This latest outage brings the total amount of production thought to be out of
    action in Nigeria to more than 800,000 barrels a day. The shuttered output has
    been one of several factors that have pushed oil prices to record-highs in
    recent months.

    -By Angela Henshall, Dow Jones Newswires; Dow Jones Newswires
    06-20-08 1011ET

37. By Tatyana Shumsky and Gregory Meyer
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–Crude oil futures jumped Friday as traders mulled a
    report hinting at a showdown between Israel and Iran and expressed uncertainty
    over the impact of an international oil summit in Saudi Arabia this weekend.
    Light, sweet crude for July delivery was recently up $3.11, or 2.4%, at
    $135.04 a barrel on the New York Mercantile Exchange after briefly jumping as
    high as $136.08. The July contract expires Friday. more actively traded August
    Nymex crude was up $3.22, or 2.4%, to $135.82 a barrel.
    August Brent crude on the ICE futures exchange rose $3.08 to $135.08 a barrel.
    The New York Times reported in Friday’s editions that Israel this month
    carried out an airborne military exercise that American officials say looked
    like a “rehearsal” for a potential bombing attack on Iran’s controversial
    nuclear facilities.
    International tensions over Iran, the second-largest crude producer in the
    Organization of Petroleum Exporting Countries, have helped rattle the market
    amid oil’s rise of more than 40% this year. Iran also lies on the Strait of
    Hormuz, a crucial conduit for the export of Gulf crude.
    “At the very least it’s noteworthy and potentially concerning,” said Eric
    Wittenauer, an energy analyst at Wachovia Securities in St. Louis. “However, at
    this point in time the imminence of an attack isn’t there. Certainly
    geopolitical tension in the region can prove price-supportive.”
    The market partly recovered from a fall precipitated Thursday by China’s
    decision to raise the domestic price of gasoline by 17% and diesel by 18%.
    “It gave us a one-day selloff,” said Walter Zimmermann, an analyst at
    brokerage ICAP/United Energy in Jersey City, N.J. “It remains to be seen
    whether that is going to translate into a decrease in demand.”
    On Sunday, Saudi Arabia has scheduled a summit of major oil producers and
    consumers. Traders continue to search for clarity over whether the meeting will
    result in a production boost.
    OPEC President Chakib Khelil said Friday that a production increase doesn’t
    make sense.
    “To ask the oil producers to increase their output is illogical and
    irrational,” Khelil told the Algerie Presse Service. Earlier reports have
    indicated Saudi Arabia, OPEC’s de facto leader, will increase output by at
    least 200,000 barrels a day after the meeting.
    Front-month July reformulated gasoline blendstock, or RBOB, rose 5.89 cents,
    or 1.8% to $3.4115 a gallon. July heating oil rose 9.38 cents, or 2.5%, to
    $3.8073 a gallon.

    -By Tatyana Shumsky, Dow Jones Newswires; 201-938-4424;
    tatyana.shumsky@dowjones.com

    -By Gregory Meyer, Dow Jones Newswires; Dow Jones Newswires
    06-20-08 0940ET

38. Thanks Sam, they still have not said if there is damage as well.

    Refiners still not catching a break. And once again I can say that sometimes the best trade you make is the one you don’t. I wouldn’t short em as they are cheap and a sellside guy from a big house could pop them on you. On the flipside, I’d like to see better numbers from the EIA and wait until July to enter to clear fund window dressing.

    I specifically watch Fox biz news this morning to catch Flynn, (short oil since $97) and he was playing up the demand destruction angle.

39. ZMAN – Are you still holding the JUN HK’s?

40. UOP – From yesterday on PBR post. If RIG drops I’m all over it.

    http://www.usatoday.com/money/industries/energy/2008-06-19-deepwater-oil-offshore-drilling_N.htm

41. PQ on sale @$25.50

42. Just a wild thought, any catalyst out of corn flooding to push refiners toward a lower utilization to retool for less ethanol blending (lack of supply), or at least to use as an excuse?

43. Ram – No June HK’s held

44. Breaking – Chevron oil facility attacked by MEND

45. MEND now says it wasn’t involved in attack. Chveron unavailable for comment

46. Tater – I don’t think so but that hurts my head to think through.

    Ram – You can always check the WIKI tab to see holdings, I make an effort to update that every night, if the date at the top doesn’t have yesterday or today on it drop me a note.

    MEND said a couple of days ago it will start going after the tankers.

47. Ok, but that’s why I leave all the thinking to you guys, gives me a headache. I’ll just stick to the math part.

48. Have reason to suspect PQ being pinned at just below 25. On A hunch, just sold PQ June 25 Naked Puts for .10 with no bids and it was immediately taken………….don’t you just love a free & open market market.

49. crys – you are probably right. This is the one day a month where manipulation is the name of the game.

    pinning setting in the group over. Like watching paint dry. Going to pack. Will keep one eye on the CHK tick chart.

50. tater: refiners are required to us 9 b/gal this year. they finished last year using roughly 7 b/gal and had 2 b/gal worth of credits. An incremental 1.5 b/gal have come on line this year, so even 1.5 b/gal coming off-line wouldn’t really impact refiners. In addition ethanol is very difficult to blend in the summertime due to high vapor pressure, so this is the time of least demand.

51. thanks much SRP

52. By Spencer Swartz
    Of DOW JONES NEWSWIRES

    JEDDAH, Saudi Arabia (Dow Jones)–A Chevron Corp. (CVX) oil facility in
    Nigeria was attacked overnight by militants, Nigeria’s main rebel group said
    Friday, though it denied its personnel were involved.
    The claim comes the same day as Royal Dutch Shell PLC (RDSA) said it has
    called force majeure on exports from its 225,000 barrels-a-day Bonga offshore
    crude oil field in Nigeria, after an attack by the Movement for the
    Emancipation of the Niger Delta.
    MEND said in an e-mail to Dow Jones Newswires signed by Jomo Gbomo that it
    wasn’t involved in the attack on the Chevron facility, pinning it on other
    unnamed militants instead.
    Despite repeated requests, Chevron officials were unavailable to comment.
    Previous warnings Gbomo has made to the media have proven accurate, and his
    accounts of MEND’s activities have strengthened his claim to being part of the
    group’s inner circle. His name is a pseudonym, however – his real identity is
    unknown. Henry Okah, who was arrested in Angola last year on suspicion of arms
    trafficking, is widely believed to have been Gbomo. It is unknown whether
    someone else is using the pseudonym to continue communicating with the press.

    -By Spencer Swartz, Dow Jones Newswires; Dow Jones Newswires
    06-20-08 1059ET

53. Looking for signs that the market is trying to make a short term low. Breadth is diverging but volume has yet to do so….the low could come anytime between today and Tuesday and then we are likely to see a short term bounce into the 27th – 30th June.

54. Thanks srp, I like to think that I get smarter in direct proportion to the amount of coffee that I drink. Way to blow my bubble:)

55. thanks for the bio el v

56. Z – I’m trying to decide b/t the NFX Sept. $75 or $80 calls. Which would you prefer to own base on today’s prices prices and near term potential catalysts? And, is it a bad idea to open a position on an expiration day?

57. After a couple more decades of this, the word “mend” is going to start meaning “to blow things up”

58. np!

59. Z – FYI, you look good for your trip next week. GOM/Atlantic looks to be quiet so far next week.

60. Z or all – What brokerages do you use, are any particularly good at displaying useful info on options? I go through Scottrade and it’s not super options friendly, of course I can’t really compare it with another broker….

61. Thanks Sam.

    back with you in a couple of minutes david

62. italyinvestor, I use ThinkorSwim and Interactive Brokers. Both are excellent. IB has best commission rates in the biz.
    Thinkorswim is better for option spreading with nice software.

63. Oil – a possible count says we see another decline to the 132 region from here – part of a triangle. Will be choppy though…

64. Z, PQ any reason its lagging the group today ?

65. italy i switched most of my acct to fidelity cause they let u short naked options. kept a little at scottrade cause i like their trading platform, altho its easy to make a mistake there, while fidelity gives u a preview.

66. David – you’re asking a bit out of the stock on the $80s and since I don’t know what happens with the Saudi’s over the weekend if I were to place the trade I’d wait through the weekend. One fun little anomaly about expiry Friday’s is that in thinner traded names you often see greater bid support in the next month out. That evaporates Monday if the stock trades flat so all things being equal, it’s generally better to wait. I only see that on the next month out options (which are becoming the new front month) and not the longer dated ones.

    Italy – I like SSP from Schwab and Optionexpress.

    Tom – none I see. Failed to turn back up with the group on a thinly traded day. It may still come around but soon stocks will be stuck were they are til 4

67. Italy
    I use Fidelity and it is good for stocks and a preview, its charts and prices on options is somewhat limited. The new Active Trader Pro has very limited charts, mostly of 2 months with no recent charts. I like charts and recent option prices and Fidelity is lacking in that regard. Security is great and classes (free and food) are usually helpful but sure could use more option pricing history and stuff like that. Their option trader pro is good also but again no history.

68. Hi Z.

    IS IT TIME TO HAVE FUN WITH THE JUN 65 CHK calls, YET?

    Bought some at .35

    Q.

    P.S. – I haven’t touted VMC for a while.
    Look at it in the low 60s. Plot the VIX against it. Get the VIX below 20 and this stock should be 80+… and what a great hold! 18 months from now you’ll be glad to have it.

69. Saudi Oil Min says report on 200,000 B/D output hike is correct – DJ

    Kingdom to give more info on output policy Sat/Sun.

70. VMC article.

    Here’s a link giving pros and cons to VMC after it rose to 84 two weeks ago. The bull case is still in place… Basically, inelastic demand and good market areas: those who need rock, need rock and have to pay for it.

    The PE was 23 when article written, now it’s 17.5

    Q.

71. Whoops,

    Here is the link: http://www.thestreet.com/story/10417431/3/whats-behind-vulcans-climb.html

    Q.

72. MEXICO CITY (Dow Jones)–Mexican state oil monopoly Petroleos Mexicanos said
    Friday that its crude oil production in the first five months of this year
    averaged 2.86 million barrels a day, down 9.3% from the like 2007 period.
    Pemex said in a press release that exports in the January-May period averaged
    1.46 million barrels a day, down 17.3% from the like 2007 period.
    The average crude price in the period was $89.40, up from $50.80 in the first
    five months of 2007.
    Natural gas production, meanwhile, rose 13.5% to an average of 6.665 billion
    cubic feet a day in the first five months of the year, a record for the period,
    Pemex said.
    Pemex said May crude production was 2.80 million barrels a day, up from 2.77
    million barrels a day in April but below the 3.11 million barrels a day
    produced in May 2007.
    Pemex’s crude production has fallen this year largely as a result of the
    decline in production at its main oil field, Cantarell. The lower output has
    also affected exports, although higher oil prices have boosted export revenue.

    -By Anthony Harrup, Dow Jones Newswires; Dow Jones Newswires
    06-20-08 1204ET

73. Hey Quarry – I’ve had my fill of fun with that one for now, just looking for a graceful exit on the rest.

    VMC – was the run to $85 due to the China quake?

74. Hi Z – Considering adding to PQ common position today as pinning action keeping the name artificially low. Does this theory make sense or am I off base here?

75. Common I like there as I’m holding. Today, next week can’t say but it is cheap and, market and commodities willing, should be higher.

    Going to kill my remaining CHK Junes and my deep in the money HK’s as I raise a little more cash.

76. ZTRADES:

    Out remaining CHK June $65s for $0.15 yielding an average sale of $0.50, down 47% since yesterday’s entry.

    Out HK September $20 Calls for $19, up 132%. Continuing to hold the common and the September $40s.

77. ioc- big run yesterday the result of a short margin call- not met and forced by broker.

78. Thanks Sam # 72 News last night says the price of gasoline running $2.50 to $2.75 pg in Mexico. Lots of folks making the trip to save $$$.

79. Weekend reading

    http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/reports_and_publications/statistical_energy_review_2008/STAGING/local_assets/downloads/pdf/statistical_review_of_world_energy_full_review_2008.pdf

80. F – Here ya go

    http://www.brownsvilleherald.com/news/fuel_87812___article.html/mexico_shrimp.html

81. Balances:
    cash: 59%
    stocks: 24%
    options: 17%

82. reef –

    How do you find that out? Or is the spec? I’m long IOC options.

    I’ve been burned by the RJ analyst before. I remember when they had a PPS over $40 on BRNC.

83. Denise’s TA lady shows MEE as a possible
    ” short ” candidate. Buying July puts.
    Wish me luck.
    apbd

84. zman:

    have a good trip and a nice vacation in Honduras,
    you must like humidity,

    when will you be back ?

85. A – here’s wishing you luck, that is my least favorite coal for no good reason other than their history.

    Uop – thanks much, back late Sunday night so first post should be 6/30.

86. GM, Chrysler and Ford put on negative watch by S & P.

87. Next support on spx is 1316.

88. The only hope I can see for the broader market is oil coming off at the moment.

89. They are going to need to find some good news to throw at this market this afternoon or we could have armageddon on Monday morning.

90. God Speed and Good Luck Mon Capitan!

    Via con Dios!

91. N – Bhawhahahahah, nothing will happen on Monday. Some talking bubblehead will come on CNBS and talk about how eveything is AOK.

    To be serious – Why this puppy (Dow) is at this level is beyond me. Stagflation, rising interest rates, Home prices worst since the 30’s, US$ falling, etc., etc, and so on. My question is, “What is the good news?”.

92. Not sure about Monday Sam. If Asia take it down then we could have another ‘January’ day…. this time Bernanke will not be coming to the rescue however! for all the good it did last time.

93. (Updates with comment from Chevron, the oil minister and further context)

    By Spencer Swartz and Angela Henshall
    Of DOW JONES NEWSWIRES

    (Dow Jones)–As Royal Dutch Shell PLC (RDSA) declared recent oil production
    shutdowns would be extended for many weeks, Nigeria’s Oil Minister Odein
    Ajumogobia conceded Friday that the country’s oil sector had received a beating
    from a spate of militant attacks, adding that a peace summit in July would help
    quell unrest.
    Nigerian President Umaru Yar’Adua called the summit and is expected to include
    representatives of several militant groups.
    “We’ve had some unfortunate incidents but we’re hopeful that things will
    improve with dialogue and the Peace Summit,” Ajumogobia told Dow Jones
    Newswires Friday.
    Among those incidents: Shell declared force majeure Friday on exports from its
    225,000 barrels-a-day Bonga offshore crude oil field in Nigeria, after an
    attack by Nigeria’s leading rebel group, the Movement for the Emancipation of
    the Niger Delta. A force majeure provides Shell legal protection for not
    meeting its contractual obligations.
    The shut-in lifts the amount of Nigeria’s crude that could be delivered to
    markets if security problems ended to around 940,000 barrels a day, according
    to Dow Jones Newswires calculations, against almost 2.5 million barrels a day
    of capacity.
    The news bolstered the oil markets Friday, where crude in New York rose to
    within $3 dollars of the record $138.89 a barrel hit last week, fueled by
    reports, later denied by the company, that Chevron Corp. (CVX) had become the
    latest target overnight.
    Rebel group MEND, traders of the gasoline-rich oil and an industry source all
    said Friday that a flowstation fed by oil from Chevron’s Escravos fields had
    been attacked, though the rebels denied their personnel were involved.
    “We have not declared force majeure in the Delta and we have no information on
    any pipeline incident,” U.S.-based Chevron spokesman Kurt Glaubitz said, adding
    that everything was running normally. Chevron pumps about 350,000 barrels a day
    of crude in Nigeria.
    Traders of physical crude oil based in Europe said the market remains
    extremely sensitive to any news of further disruption in Nigeria.
    They said the state-run Nigerian National Petroleum Corp. is yet to issue its
    loading program for August, although Angolan grades which are usually issued
    just prior to the Nigerian plan have already started trading.
    Market participants said they expect to see a much smaller total volume for
    the program than in previous months, on the back of a spate of attacks that
    have suspended both onshore and offshore production in recent weeks.
    Militant groups have long resorted to violence in the country’s Niger Delta,
    aggrieved by years of living in abject poverty and government corruption that
    has seen billions of dollars in oil revenues wasted.
    Eurasia Group analyst Sebastian Spio-Garbrah said the violence may get worse
    ahead of and after a scheduled peace summit in Nigeria in July that the Nigeria
    government hopes will lower tensions in the country’s main oil producing
    region.
    “Jostling for invitations and government recognition ahead of the summit has
    set-off heightened violent competition among the area’s ethnically diverse
    militia groups for political relevance,” Spio-Garbrah said.
    Militias who will be invited will likely receive monetary rewards and promises
    of jobs from the government and if a group hasn’t earned a reputation for
    thuggery it won’t be invited to the summit, he added.

    -By Spencer Swartz and Angela Henshall, Dow Jones Newswires;(Nicholas Heath and Adam Smallman in London
    contributed to this story.)

    (END) Dow Jones Newswires
    06-20-08 1400ET

94. Off subject – havin a Friday moment!

    love this song, baby!

95. MEND already say they will not attend that peace summit so I don’t see anything getting quelled.

96. Scoop, I was just looking at something on Tuesday and commented there by accident.

97. U.S. Gas rigs up 10 to 1514, near 20 year high of 1523 from last August.

98. Z,

    One of our vendors working the Haynesville for CHK said they are IP’ ~ 22MM and currently ~17MM (not sure how long on sales). Said that other operators are all of that too. Believe half of what you see, nothing what you hear. The guy is pretty competent and comes from that area, and already has my work.

99. Wyoming – thanks. Makes me want to double my CHK July calls, add GDP, and HK julys and double my QBIK lottery ticket.

100. Bon Voyage Z!

     Looks like next week in the markets could be quite exciting & being somewhere calmer and more tropical seems like a good idea 🙂

101. Will you be fishing in Honduras?

102. I don’t think I’ll have time but will squeeze it in if I can.

103. Good Floyd Wilson interview on Mad Money. Think it aired last night. Can see on HK profile in Yahoo Fin.

104. Z, Cheers to a great month! Buenas viajes!

105. Think they are killer numbers if real. Typical Barnett operation number would be something like:

     DROI = 20%

     You need:

     1.7 BCF
     $2.5MM costs @ $10 gas

106. Uncle Phil

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

107. Here’s the Floyd interview link
     http://www.thestreet.com/_yahoo/video/cramerinterviews/10422266.html?cm_ven=YAHOOV&cm_cat=FREE&cm_ite=NA#1612713595

     I would think rates like that could correlate to EURs > 8-10 Bcf

108. Wyoming. Check your email and did PVA ever say what they spent on their well?

109. Z – Have a great time in Honduras. We will miss you!

110. Thanks for the best wishes and likewise! I’m sure I’ll be jonesing for comments by Monday morning.

     NBR like the rig count data so it seems or maybe its just noise. PDS and UDRL particularly weak.

111. Thanks and have a great vacation. “All work and no play makes Jack a dull boy”

112. Sam here’s another good one for a TGIF:

113. No cost data, just the production.

114. have a great trip i think it’s great you’re giving something to those who need it. talk u in a week

115. 1324 support on spx now becomes resistance.

     Suntrust providing some reassurance to the market.

116. Have a safe and prosperous week. You are a good man helping others in need ZMAN.

117. Thanks for the Bio Wyo! It’s on the tab.

     Kyle – thanks.

     Wyo – that’s what I thought, best guess at costs on first well and 20th well by me $10 mm, $8 mm.

118. Best to you too Ram.

     Friday Movie Quote Watch:

     “This town needs an enema” or in this case I’d replace town with market.

119. Batman

120. Probably right on costs, much deeper than Barnett Shale, fracs probably have ceramics. HS is probably more ductile than brittle (BS) and probably using xlink gel systems. All add costs to completions. Learning curve, increased competiton of vendors will probably get them to $8mm. Linear reservoir eng. gets you to ~ 4BCF for ~20% ROI @ $10 gas …. they are all over this if those rates are correct.

121. Joker

122. Sambone,
     Thought you might pick up the All work quote.

123. My turn

     If you didn’t kill him, then who did, sir?
     Who can say. Best thing for him, really. His therapy was going nowhere.

124. All work and no play makes Jack a dull boy…typewriter sentences repeated in the Shining

125. By Mark Peters
     Of DOW JONES NEWSWIRES

     NEW YORK (Dow Jones)–Natural gas futures rose Friday as strength in the
     petroleum complex helped boost prices.
     Natural gas for July delivery on the New York Mercantile Exchange settled
     floor trade 13.3 cents higher, or up 1.03%, at $12.994 per million British
     thermal units after reaching a high of $13.185/MMBtu in combined electronic and
     floor trade earlier in the day.
     “It is mainly overflow from petroleum prices,” said Jim Ritterbusch, president
     of Ritterbusch and Associates, a Galena, Ill., energy advisory firm. “All in
     all, not much in the way of fresh fundamentals.”
     Crude oil futures settled up $2.69, or 2.04%, at $134.62 amid a report of
     Israeli military activities that were seen as a possible rehearsal for an
     attack on Iran’s nuclear facilities and disruptions in Nigerian production oil.
     At the same time, traders have been watching weather forecasts closely to
     determine whether supply constraints are coming. Cooling demand can cut into
     the amount of gas available for injecting into storage for the winter,
     supporting futures prices.
     Forecasts for warmer temperatures ahead help push prices higher. The National
     Weather Service predicts above-average temperatures from June 26 to June 30
     from New Hampshire to Florida, while coastal California would experience
     below-average temperatures.
     “There are some warmer-than-normal temperatures forecast for the northern U.S.
     through early July that the market is viewing as support, although we note the
     pattern matches the five-year average, in most respects,” wrote Tim Evans, an
     energy analyst with Citi Futures Perspective in New York, in a note to clients
     Friday.
     A U.S. Energy Information Administration report Thursday showed a
     smaller-than-expected injection into storage last week. The EIA reported a 57
     bcf build.
     The injection fell far short of the 90 bcf five-year average. The latest build
     brings the total amount of gas in storage to 1.943 trillion cubic feet, 16.2%
     below the five-year average and 2.6% below last year’s levels. But analysts
     expect injections in the coming weeks to be stronger because of cooler
     temperatures that produced less cooling demand.

     -By Mark Peters, Dow Jones Newswires; Dow Jones Newswires
     06-20-08 1529ET

126. Have a great week Z. We’ll all miss you. 🙂

127. too easy
     Silence of the Lambs

128. Irish – Well done! #2

     There are two kinds of people my friend. Those with a rope around their neck, and those that do the cutting.

     There are two kinds of people in this world. Those with loaded guns, and those who dig. You dig.

     There are two kinds of spurs my friend. Those that come through the front door, and those that come through the window.

129. Z
     ATN just [a few minutes ago] announced 4 Horizontal Gas Wells in the Chatanooga Shale [believe near Mnteagle, TN, IP flow rates are several hundred Kmcf per day.

     To the best of my nowedge these are the first Horizontal wells and imply to me discovery of a a new [deeper]fromation….they have 106,000 acres in the play and have a history of drilling shallow [low production] wells in East Tennessee………not a ‘barnburner’ like Haynesville, but certainly another new Sale play to keep our eyes on.

130. Here’s one from one of my favorite movies:

     Now, a few words on looking for things. When you go looking for something specific, your chances of finding it are very bad. Because of all the things in the world, you’re only looking for one of them. When you go looking for anything at all, your chances of finding it are very good. Because of all the things in the world, you’re sure to find some of them.

     This by the way is how I do research. Instead of having a point and looking for things to prove your case, why not look at all the pieces and see what they tell you?

131. Thanks for the headsup Crys. ATN is an interesting trader. Looked at awhile back, did not bite, they have a slug of Marcellus if I’m remembering correctly so close to beer thirty on an expiry Friday. Will have a look.

132. Thanks Isle

133. Good Bad and Ugly

134. sambone
     Think spaghetti western aka Clint Eastwood
     Bueno, Malo and el Feo!!

135. Well done, Irish and Wyoming.

     Z- Zero effect? Not sure on this one.

136. ATN – 10x 2009 CFPS estimates, (pricey) but they should have a pretty high R/P and production growth rate to back that up. Don’t like the option spreads for a quick trade but the chart looks poised to my neophytic technical eye to rally. Was hot a few weeks back and has been resting.

137. Yep Daryl Zero

138. Hint ZMAN??

139. Z,
     Here are details of the ATN discovery, they so not give a depth, but the well cost [for a 3,000′ lateral Horizontal is’DIRT’….. or should I say Shale CHEAP @ $1.1million each], so my guess is the depth is less than 5,000’…but this is my speculation……..they are saying 750 well potential on their exising leasehold.

     “Co announces that it has drilled or participated in four successful horizontal wells in the Chattanooga Shale of Eastern Tennessee. Initial results indicate that horizontal Chattanooga Shale wells, with a 3k foot lateral, can be drilled and completed for ~$1.1 mln, and are capable of stabilized production into a pipeline of 300-500 Mcfe per day. Over the last 18 months, co has accumulated 105k net acres located in Eastern Tennessee. The co believes that its acreage contains up to 500 potential horizontal drilling locations in the Chattanooga Shale. Furthermore, most of this acreage is prospective from conventional reservoirs, such as the Monteagle, the Fort Payne Limestone, the Stones River and the Knox Group, for which the co believes it has up to 750 locations”

     crysball

140. E&P rallying into the close

141. See I fiugured ZMAN’s favorite movie had to be Texan, oil, The Duke=Hellfighters. Zero Effect never played in NY!!

142. I don’t deserve to die.
     Deserv’in got nothing to do with it.
     I’ll see you in hell Will Money.

143. Crys – almost certainly shallower than that, you can punch those quickly with a smaller rig to boot. Say they’re 0.5 Bcfe bumps apiece (pure spec on my part but should be on the side of conservatism) that’s a pretty low cost add of 200 B’s from the shale alone.

     The Hell Fighters and Grand Prix are in my top 10. People that put out oil fires; people that burn a lot of oil.

144. Z-Have a safe journey

145. Nah, Z’s favorite is “Starship Troopers” with the talented Denise Richards starring, LOL!

146. Z- Good luck, be safe. We will not let the market fall in your absence

147. Thanks P.

     Thanks for the cost info Wyo. Where they going to get all the water for these fracs, they’re talking some serious size on these, I mean if the play gets as hopping as everyone thinks doesn’t access to and then disposal of throw them a kink? I know CHK and SWN spent a fortune in the Fayetteville just handling water.

148. WY – Unforgiven

     Z – Thanks for a great site – good stuff

     Gute Reise!

149. Sambone does not lie. “Do you want to know more?” Thought about naming the site that, lol, then thought it sounded a bit pretentious.

150. Z Be safe and may the force be with you

151. Have a safe trip Z.

152. Tini time, Everybody have a good weekend!

     Z – Keep it between the lines, keep the chalk off your shoes, have fun. We’ll be here when ya get back!

153. If they are more conventional than slickwater, water required will be much less (brittle vs. ductile). Say about 20,000 bbl water per well (xlink frac) vs 90,000 bbl for slickwater. depends on # stages and many variables. Even said, costs to truck vs pits in Barnett is about $200k vs $50k with all of the tanks and right of way for pipes, xfer pumps.

154. Oh dear. Volume indicates lower lows still ahead. Still looking for a low early next week and then a bounce.

155. Water is peanuts compared to the rig costs, go NBR. The company we love and hate (operationally speaking).

156. Z, have a great trip, be safe

157. ZMAN Good trip and great time and come back sooon!!! It will sort of be like in August in NY when all the psychiatrist are on vacation. A group of lonely lost souls LOL
     Thanks all.

158. Beer Thirty!

     Thanks Hoss!

     Will have the weekly wrap out in 30 minutes and that will be the place to post next week. I will be back June 29 and barring malaria/dysentery etc will post on Monday.

     Wyoming – thanks re water. Agreed go NBR. Got any first hand thoughts on UDRL? They seem like the uncoventional horizontal and underbalanced capable poster child.

159. Z: Have fun next week.
     Bob

160. Scoop, Pop, Boss, Irish & Bob – muchas gracias!

161. Have a great trip zman! Good weekend to all!

162. We don’t use them, at least in our group. Mainly NBR and HnP. PTEN is looking interesting to us for some other applications. Without looking at the fundies, UDRL should be doing good. Drunk Monkey in this environment better manage a profit. Like I said earlier, factor rig rates about $26k per day, HHP does not matter. We are looking to add in H2 just like everyone else.

     On another note, buddy of mine says they are tight on pipe, mainly when the new year starts. They drill in the Fayetville.

163. Thanks Bleembus

     Thanks Italy for the bio. Gives Petra something to do before she gets a vacation from me.

164. Wrap in 5 minutes. This will be where comments go for the next week.

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