Thursday – Natural Gas Preview and Oil Review + More WIOWIO

Bullish EIA Numbers Stoke Energy Market Rally...Upping My View of Street Energy Sector Sentiment from "Negative" to "Highly Suspect With Fear of Attachment and Loss of Job". Well, yesterday's action was more like it. One rally does not a trend make and I will save the celebrations for firmer and higher levels.


Quotes We Haven't Seen The Likes of Which In Quite Some Time Watch:

``The ban on short selling financial stocks ended today...The trade of the year had been short financials and buy commodities. We're seeing money flow back into commodities.'' ~ Carl Neil, an energy analyst at Risk Management Inc. in Chicago.

The crude oil report was ``bullish'' for natural gas and turned the sentiment toward energy products ``more positive,'' ~ Kyle Cooper, an analyst at IAF Advisors in Houston.

The market decline ``is running out of steam,'' Gas wants to move higher, ``though it had been delayed because of other markets.'' ~ Veronique Lashinski, a technical analyst at Newedge USA LLC in Chicago.

In Today's Post

  1. Holdings Watch
  2. Commodity Watch - gas preview and oil review
  3. Stocks We Care About Today - More from the dance list (GMXR today)
  4. Odds & Ends

Holdings Watch:

  • (HK) - Added HK August $30 Calls (HKHF) for $0.85
  • (HK) - Added HK September $30 Calls (HKIF) for $3.00
  • (HK) - Added more of the August $30 calls for $0.70

Commodity Watch:

Natural Gas fell early as weather continues to disappoint but bounced just above $8 and rallied strongly once oil found its footing with the EIA report. NG closed up $0.13 at $8.46, but only after a wild trading session that saw an 8% swing on the day. This morning we await what by all reason should be a larger injection into storage due to cool August weather. In early trading gas is off nearly a dime but this means little before 10:35 EST and the weekly EIA report. I think gas is overdue a small pop back over $9 but this mild weather is not a help to that cause. If injections come in heavy (north of my number), look for quick selling to send gas back for a test of $8.

  • My Number: 60 Bcf  Injection To Storage;
    • Year Ago: 27 Bcf Injection
    • 5 Yr Avg: 53 Bcf Injection
    • Last Week: 56 Bcf Injection

Weather: 74 Cooling degree days, vs 84 CDDs last week and 93 in the year ago week.

Imports: Down 3.1 Bcfgpd vs year ago (so 21 Bcf off for that), in line with last week's levels

Domestic Production: generally thought to be up 5 Bcfgpd from a year ago (so call it up 35 Bcf)


  • Street Consensus: 52 Bcf (from the Bloomberg Survey)
  • Current Storage is in line with the 5 year average and about 12% below last year's elevated levels.

Crude Oil rallied after the EIA released unexpectedly bullish numbers in its weekly report. September crude closed up $2.99 at $116.00, after having traded as high as $117.46. My sense is that oil may rise tentatively towards $120 but that traders are still looking for reasons to sell the commodity off and that we are likely to be range bound for the next week to two weeks in the $110 to $120 area. Hey, it beats tumbling $5 per day every day and it means consumers still get to fill up on sub $4 "cheap" gasoline while refiners get to do a little more "unplanned" maintenance. Who can fault either of them? This morning oil is trading off slightly.

The EIA Crude Inventory Review: Across The Board Declines.

ZComment: Gasoline and distillate inventory changes were the name of the game yesterday as it relates to the move in oil prices. The change in crude inventories was essentially in line with expectations but yet another much bigger than expected draw down of gasoline stocks and a completely unexpected and contra-seasonal decline in distillate stocks are what sent  products and crude higher. 

CRUDE OIL: In line draw down of stocks, refinery utilization fell as did imports.

Utilization and Refinery Inputs. Utilization fell again.

GASOLINE: Another Huge Drawdown As Production Declines And Demand Remain Intact. Note we've gone from a 5% surplus to the five year average to just about in line in 3 weeks.



Gasoline stocks have fallen 14.3 million barrels, or a whopping 7% in the last three week. The tipping point for gasoline demand is pretty much established at $4 and the American driver’s propensity to conserve has been greatly exaggerated.

DISTILLATES: Unexpected Draw Reflects Resurgent Demand and Dipping Supply. Last week I, along with every other energy talking head, said distillates were about to become more important as driving season winds down. Too true. We remain well stocked compared to normal levels for this time of year but the contra-seasonal withdrawal last week leads me to ponder the question of whether or not we will look back and say that was when it started to turn to better times for the refining crowd. That was when the industry cut enough production that it began to rescue itself from the problem of too much product on hand and that is when we should have noticed just how short of supply we were of the stuff used to heat homes, since everyone had been producing the stuff used to power cars and trucks. Probably not but maybe. Definitely, a welcome data point for the indie refiner group but one point does not make a trend. Two points and heating oil and the refiners should be in for happier times.

Production Dropped Sharply As Refinery Utilization Dipped. I would imagine this rebounds a little in coming weeks.

Stocks By Type. Low Sulfur Mandate Yields Decline Dirtier Stocks. U.S. refiners have been producing and shipping more Ultra Low Sulfur overseas. This is not what you want to use to heat homes in New England this winter. Get ready for heating bill shock this this winter.

Distillate Demand Reaches Unseasonably High Highs. I read some trader comments referring to yesterday's drops in product inventories as supply and not demand based. For gasoline I'd say "yeah, well, its holding up pretty well near the highs of the year pal," but for distillate I'd have to say " read on fella, demand is at new record highs for this time of year!" People see what they want to see and talk their book accordingly. Sad that the press can't address that.  Refiners have been seeking better cracks which have been available over in Ultra Low Sulfur diesel land for export and well, there you have it. Record demand in a time of demand destruction (that range outlined in blue is 2000 to 2007).


Distillate Stocks Retreat From The Peak

Stocks We Care About Today:

Petrohawk Added To MSCI World Index. Morgan Stanley Capital International announced it will add (HK)  to its World Index on August 29. Might be worth a small boost as funds that mirror the index add HK shares. Here's the Wiki link on that index that dates back to 1969.

Enercom Oil & Gas Conference - August 10-14. Conference Schedule. Last day of the conference, interesting names today include Dune Energy (DNE), (XCO), (BRY), and (TLM).

Haynesville Well Note: Need to check on Brown 8H for (PVA), due for completion before end of month.

HAL Says Business Unaffected By Slide In Oil Prices.  "Customers are basing decisions on significantly lower oil prices, and they plan very long-term projects that don't switch on or switch off based on the oil price," Lesar told Bloomberg.

More E&P Dance List Names from Wednesday's Post:

GMXR - East Texas Cotton Valley Lime player with Bossier  / Haynesville Shale underlying their acreage. 94% gas with a strong balance sheet.


    • Highly concentrated: 1 core asset in 2 counties (Harrison and Panola in E. Texas)
    • "Soft guidance" for 100% production growth next year. They have grown production by 100% in each of the last 3 years.
    • Large inventory of highly economic drilling locations (read on)
    • Proved Reserves at YE 2007: 434 Bcfe. At $3 per Mcfe in the ground that equals  $1.3  billion vs a current Total Enterprise Value of $1.25 B.
    • They see 3P reserves at 3 Tcfe (7x current proved)
    • Operating costs : falling below $1/ Mcfe and looks to fall more as production runs up
    • Deal already out of the way, they are saying taking the deal fear off the table for the next 18 months and took debt down to 32% debt to cap.
    • Bread & Butter business is Cotton Valley wells
      • low, low F&D costs of $0.79  per Mcfe ...just about best in class
      • only 15% of acreage drilled up so far; 890+ locations remain
    • Haynesville/Bossier Shale Exposure:

      • 38,455 haynesville acres - with two targets,
      • 480 net locations on 80 acres,
      • acreage in fairway of the play
      • 350 foot thick section, EURs of 4.5 to 8.5 Bcfe estimated by others in the play; is about 10 miles west of CHK's big well and just east of PVA's wells.
      • Have drilled multiple vertical wells on their acreage back to 2006, waited for industry leaders to crack the code on horizontal development and to share data - goes to management intelligence.
      • Porosity of 12 to15%, maybe be underestimated due to presence of dolomite. It's going to flow.
      • Gas in place in this area is in the 170 to 200+ Bcf range per secton 
      • 81% operated with a 79% net revenue interest
      • Plan to spud first horizontal well in 3Q08.
      • pre purchased OCTG for near term program,
      • 5 rigs now, 6th rig coming Nov., 2 will drill vert cv wells, 3 now drilling cv and they will be repurposed to finish the current well and then go Hs, sixth rig goes hs immediately on delivery in NOV. HP flex rigs show up next year (2) and go to drill HS. 9-11 rigs by end of next year with 2 to 4 of them in the CV.

  • What's To Knock:
    • Small caps are going to be extremely volatile in the near term
    • "Gas glut" thesis not yet resoundingly defeated
    • Hot money still in the name may present overhanging supply as it tries to rally
    • The stock is up 90% since the beginning of the year but see valuation metrics below


  • Where's It Trade:
    • P/CF of 6.7x on a 2009 CFPS estimate of $9.31. Not expensive given their growth and that CFPS number is not based on 100% expected growth.
    • Debt to cap of 32%, not bad at all.
    • They had 435 Bcfe in proved reserves as of YE07. Putting a 6 Bcfe EUR on its acreage risked 50% with an 80 acre spacing and their royalty guidance yields a net potential reserve estimate of 1.2 Tcfe, or 2.75x current reserves. In their presentations they are not risking the play 50% which would double the reserve number to 2.4 Tcfe or 5.5x their current reserves
    • The stock is trading at a TEV of $1.045 billion:
      • If you assume they could garner $2.50/Mcfe for their in the ground booked reserves which is beyond reasonable that leaves the Haynesville acreage for free.
      • A takeout at a 50% premium to yesterday’s closing price would probably get the deal done and would still only value the Haynesville/Bossier acreage at under $10,000 per acre, a far cry from the $20K to $30K per acre deals we have been seeing of late.
      • I think they could get $3 /Mcfe for the in ground proven  reserves  and $25K per acre for their Haynesville acres which would yield a triple digit share price as calculated below.
      • They have mapped out a potential price that is much higher but for now, the easy math gets you a double and isn't such a stretch to the Summer-weary energy investor.



Oil Service Dance List - (SLB), (HAL), (NBR), (RIG). I own in one way or another the first three and have been looking for an entry point on the ridiculously cheap fourth one. These are the names I believe will make a quick come back once stability returns to the commodity and energy patches. Wallflowers here are (CRR) and (CLB). Will add reasoning in coming days.


Odds & Ends

Analyst Watch: (SM) upped to buy at Suntrust, (EGLE) to overweight at JPM

125 Responses to “Thursday – Natural Gas Preview and Oil Review + More WIOWIO”

  1. 1
    zman Says:

    Iran on the tape saying oil to fall for several months before resuming up trend.

  2. 2
    ddaley Says:

    Lt’s hope this day continues yesterdays progress!
    Good NYT piece on the Russian invasion and possible long term effect on the pipeline:


  3. 3
    zman Says:

    This from WYO several days ago for Bird – got caught in our spam block over the link.

    Tried to send this a couple times;
    Thought more about your question when I picked up the kiddo’s:

    Reason for your stringer is probably tidelands. Tide comes in lays down dolomite / limestone or shale. Tide rolls out sand sequence repeats etc..

  4. 4
    Dman Says:

    Hi Z,

    is there a link for #1?

  5. 5
    zman Says:

    Dman – will look for one, just saw it go by the headline. Not sure what their game plan is since these guys were extremely vocal about oil being too cheap just a few months ago as it went higher. Maybe they are talking their financial book.

  6. 6
    Bleemus Says:

    You recently made a comment that if nat gas got down to $8 you would be a buyer of UNG common. Do you still feel this way or has recent chatter about oversupply got you rethinking this position?

  7. 7
    zman Says:

    Red open for the group but it almost feels like it will green up later in the day.

    Bleemus – Still feel that way, would not do it in front of the gas report.

  8. 8
    Sambone Says:

    Oil Rally Flags As Demand Focus Returns

    Dow Jones Newswires
    [Dow Jones] Crude treads water, losing momentum after its nearly $3/bbl rally Wed. Concerns about weaker oil demand are weighing on prices, with auto miles traveled down in the US and, as consultancy JBC Energy reports, refiners cutting runs in Asia. US stats out Wed showed domestic oil demand down 2.8% in the four weeks to Aug. 8. Nymex Sep crude up 25¢ at $116.25/bbl.

    Reported Earlier:
    LONDON — Crude oil prices struggled to preserve early gains Thursday after a burst of support gleaned from weekly U.S. Energy Information Administration inventory data Wednesday faded under prevailing concerns over slowing global crude and products demand.

    Persistent consumption fears, allied with a negative technical outlook, continued to dampen upside response to supply-related developments, such as the recent conflict in Georgia that has threatened the flow of the more than 1.2 million barrels a day of crude through the Caucasus.

    “Despite the bullish EIA report and the Georgian-Russian conflict, market participants still remain concerned over demand amid slowing economies, which is limiting gains,” said Nimit Khamar at Sucden Research in London.

    At 1142 GMT, the front-month September Brent contract on London’s ICE futures exchange was down 18 cents at $113.29 a barrel.

    The front-month September light, sweet, crude contract on the New York Mercantile Exchange was trading 22 cents lower at $115.78 a barrel.

    The ICE’s gasoil contract for September delivery was down $1 at $1,018 a metric ton, while Nymex gasoline for September delivery was down 19 points at 293.04 cents a gallon.

    The stimulus for Wednesday’s higher closes — a surprise 6.4 million barrels draw in weekly U.S. gasoline stocks — appeared to lose its potency Thursday, trumped by sentiment that demand concerns carry greater weight.

    The gasoline stock draw was a worrying number only if isolated from continued signs of falling demand, said Olivier Jakob, managing director of Swiss consultancy Petromatrix. However, recent data revealing American motorists continued to crimp their driving in June, alongside a MasterCard report Tuesday showing gasoline pump purchases kept falling last week, suggested that no rebound in demand has emerged, Jakob said.

    Adding to fears that economic slowdown will drag on consumption outside the U.S. as well, the European Union’s statistics agency, Eurostat, reported the euro-zone economy shrank in the three months from April to June, its first quarter-on-quarter contraction since records began in early 1995. Meanwhile, an unexpected slowdown in China’s industrial production growth in July also sounded a bearish note for the oil market, with weakening global demand, alongside temporary factory closures linked to the Olympic Games, seen to play a role in the slowdown.

    “It is clear the economic slowdown is a global phenomenon, including China, which has been one of the driving forces for oil prices over the past few years,” Sucden’s Khamar said.

    The oil market continued to monitor developments in the Caucasus Thursday, where, although fighting between Russian and Georgian forces has de-escalated, concerns over the threat posed to oil flows through the important transit country remain heightened.

    “This week Georgia gave some support to oil, otherwise we would have gone directly to $110 or $108. We stopped a few dollars above. It proved to be a support,” said Serge Laureau, commodities strategist at Saxo Bank in Copenhagen. Any signals that tensions in the region were easing could add more downside pressure on prices, he added, although news Thursday suggested sporadic violence continued, with Georgian officials reporting Russian troops were “destroying” the city of Gori and port city of Poti.

    Expiry of September Nymex light, sweet crude options Friday could influence price moves during the remainder of the week, analysts said, and may already have proved a weight on prices.

    “A recovery in oil prices over the last couple of weeks has been repeatedly hampered by players seeking protection against the downside through the purchase of puts amidst decidedly bearish sentiment,” said Harry Tchilinguirian, senior oil market analyst at BNP Paribas in London. “The sales of these puts have come with their corollary, hedging sales of futures by those who sold the puts as prices weakened.”

    Depending on futures’ price moves ahead of expiry, large open interest on puts at $100, $105, $110, $115 and $120 could result in sellers of the options also selling futures as a hedge against their exposure.

    “The futures price would need to move sufficiently above these threshold strikes before option expiry to avoid being dragged down by incremental hedging activity,” Tchilinguirian said.

    Meanwhile weather activity posed a potential risk for crude short position holders ahead of the weekend, with weather charts warning of a possible tropical depression forming in the Atlantic.

    According to the National Hurricane Center an area of low pressure associated with a tropical wave centered about 175 miles east of the Leeward Islands could become a tropical depression Thursday or Friday. The low pressure system is heading generally westward at 10 miles an hour, the NHC reported.

    —By Nick Heath, Dow Jones Newswires

  9. 9
    zman Says:

    Thanks Sam – I like how the story talks about drivers continued to crimp their driving habits in JUNE. Really, wow, you mean when prices were at their highest. They have clearly begun to refill their cars more since then.

  10. 10
    zman Says:

    Gasoline demand article in the WSJ, sees it differently than I do (or spins it differently) using the same numbers I’m using.


  11. 11
    zman Says:

    Oil trying to go green, NG up a few pennies but inventories are going to be a real mover today.

  12. 12
    zman Says:

    GMXR moving again, up another buck, group off its lows, still far from green.

    Oil up 20 cents now, NG #s in 20 minutes.

  13. 13
    reefguy Says:

    z-GMXR-Great analysis, a rare pureplay. Only other knock I have is management. Maybe thet need to be owned by a major?

  14. 14
    arodeen Says:

    An ETF newsletter I read (that is usually very high on TA) is noting that USO has support from a long term uptrend (seen on the weekly chart) at around 90. Nicky/Tater/Z – could this intersection of TA and fundamentals mean anything here?

  15. 15
    zman Says:

    Morning, thought my mike was broken. Thanks re GMXR piece, kind of think it is as simple as that although they throw out a $400 number for NAV which I think just makes people lose interest. I think a mid cap like NFX could take them or an APC. Maybe a major, but it seems its would be somebody like BP who wants to grow production and not one of the domestics.

  16. 16
    reefguy Says:

    BP is the one that came to mind.

  17. 17
    zman Says:

    On the fundamental side, the expectations are still for growth 08 and 09, not even close to contraction on a global scale. That will probably slim up to closer to flat by year end for 2008 but still positive.

    The chatter in the press is still overwhelmingly bearish but they can turn that trade on a dime. My laymens view on TA says it goes lower ($110) and then bounces but I see more demand numbers next week eroding inventories on these lower pump prices. I seem to be the only one who thinks the American driver is price sensitive and that these prices are going to inspire bigger fill ups. AAA even said they only expect demand to rise in a sub $3 environment. I say $3.75 is the new $3 as the consumer is getting used to paying more for everything…who knows, maybe they are spending more time driving around looking for bargains on the weekend.

  18. 18
    breakhound Says:

    Zman, i also was veyr impressed with gmxr. that is one cheap play. the chart is still super strong just need some volume and a close above the 50 day.

  19. 19
    zman Says:

    Reef- re BP – yeah, that Woodford deal kind of came out of left field. They said afterward they want to grow the Arkoma production so I wonder if they will be the 25% buyer of CHK’s Fayetteville shale asset which CHK is hoping to have done by Sept 30. Ya gotta think the Haynesville has gotten their attention and that $2B for them is pocket change.

  20. 20
    zman Says:

    Break – GMXR – kind of like re discovering a little diamond. I should say I don’t know the management team here but the numbers have been solid for awhile and I like the idea of them walking in the steps of giants and not being all “I’m the groundbreaker, and I’m the big acreage gatherer”

  21. 21
    zman Says:

    NG flat with 3 minutes to go.

  22. 22
    zman Says:

    Going to listen to STR at 10:50 est, could be some interesting feedback on that presentation. See link above for the last day of the Denver conf. Its a good way to quickly come up to speed on names on a slow summer day when the Olympics have badmitton on.

  23. 23
    zman Says:

    Natural Gas Storage: 50 Bcf Injection, in line to a little better than expectations, could have been a lot higher given the weather, initial reaction is down but really that is not a bad number at all given the cool weather.

  24. 24
    zman Says:

    Very pleased to be wrong on my gas number of 60, group is greening nicely now. NG still falling on the number though.

  25. 25
    reefguy Says:

    20-GMXR bought, at the time, second teir CV-TP HBP and it fell into harms way for HY.

  26. 26
    zman Says:

    NG Report. Producing region saw another decline in storage. Now down 20% YoY and down 5% to the 5 yr average. Better not have a cold winter in the South.

    Hard to say what people want out of the gas numbers. This is I think the fourth set of gas numbers in a row that came in at or below expectations and all of them have seen post report sell downs.

    I still think we green up later.

  27. 27
    arodeen Says:

    Thanks Z. The GMXR analysis and breakdown of the fundamental valuation helps me understand how this sector/industry differs from the normal PE based analysis in other industries.

    Love the comment about $3.75 being the new $3. Factor in inflation and you’re close anyway. I know that the only strategic investing most people do in the US is filling up their car at a near term bottom. When price at the pump dropped ~$0.30-$0.40 in a week ($3.89 to $3.45 here in OK), everyone I know filled up, boats, lawnmowers and all. Small businesses filled up all their company vehicles. That may be forest for the trees, but I also see people thinking, “I better go to the lake and use up all this gas while I can still fill up cheap.” I think you call it the Bubba Factor. It’s alive and well in OK.

  28. 28
    reefguy Says:

    MMR- moving prior to Enercom presentation, although slides show nothing on BlackBeard that is new

  29. 29
    zman Says:

    Hear ya ARO, I’ve noted long lines in AR on the weekend.

    Reef – maybe Moffett has a surprise up his sleeve (down his 35,000 foot hole).

  30. 30
    zman Says:

    Wow minute chart on HK.

    Why I don’t on GMXR is a mystery to me.

  31. 31
    reefguy Says:

    Moffett likes to grandstand, sometimes with his words in the Q and A, we will not here that in the breakout, anybody we know going?

  32. 32
    zman Says:

    Not that I know of. I plan to sit in on him at IPAA in San Francisco in early October but BB should be a done deal by then, right?

  33. 33
    reefguy Says:

    At about 500k/day, it better be!

  34. 34
    Popeye Says:

    Lease sale proves to be Louisiana’s second highest

    “The companies do not disclose which oil and gas company they represent; however, last month it was Petrohawk making the actual payments to Caddo and DeSoto parishes in response to the Theophilus bids. In most cases, Theophilus was the highest and most frequent bidder Wednesday.”


  35. 35
    kyleandy Says:

    now we know why HK needed money

  36. 36
    reefguy Says:

    kyl- see ioc?

  37. 37
    zman Says:

    NG positively tanking now, down 33 cents and taking oil and the group lower too. I was walking about on a call and left with a nearly completely green screen…ug.

  38. 38
    mahout Says:

    Super analysis of GMXR. My kind of company, plenty of upside forecastable.

    That wallflower, CRR, was added to “strong buy” today by Zacks.

  39. 39
    kyleandy Says:

    reef yeh but have none left. sold abt these levels

  40. 40
    zman Says:

    Mahout, planned to do CRR last night but ran out of time. Will do soon.

    NG trying a small bounce above yesterday’s lows. Stocks look like they need any excuse to rally but also need a firm footing from the commodities which just is not there yet.

  41. 41
    Nicky Says:

    Morning all.

    I still think oil needs a low below 112.31 to finish the move but a move above yesterdays highs would most likely say the low was in. If lower lows are in store I am looking at anwhere between 109 – 111 for likely target area.

  42. 42
    Sambone Says:

    9:56 am EST

    Oil Flags, Resuming Downtrend

    By Gregory Meyer

    NEW YORK — Crude oil futures lost steam Thursday as concerns about weaker consumption regained the spotlight.

    Light, sweet crude for September delivery was recently down 64 cents, or 0.6%, at $115.36 a barrel on the New York Mercantile Exchange.

    The September Brent crude contract on the ICE Futures exchange, which expires Thursday, dropped 49 cents to $112.98 a barrel. The more actively traded October contract was at $114.24 a barrel, down 61 cents.

    After leaping $2.99 a barrel Wednesday on big reported drawdowns in U.S. petroleum stocks, Nymex crude resumed the down pattern of the last month. It is off more than 20% since breaching $147 in July.

    Wednesday’s rally “looked like it was a one-day thing,” said Justin Fohsz, an oil broker at Starsupply GFI in Englewood, N.J.

    While Wednesday’s U.S. data showed crude, gasoline and distillates stockpiles all shrinking, they also revealed a decline in consumption in the world’s top energy consumer. Oil demand in the four weeks to Aug. 8 was 2.8% lower than the same time last year, the Energy Information Administration said.

    A separate government report Wednesday showed Americans drove 4.7% fewer miles in June than they did the year before.

    “The conservation habits that have set this reduced demand into motion are not likely to be reversed” unless gasoline starts retailing at about $3.25, said Jim Ritterbusch, president of energy trading advisory service Ritterbusch and Associates, in a note. U.S. gasoline prices now average about $3.81 a gallon, according to the EIA.

    Higher energy prices have translated into steepening prices for other goods. U.S. inflation jumped to a 17-year-high annual rate in July, the Labor Department reported Thursday, led by gains in food, energy, airline fares and apparel, and the consumer price index rose 0.8% in July.

    Inflation fears have varied effects on the oil market. The raise the prospect of higher U.S. interest rates, which could boost the dollar and weaken commodities’ attraction as an inflation hedge. At the same time, pension funds and other institutional investors buy commodities to protect against inflation, helping to support oil prices.

    The market remained on edge after Russia’s incursion into Georgia, home to major export pipelines supplying the West. The conflict has so far failed to ignite a lasting rally.

    “This newly acquired ability to absorb seemingly bullish international headlines has apparently been replaced by a market environment in which clear evidence of actual production disruptions of significant magnitude will be required to sustain price advances similar to those of the first half of this year,” Ritterbusch said.

    Front-month September reformulated gasoline blendstock, or RBOB, fell 2.01 cents, or 0.7% to $2.9122 a gallon. September heating oil fell 2.87 cents, or 0.9%, to $3.1030 a gallon.

    —By Gregory Meyer, Dow Jones Newswires

  43. 43
    Bleemus Says:

    NEW YORK (Reuters) – A low pressure system associated with a tropical wave is passing over the northern Leeward Islands and could become a tropical depression Thursday or Friday but probably won’t threaten the oil rich Gulf of Mexico, the U.S. National Hurricane Center said in its 8 a.m. EDT (1200 GMT) report.

    Weather models show the system will pass to the north side of Puerto Rico and Hispaniola before turning north and crossing the Bahamas over the next five days without reaching the Florida coast.

    An Air Force Reserve Reconnaissance aircraft is scheduled to investigate the system later Thursday, if necessary.

  44. 44
    zman Says:

    Morning NIcky – yep looks like a commodity thing as oil, gas, gold all up in Asia overnight and all down strong now with the XLF rising from the ashes like there’s mortgages to be mined from the hills.

  45. 45
    VTZ Says:

    Nicky… do you view this gold pullback as a possible retest of the bottom?

  46. 46
    zman Says:

    NG looking like it wants to test $8 again, now just pennies off yesterday’s 8.05.

  47. 47
    md Says:

    Any explanation for increase in distillate demand. Is it possible that the numbers broken out between exports and domestic are estimated. Considering that the only driver in summer would be transportation and that trucks would be driving flat to lower volumes it’s hard to understand.

    GMXR- txs for the in depth analysis.
    No shortage of names to choose from.
    Given the right opportunity what allocation would you look to do among the names included in the WIOWIO.

    NG – Over production fear factor- Are the pipelines in place for the major new plays. If not when do they come onstream.
    How much control is held by how many players among the 56+ BCFPD that’s produced.

  48. 48
    Nicky Says:

    V – I actually think we need a lower low in metals. My count for gold is this (based on the spot price). Overnight high at 837 was wave iv. We are now in v down and in wave i of v currently which I think is close to completion (may have just completed at 812 area). Then I would expect to see a 3 wave correction of today’s wave down most likely overnight before we turn lower again. My target for the end of wave v down is anywhere between 775 and 795. At that time I would expect to see a much bigger wave 2 correction which could take 1 – 2 weeks and will correct the move down from the 980 area.

  49. 49
    zman Says:

    MD – they are indeed estimated exports, the exports have been ULS and non ULS and the export market as I hear is still quite strong. I was thinking the increase in demand may be a function of secondary demand (gas stations and trucking operations) filling their tanks.

  50. 50
    zman Says:

    NG through yesterday’s lows now, here’s to hoping for a bounce off $8.

  51. 51
    zman Says:

    VTZ – any thoughts on OptiCanada?

  52. 52
    VTZ Says:

    Nicky – I could see 790 as support as well if it fails to hold the lows (which I think it did when it fell from the 820 ish level)… just looking for another opinion.

  53. 53
    Nicky Says:

    Nat gas I still have possible target areas at 7.8 or 7.3 – 7.580.

  54. 54
    VTZ Says:

    I like opti although I heard their startup will be delayed… that beign said I think opti and uts are the two best oil sands plays due to 100% leverage, UTS has a good mineable lease and the fact they are going to be the first startups so they have avoided some of the cost increases.

  55. 55
    Nicky Says:

    Nat gas has now made lower lows so an end is possible anytime!

  56. 56
    Nicky Says:

    V – taking another look at gold. we may already be in iii of v down having that little blip up to 822 earlier being a little wave ii correction.

  57. 57
    zman Says:

    Nicky – an end as in a reversal higher or an end as in natural gas rolls over and dies?

    VTZ – thanks, just listening to the conf call. Not my normal cuppa crude but impressive net backs.

  58. 58
    Nicky Says:

    Lol Z – an end as in reversal higher. But watch oil as I think they are likely to reverse together. And oil is not finished to the downside yet..

  59. 59
    VTZ Says:

    Z – if you are goign to look into the oil sands at all those are the best growth stories with 100% leverage by far.

    UTS is essentially a land holding company that is partnered with Petro-Canada and Teck Cominco and they have a lot of expertise. If they find themselves not able to raise capital they will either get bought out by one of the other two or offer their UTS-only property to the Fort Hills Partnership in exchange for a reduction the % of capital they are required to pay.

    OPTI has the first gasifier in the oil sands. It is Shell technology and will reduce costs of energy drastically. Their netbacks are impressive, it’s only a matter of whether or not they start up smoothly. If they do they should be valued much higher than here. But, I do know that their startup will not be on time.

  60. 60
    zman Says:

    HK off 6% and we officers and directors buying shares in the stock and the addition to an index having no impact.

    Thanks V – have played SU in the past as a play on oil directionality but other than that I am a bystander. Sounded like everything at Opti that is a known delay now ready to start up soon.

  61. 61
    zman Says:

    NG traded at 8.00

  62. 62
    Nicky Says:

    Okay oil only needs to trade below Wednesdays low at 112.31 – that said options expiry tomorrow and then may gun for 110….

  63. 63
    VTZ Says:

    Z – Don’t let me talk you out of OPTI or UTS. They are both amazing plays and once they start up they are essentially cash printing machines at anything above 80$ and still profitable above 60. I was just saying to be weary about OPTI because of startup considerations and personnel shortages.

  64. 64
    zman Says:

    CRR is going to be just a huge winner as the shales are developed. Stock near its highs, my bad for not being in that one from an equity holding standpoint, always waited for the pullback and never got it. Need to look at valuation but the growth just makes so much sense.

  65. 65
    VTZ Says:

    As a buy and hold you could not go wrong with OPTI.

  66. 66
    zman Says:

    Thanks V – just snooping around for now.

    Oil has given back all gains and more yesterday, just ugly. Guess yesterday commodity and group action just a head fake.

  67. 67
    Nicky Says:

    Z – a wave iv – in v down now…..its nearly over….

  68. 68
    zman Says:

    Nicky – so you are saying if it holds 112.31 it goes higher briefly and then lower tomorrow, yes?

  69. 69
    Nicky Says:

    Broader market would have a nice C = A if SPX hit 1325 and Dow at 12000 – 12100.

  70. 70
    zman Says:

    Sorry Nicky, feeling particularly obtuse from blood loss. Are you saying you think the move lower in crude is nearly done and time for bounce is at hand?

  71. 71
    Nicky Says:

    No I am saying 112.31 is the area we need to see taken out to the downside to give us our five waves down. Of course it could truncate (!) and fall short of a lower low but I don’t think so. But once 112.31 is taken out then the wave target is satisfied so we just have to look for areas that may bottom this. What I am saying is that the pattern completion for the downside is getting very close. Once the lows are in we see a very good bounce for a week or two to retrace some of the move down.
    Nat gas has already satisfied the wave pattern by making a lower low. If it were to move above the 8.50 area now I would say it was done.

  72. 72
    Sambone Says:

    Crude Drops $2/Bbl On Georgia Truce, Dollar Gain

    Dow Jones Newsewires
    Oil tumbles more than $2 in a market under pressure by demand concerns. Georgia’s truce with Russia seems to be holding, while US Defense Secretary Robert Gates rules out using US military force in the conflict. “While there is still a heavy news flow on the situation in Georgia, the market seems calmer today and may be taking some of the geopolitical risk premium back out of the price,” writes Tim Evans, analyst at Citi Futures Perspective. Meantime, the dollar hits an intraday high against the euro. Nymex Sep crude -$2.14 at $113.86/bbl.

    Reported Earlier:
    NEW YORK — Crude oil futures lost steam Thursday as concerns about weaker consumption regained the spotlight.

    Light, sweet crude for September delivery was recently down 64 cents, or 0.6%, at $115.36 a barrel on the New York Mercantile Exchange.

    The September Brent crude contract on the ICE Futures exchange, which expires Thursday, dropped 49 cents to $112.98 a barrel. The more actively traded October contract was at $114.24 a barrel, down 61 cents.

    After leaping $2.99 a barrel Wednesday on big reported drawdowns in U.S. petroleum stocks, Nymex crude resumed the down pattern of the last month. It is off more than 20% since breaching $147 in July.

    Wednesday’s rally “looked like it was a one-day thing,” said Justin Fohsz, an oil broker at Starsupply GFI in Englewood, N.J.

    While Wednesday’s U.S. data showed crude, gasoline and distillates stockpiles all shrinking, they also revealed a decline in consumption in the world’s top energy consumer. Oil demand in the four weeks to Aug. 8 was 2.8% lower than the same time last year, the Energy Information Administration said.

    A separate government report Wednesday showed Americans drove 4.7% fewer miles in June than they did the year before.

    “The conservation habits that have set this reduced demand into motion are not likely to be reversed” unless gasoline starts retailing at about $3.25, said Jim Ritterbusch, president of energy trading advisory service Ritterbusch and Associates, in a note. U.S. gasoline prices now average about $3.81 a gallon, according to the EIA.

    Higher energy prices have translated into steepening prices for other goods. U.S. inflation jumped to a 17-year-high annual rate in July, the Labor Department reported Thursday, led by gains in food, energy, airline fares and apparel, and the consumer price index rose 0.8% in July.

    Inflation fears have varied effects on the oil market. The raise the prospect of higher U.S. interest rates, which could boost the dollar and weaken commodities’ attraction as an inflation hedge. At the same time, pension funds and other institutional investors buy commodities to protect against inflation, helping to support oil prices.

    The market remained on edge after Russia’s incursion into Georgia, home to major export pipelines supplying the West. The conflict has so far failed to ignite a lasting rally.

    “This newly acquired ability to absorb seemingly bullish international headlines has apparently been replaced by a market environment in which clear evidence of actual production disruptions of significant magnitude will be required to sustain price advances similar to those of the first half of this year,” Ritterbusch said.

    Front-month September reformulated gasoline blendstock, or RBOB, fell 2.01 cents, or 0.7% to $2.9122 a gallon. September heating oil fell 2.87 cents, or 0.9%, to $3.1030 a gallon.

    —By Gregory Meyer, Dow Jones Newswires

  73. 73
    zman Says:

    Nicky – thanks for your patience. So on NG, above $8.50 would confirm the wave pattern down is done and we could see a move higher from there, correct? What would be the corresponding number in oil?

  74. 74
    Jason Says:

    Hi Nicky – Love all that you do for the site…thanks so much. Any opinion on broad market levels?

  75. 75
    Sambone Says:

    Latest on 92L


  76. 76
    Sambone Says:

    NEW YORK, Aug 14 (Reuters) – Gasoline edged up on Thursday
    in the U.S. Gulf Coast, New York Harbor and parts of the
    Midwest following news of refinery outages or works but also
    compensating for lower futures, traders said.
    Valero said it shut a 110,000 barrel-per-day crude unit at
    its refinery in Corpus Christi, Texas, due to a snag and the
    unit was expected
    Valero also said a 45,000 bpd hydrocracker was in start-up
    at its Port Arthur, Texas refinery after overhaul.
    Conoco has started maintenance on a
    hydrodesulferizer at its 153,000 bpd Borger, Texas refinery to
    Aug. 24.
    The only cash market east of the Rockies where gasoline
    differentials retreated Thursday was Chicago following the
    return of Marathon’s 222,000-bpd Catlettsburg, Kentucky
    According to government statistics released on Wednesday,
    U.S. gasoline inventories plunged much more that forecast last
    week, falling by 6.4 million barrels to 202.8 million barrels.
    Still, experts say supplies remain comfortable due to weak
    demand for the motor fuel as a result of high pump prices.
    In the last three weeks supplies have dropped by a total of
    more than 14 million barrels or 6.6 percent, Stephen Schork,
    editor of the Schork Report in Philadelphia, said in a report.
    “That is large, but in light of the peculiar build through
    most of July, the recent purge has only managed to pull
    inventories back to the seasonal mean,” Schork added.
    NYMEX crude and products were in the red, with September
    crude down more than $3 at $113 per barrel.
    Scheduling cycle 47 M2 conventional gasoline traded at 1.25
    over September RBOB futures, moving back up about0.75 cent
    after loses on Wednesday.
    Cycle 48 M2 gasoline traded at 0.50 cent over the board.
    Ultra-low sulfur diesel 61-grade traded at 4.15 cents over
    the September heating oil contract, within Wednesday’s range.

    Ultra low sulfur diesel was said bid at 6.75 cents over the
    benchmark September futures with offers at 7.25 cents over, up
    from around 6.50 cents over a day earlier.
    Heating oil was reported a little firmer at 3.00 cents
    under futures.
    Jet fuel was set about two cents lower at 6.00 cents over.
    Gasolines were a little firmer, with prompt conventional M2
    quoted at about 3.00 cents under the September print, up about
    half a cent, traders said. Any month barrels were valued a tad
    lower at about 4.50 cents under.
    F2 reformulated was seen at about 1.25 cent over, a little
    firmer while premium V2 added about a cent to around 17 cents

    Group Three gasoline traded at 9.50 cents over September
    RBOB futures, up about half a cent from Wednesday levels.
    In Chicago, cycle 2 gasoline dropped at least 4 cents,
    pegged at 21/24 cents over the September RBOB benchmark.
    In Group Three ultra-low sulfur diesel edged up about 0.75
    cent, pegged at 9.25 cents over September heating oil futures.
    Chicago ultra-low sulfur diesel was flat at 5.50 cents over
    the September heating oil board, while low sulfur diesel was
    pegged at 0.50 cent over futures.
    (Reporting by Haitham Haddadin and Rebekah Kebede)

    Thu Aug 14 16:59:55 2008 -GMT-

  77. 77
    elduque Says:

    vtz- Thanks for your help. I am off for two weeks of paddling in the Quetico Prov. Park. in northern Ontario.

    Move the market up while I am away.

  78. 78
    tater Says:

    arodeen #14,

    Personally I see longer term support on WTIC at around $100 and below that, the number is currently $76 (but by the time the price got down that low, the line would be above 76).

    Everybody does TA differently, I lean more towards using trendlines and moving averages and money flows. Nicky and others use more math indicators and wave movements than I am comfortable with. They all work to some extent in their own way, it’s just a matter of training and preference (and talent, which Nicky obviously has).
    I don’t know exactly what the piece you read says, and I do see support at 90, I just don’t think it is all that strong of a price level for oil to find a home at.

    Personally, I am not trying very hard to locate a bottom as much as I am trying to go with the trend and make money up or down. The equities markets have a bullish bias. People always want to know when to buy. I have found that to only be half a strategy.

  79. 79
    zman Says:

    Sam – re #75. That looks friendly, got a spaghetti track for it?

  80. 80
    Nicky Says:

    Z – re nat gas yes with a close above 8.650 pretty much sealing it I would say. Too soon to say yet whether it has already ended with an ending diagonal…

    Oil – 200 dma is at 109.87. Wave v can be spiky so look for a move that spikes to 110 or even 109. A move above yesterdays highs would say the low was in imo.

    This low will give way to a wave B or ii rally likely to last a week or two before the downtrend resumes.

    Jason – broader market – there is a gap that needs to be filled at 1305 spx area from earlier this week. I still favor the areas mentioned in #69 before this rally is done.

  81. 81
    Nicky Says:

    SPX has support between 1287 and 1292.

  82. 82
    zman Says:

    So where’s Cramer on the red days?

    Looks like pinning action is already setting in.

  83. 83
    Popeye Says:

    Bigfoot found. 🙂


  84. 84
    zman Says:

    Thanks Popeye.

    ZTRADE: Doubled HK $30 August Calls for $0.25. Obviously high, high risk given the fact that they expire on Saturday.

  85. 85
    Popeye Says:

    DRYS has been making a comeback lately. Any comments from our bulk analyst?

  86. 86
    zman Says:

    Bill, you around?

    Listening to replay of the DNE call, notes in a bit for all you single digit midget fans.

  87. 87
    Fred Says:

    Popeye Georgia bigfoot photos:


  88. 88
    Sambone Says:

    New ETF I just found. Gulf States. Hey we’re sending all our US$ to them, might as well get some back, ya know.


  89. 89
    zman Says:

    DNE up 15% today, just reviving my memory on the name. Lot of respect for management here. Lot of potential in deeper stacked pays on salt dome flanks. Don’t know if anyone will care during shale mania but I suspect these guys will continue to creep EBITDA higher to a point where it can’t be ignored.

  90. 90
    bill Says:

    Hi guys, re 85 and 86

    im on vacation this week so popping in an out. Yes the drybulks have recovered from lows. I think the bdi index was off more than 20 days in a row and created real bargains across the board, (kinda like the gas sector)

    OCNF and exm reported earnings on monday which were fantastic and that seem to get things moving for the sector. Drys hasnt reported yet. Then Tuesday rates went up breaking the 20 + day down draft

    I favor Free and ocnf at the moment . Free recovered from 5.80 to 7.14 and ocnf from 17 to 20.

    i sold some to take some profits but still like them both.

    Drys was my favorite stock 6 months ago until the ceo pulled several self serving deals and i wont invest there unless it gets to give away price 50 ish i think mid 85 to 90 is fairly price for drys

    It could pop to 90 to 100 with good numbers. They are investing heavily in ocean drillships and they indicated they will spin that off to shareholders within a year

    So if rates stay good in the dry sector and demand is still there for drillships in 2 years, drys could be a homerun.

    They are levered up with high prices assets and the whole thing can come crashing down if rates soften materialy for some time.

    ocnf has long term contract and pays out almost 17 % and is pure play.

    free has more operating days and higher rates plus long term contracts and will hit the cover of the ball. Im going to reload on that one on any pull back

    id buy exm under 33 and egle under 27 and dsx under 27 and drys in the 60’s

  91. 91
    Fred Says:

    Uncle Phil reviews Georgia/Russia events:


  92. 92
    tomdavis12 Says:

    Z: Looking at your figures this morning, would you say utilization is down mostly from just refiner discretion because this is not a planned maintenance period of time. Aren’t the crack spreads getting better? With all this demand destruction comments, what would you like to see to make VLO an immediate dance partner?

  93. 93
    zman Says:

    Tom – back to you in a couple of minutes.

  94. 94
    Sambone Says:

    TBILISI, Georgia (AFP)–About 130 Russian armored vehicles moved out of
    Georgia’s western city of Zugdidi Thursday and began to penetrate deeper into
    Georgian territory, said Georgian Interior Ministry Spokesman Shota Utiashvili.
    The vehicles “have left Zugdidi and are moving in the direction of Kutaisi,”
    Utiashvili told AFP. “For this moment they are in Khobi,” 20 kilometers south
    of Zugdidi, he said.
    Kutaisi is Georgia’s second-largest city.
    -Dow Jones Newswires,
    Dow Jones Newswires
    08-14-08 1514ET

  95. 95
    rseidman Says:

    Z: Your HK trade didn’t get through email yet

  96. 96
    zman Says:

    BP Capital (T Boone) reports 1.83 mm share stake in CHK.


    This was their previous filing which does not contain CHK back in May:

  97. 97
    kyleandy Says:

    bill cud u comment on FRO pls. i think u like dry-bulks better, but not sure thks

  98. 98
    Popeye Says:

    Tnx Bill, very helpfull.

  99. 99
    zman Says:

    RS: It seems the email did not send.

    Bill Thanks a lot for the above. I thought the EXM quarter and guidance was excellent. Agreed re DRYS – sounds like greed mixed with diworsification over there.

    Tom – RE VLO:
    1) a few more weeks of improved cracks which I think will be take more evidence that more unplanned maintenance is occurring. Over production is the group’s worst enemy, if they can keep utilization down they’ll do much better.
    2) a feeling that the refining group is really turning the corner with the Street (not there yet) and not just being bottom fished
    3) some more export data showing distillates continuing to do well (don’t know when we will get this)

  100. 100
    zman Says:

    Re 96: I guess no one cares what TBP owns these days. I do.

  101. 101
    tomdavis12 Says:

    Z: Isn’t normal for planned maintenance from most refiners to be a Feb – Mar thing?

  102. 102
    zman Says:

    Tom – there are two shoulder seasons or slack demand seasons. They switch in the Spring to a little higher mix of gasoline vs distillate production and then in the Fall back to a little more distillate (still producing more gasoline the whole time in aggregate). Some seasons are busier than others and a lot of needed maintenance for the industry has been delayed post Katrina…don’t think it has all been worked off yet. Anyway, I’d just like to see the group make this maintenance season one to remember if you get me. They will get a bit pinched on throughput but gain from higher cracks. At least that would be what I would want to see.

  103. 103
    Fred Says:

    Z – I do too thank you for the update. TBP’s down according to a recent SA article post here.

  104. 104
    zman Says:

    Fred – that’s what I hear, he got popped in July and August on crude and nat gas. It has been a very unusual period in terms of the severity of the blood letting but that doesn’t mean he’s not a smart guy. Just a little surprised the stock did not seem to react to the filing.

  105. 105
    zman Says:

    Wonder why COP getting so stung today.

  106. 106
    tomdavis12 Says:

    Z: PDC up 28% in last 8 days. Could you give what they are drinking to NBR?

  107. 107
    Sambone Says:

    By Gregory Meyer

    NEW YORK (Dow Jones)–Crude oil futures slumped by nearly a dollar Thursday,
    undoing part of the previous day’s rally as concerns about demand accumulated.
    Light, sweet crude for September delivery settled down 99 cents, or 0.9%, at
    $115.01 a barrel on the New York Mercantile Exchange. September Brent crude on
    the ICE futures exchange, which expired Thursday, settled down 83 cents at
    $112.64 a barrel. More active October Brent settled down $1.17 at $113.68.
    Crude slumped as traders acted on data pointing to lower consumption ahead.
    After a report Wednesday showing a 2.8% decline in U.S. oil demand, Thursday
    greeted market participants with the news that relatively high energy and other
    costs have pushed U.S. inflation to its highest annual rate in 17 years.
    Worries about the effects of energy costs and stagnating growth have weighed
    on crude prices since their $147 peak in mid-July.
    “The market is concerned with regard to the economy,” said Stephen Schork,
    editor of the Schork Report markets newsletter in Villanova, Pa. “It’s
    concerned with the rampant amount of demand destruction in the market.”
    In Europe, the economy in the 15 countries using the euro made its first
    quarter-on-quarter contraction since records began in early 1995, according to
    a separate report.
    That reinforced recent pressure on the euro, which fell to a six-month low
    against the dollar, dropping to $1.4777. Since oil is dollar-denominated, a
    stronger dollar tends to dampen global demand for the commodity from buyers
    with other currencies.
    Front-month September reformulated gasoline blendstock, or RBOB, fell 2.03
    cents, or 0.7%, to settle at $2.9120 a gallon. September heating oil dropped
    3.26 cents, or 1%, to $3.0991 a gallon.
    Nymex crude closed within this week’s range, but analyst Jim Ritterbusch at
    Galena, Ill. trading adviser Ritterbusch and Associates said in a note that
    “the market appears poised for a decline to fresh 3.5-month lows as early as
    tomorrow.” Nymex crude last traded below $111 a barrel on May 1.

    -By Gregory Meyer, Dow Jones Newswires

    Dow Jones Newswires
    08-14-08 1540ET

  108. 108
    zman Says:

    Tom – And I had been looking to buy PDC at $22, now at $18 and that’s up. It’s a crazy market.

  109. 109
    bill Says:

    fro is a tanker stock ie ships oil not a bulker

    I dont follow it closely but it is well run

    on the tanker side i like tnp

  110. 110
    zman Says:

    Woops, wrong stock, Tom…man its been a long month.

  111. 111
    Sambone Says:

    That it has, that it has!

  112. 112
    zman Says:

    Beer thirty!

  113. 113
    Sambone Says:

    Stick a fork in me, I’m done. Tini time!

  114. 114
    bill Says:

    pq about 4 x cash

    i bought some more today

    Whats the best bargain in ep gas sector in your opinion

    chk, hk, pq??

  115. 115
    zman Says:

    PQ is dirt cheap and I like the GMXR from today’s post but do not own it yet.

  116. 116
    bill Says:

    thanks z

    i think you can buy them all and make money at some point , lol

  117. 117
    john11 Says:

    Here’s more on Boone’s new positions, interesting to see starter position in BZP

    13:51 BP Capital Management discloses changes in quarterly positions in 13F filing

    In a 13F filing out 15 minutes ago, BP Capital discloses new positions BZP (350K shares), CHK (1.838 mln), DVN (845K) and EOG (322K)… The firm also increased its positions in HAL (up 971K shares), SU (up 1.328 mln) and WFT (up 1.378 mln).

  118. 118
    zman Says:

    Thanks John…I feel TBP’s pain…those are are almost positions I am in.

  119. 119
    Fred Says:

    Z – COP may have something to do with their Lukoil investments look in a little iffy right now.

  120. 120
    bill Says:

    on drybulk…

    Dry-bulk stocks were posting double-digit gains in afternoon trading Wednesday, with three of the largest bulker owners posting some of the biggest increases.

    Excel Maritime Carriers’ New York-listed shares jump 11.1% to reach $39.12 at mid-afternoon, while Nasdaq-listed rival DryShips saw a 10.2% increase, with its stock price hitting $74.

    Peter Georgiopoulos-led Genco Shipping & Trading saw its stock increase by 10.2% to $59.72, while Piraeus-based Navios Maritime Holdings’ shares jumped by 8.2% to $9.27.

    The bulker share gains came after the Baltic Dry Index (BDI) closed with an increase of 105 points, or 1.5%, bringing it to 7,097. The Capesize Index jumped 561 points, or 5.2%, to close at 11,256.

    Earlier in the day, shipping equities analyst Urs Dur of New York’s Lazard Capital Markets said in a note to clients that the BDI should start an upward trend within the next 40 to 60 days and last until December. He expects stocks to follow suit.

    Dur tied the forecasted increasing demand for steam coal and iron ore, as well as the seasonal grain trade and tight supply for the rest of the year.

    “We recommend that investors take advantage of the projected near-term upside by buying shares of quality companies with built-in growth, long-term contract cover, solid balance sheets and top management,” he said.

    Other dry-bulk stocks posting price increases of more than 5% Wednesday were TBS International, Diana Shipping and Euroseas.

    But the biggest gainer Wednesday is Ultrapetrol, whose stocks jumped by 12.8% to $13.02 after the South American diversified owner posted better-than-expected profits a day earlier.

  121. 121
    bill Says:

    short term bullish, longer term be more cautious

    The dry-bulk market looks set to deliver healthy returns in the short term but further down the road prospects are more worrying, two separate reports on the market have concluded.

    Jefferies analyst Douglas Mavrinac has raised earnings estimates for US-listed bulker owners. He heads the investment bank’s maritime-research group and says he expects charter rates to “strengthen significantly” in the third and fourth quarters of this year.

    Bulker rates have remained buoyant during the typically slow summer months but are expected to improve in the seasonally strong autumn months, the Houston-based analyst wrote in a note to clients.

    Mavrinac ties the rate rise to increased iron-ore production, increased coal shipments, the beginning of the North American grain trade in the third quarter and the rising tide of shipyard delays.

    He raises his third-quarter spot-rate estimate for capesizes from $130,000 per day to $150,000 a 15.4% boost. In the fourth quarter, the forecast increases from $160,000 to $170,000 per day.

    Increased iron-ore production should help lift bulker rates. “We believe even our increased estimates could prove conservative,” Mavrinac wrote.

    For panamaxes, the third-quarter forecast is up by 7.7% from $65,000 per day to $70,000. Mavrinac hikes his fourth-quarter estimate from $80,000 to $85,000 per day.

    However, Goldman Sachs is taking a pessimistic view of longer-term prospects.

    It has downgraded a swath of Asian bulker stocks over concerns about the massive newbuilding orderbook.

    The US investment bank downgraded China Cosco Holdings, STX Pan Ocean, Malaysian Bulk Carriers and U-Ming Marine all to “sell” from “neutral”.

    “We advise investors to sell bulker stocks now, well ahead of the correction in the freight market and decline in earnings that we anticipate from 2009 onward,” it said.

    “The sector’s orderbook stands at a record and the capesize fleet is set to double by 2011, which implies very significant downside risk to the freight market.”

    “We expect the [Baltic Dry Index]to decline 40% year-on-year in 2009 and a further 47% in 2010,” the bank added.

    Goldman upgrades China Shipping Development’s Shanghai-listed A shares to “buy” from “neutral” as it is more protected with 60% of its revenue coming from domestic shipping.

    Thailand’s Precious Shipping was also upgraded to “buy” from “neutral” because of its more attractive valuation relative to peers and on the expectation of greater forward fleet coverage.

  122. 122
    Nicky Says:

    WOW – Silver fell from 13.80 at 7.40pm to 12.20 an hour later! That’s 160 points!!!! Now back at 12.98…

  123. 123
    Nicky Says:

    Gold fell but nothing like as much – from 805 to 789 and now at 796…

  124. 124
    zman Says:

    Nicky – looks like more dollar strength today to see follow through tomorrow, oil, gas getting hit along with gold.

    On the GMXR, I am thinking, given the lousy metrics of the options, of buying stock and continuously writing covered calls on it.

  125. 125
    zman Says:

    I think I’ll start a $10K portfolio on Monday. I’ve had a few emails regarding relative weighting of option, stock, and cash positions.

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