Monday Morning – Ike and OPEC Loom

82 thoughts on “Monday Morning – Ike and OPEC Loom”

1. By Nick Heath
   Of DOW JONES NEWSWIRES

   LONDON (Dow Jones)–Crude oil prices rose in European trade Monday as another
   hurricane looked set to bear down on Gulf of Mexico oil and gas producing
   infrastructure.
   Hurricane Ike’s projected path into the Gulf of Mexico spurred buyers and
   warded off short-sellers Monday, its progress threatening to further hamper the
   regional output still in the process of returning to full capacity following
   Hurricane Gustav’s trail through the region at the end of last month.
   Market participants also looked ahead to Tuesday’s Organization of Petroleum
   Exporting Countries meeting, where production levels are expected to be left
   unchanged, but subject to scrutiny following crude’s $40 retreat from record
   highs in less than two months.
   At 1119 GMT, the front-month October Brent contract on London’s ICE futures
   exchange was up 88 cents at $104.97 a barrel.
   The front-month October light, sweet, crude contract on the New York
   Mercantile Exchange was trading $1.12 higher at $107.35 a barrel.
   The ICE’s gasoil contract for September delivery was up $13.75 at $967 a
   metric ton, while Nymex gasoline for October delivery was up 747 points at
   276.08 cents a gallon.
   According to the National Hurricane Center’s 0500CET update, Ike weakened to a
   Category 2 storm after making landfall in Cuba Monday. It will move over
   central Cuba later Monday and emerge into the southeastern Gulf of Mexico by
   late Tuesday, it said.
   Its approach threatens a fresh wave of shut-ins and a delay to the return of
   those undertaken as a precaution ahead of Hurricane Gustav at the end of last
   month. Major oil producer Royal Dutch Shell said Saturday that it was not
   redeploying all its personnel evacuated prior to Gustav because of the
   possibility that Ike might require another evacuation.
   According to the U.S. Department of Energy’s latest update issued Sept. 7,
   87.5% of offshore crude production remains shut in, while just over 922,000
   barrels a day of onshore refining capacity is sidelined.
   Evidence of Gustav’s impact on U.S. inventories are expected to be revealed in
   Department of Energy weekly inventory data Wednesday. Weekly stock readings,
   particularly for products, are expected to be distorted and for weeks to come
   due to storm-related shutdowns, analysts said.
   “With this hurricane coming up, we will have several weeks of fairly
   supportive statistics in the weeklies,” said Torbjørn Kjus, oil market
   analyst at DnB NOR in Oslo. “It’s hard to see that prices could really collapse
   in the coming two weeks.”
   OPEC’s gathering in Vienna Tuesday is expected to conclude with formal
   production levels left untouched, many analysts say, although crude’s rapid
   descent from mid July’s record highs near $150 a barrel will likely stir
   hawkish comments from some of the organization’s members.
   “We will assess the market and then we will take our decision. But the market
   is definitely oversupplied,” Iranian oil minister Gholam Hossein Nozari said on
   arriving in the Austrian capital Monday.
   Despite the rhetoric, OPEC’s decision is expected to largely rest on input
   from Saudi Arabia, the group’s largest producer.
   “The key is what Saudi wants and we believe that is not more than a high
   double digit oil price,” said Colin Smith, research analyst at Dresdner
   Kleinwort in London. “We believe Saudi wants oil below $100 as it is concerned
   about maintaining the medium and long term market for oil.” Signs of global
   economic slowdown amid high energy prices have stoked concerns over oil
   consumption, providing resistance to climbs in oil prices. In that vein, some
   analysts suggested Monday that the U.S. government’s takeover of troubled
   mortgage giants Fannie Mae and Freddie Mac provided both a boost to the global
   economic outlook and to oil prices. Asian and European equity markets traded
   sharply higher Monday, while the U.S. dollar strengthened against most major
   currencies.
   “The housing markets would have been left in disarray had either of these two
   companies failed, which would have had a catastrophic effect on global
   economies, so the rescue of Freddie Mac and Fannie Mae is certainly good news
   in our opinion,” said Nimit Khamar of Sucden Research in London.
   -By Nick Heath; Dow Jones Newswires
   Dow Jones Newswires
   09-08-08 0743ET

2. Gustav Hits Supply Picture, But Prices Fall

   By DAVID BIRD
   A DOW JONES NEWSWIRES COLUMN

   NEW YORK — U.S. refiners pushed gasoline output to record highs in the days before Hurricane Gustav shuttered operations along the key Gulf Coast.

   Many plants are beginning to ramp up operations, but pre-storm oil inventory data point to several areas of potential supply tightness far from the Gulf region.

   Still, even with the possibility of some local supply worries and price spurts, crude oil futures prices continue to tumble. On Friday, front-month crude futures posted their sixth straight loss and have shed 10% of their value in the biggest streak of down days in 16 months.

   Ahead of a crucial OPEC meeting, where traders hope for hints of a price floor from the group, and its leader Saudi Arabia, expectations that oil may soon fall below $100 for the first time since early March are growing.

   Activity in Nymex options suggests increased expectations that December-delivery crude oil futures will be below $100 at expiration on Nov. 20, Deutsche Bank said Friday.

   Options trading shows a 27% likelihood of the contract going off the board below $100 compared with just 8% in July while the prospect of the contract ending at $150 has fallen to 9% now from 58% in July. The contract settled at $107.18, down $1.82 a barrel Friday.

   Meantime, in the key Northeast and New England region — the world’s largest heating oil market — stocks of distillate fuel (heating oil/diesel) are 5% below five-year averages at the end of August.

   In the lower Atlantic region, bracing for a blow from Tropical Storm Hanna, gasoline inventories are nearly 11% below their five-year averages.

   That snapshot of tight supplies comes from Energy Information Administration data for the week ended Aug. 29, which doesn’t take into account the vast amounts of oil flows lost in the wake of Hurricane Gustav, with 1.3 million barrels a day of Gulf Coast crude oil output shut-in and nearly 2.7 million barrels a day of refining capacity closed ahead of the storm.

   EPA Bends Fuel Rules On Supply Worries
   Late Friday, the federal Environmental Protection Agency issued waivers from clean fuel requirements for parts of Georgia, Alabama and North Carolina, and extended waivers in Louisiana until Sept. 15 to “allow for greater flexibility for the fuel distribution system to support an adequate supply of gasoline.”

   Lost refinery output last week alone could be on the order of 20 million barrels of gasoline and other products. Power outages to plants and pipelines complicate the matter and spread the problem beyond the region.

   Midwest refiners — notwithstanding a surge to record-high gasoline output last week — face a supply shortfall as the Capline pipeline, the 1.2 million barrel-a-day main artery for crude supplies from the Gulf to the heartland, is only just resuming partial operations.

   The Colonial Pipeline from the Gulf to New Jersey, a crucial link for Northeast U.S. supplies, is running at reduced levels. During September, shipments of gasoline on the vital carrier averaged 1.2 million barrels a day in the past five years, with distillate flows at around 625,000 barrels a day.

   At best, refiners are likely to take at least a week to bring operations back, while offshore output will likely take twice as long to return to pre-storm levels, government officials estimate.

   The big loss of refining capacity, relative to shut-in crude output, has helped sharp the steep falloff in prices begun when Hurricane Gustav was shown to be less destructive than Hurricane Katrina in August 2005.

   Imports, especially of gasoline, are expected to flow heavily from Europe, where the fuel remains in surplus and the usual seasonal decline in demand may blunt the impact of supply losses.

   The end of August brings an end to the peak summer gasoline demand season, which was battered by high prices this year. Michael McNamara, who compiles the SpendingPulse survey for MasterCard Advisors LLC, said U.S. gasoline sales between the end-May Memorial Day and Labor Day dropped 3.9% to around 9.4 million barrels a day, after a year-to-year rise in the peak period in 2007 of 2.4%.

   Demand Down For 13th Month
   EIA data for the four weeks to Aug. 29 show total U.S. oil demand down 733,000 barrels a day, or 3.5%, from a year ago, at 20.292 million barrels a day. That would be the lowest August demand since 2003 and mark the 13th straight year-to-year drop in monthly oil demand.

   Preliminary data show January-August U.S. oil demand is down 847,000 barrels a day from a year ago, the biggest decline in the first eight months since 1981. At 19.9 million barrels a day, demand is the lowest in the period since 2001.

   A pre-storm surge in gasoline output in the Midwest of 12.3% pushed regional output to a record 2.55 million barrels a day, and pushed nationwide output to a highest-ever weekly level of 9.422 million barrels a day.

   In an indicator that says more about sluggish demand than about refining capabilities, domestic output of gasoline topped demand at the end of August for the first time on records dating back to 1991. The last time domestic output topped demand in any week was in mid-January.

   Production exceeded demand by a slim 22,000 barrels a day in the latest week, while a year ago, demand outpaced production by 420,000 barrels a day in the last week in August.

   Still, while margins favor a counter-season shift to gasoline output over distillate output, and refiners outside the Gulf Coast have some spare capacity, reliability of crude supplies from the region is vital. Marathon wants to borrow crude oil from the Strategic Petroleum Reserve for running at two Midwest refineries, but the oil must be shipped through the still-limited Capline, which Shell said it hopes to have fully operational in the coming weekend. Valero said it cut runs at its Tennessee refinery.

   Gustav May Cloud OPEC Talks
   EIA warns that some local markets may face supply tightness and potential price jumps. But they won’t likely be enough to reverse the slide in prices in recent days, provided there isn’t any lasting damage to facilities.

   The aftermath of Gustav adds another dimension to the Sept. 9 meeting of the Organization of Petroleum Exporting Countries, where Saudi Arabia is likely to come under pressure from Iran and others for output cuts aimed at putting a floor under the market at $100 a barrel.

   The Saudis have a long-term stake in keeping demand for oil strong by diminishing the potential for costly competitive supplies and substitute energy sources, and may be able to stave off the calls at least beyond the U.S. presidential election on Nov. 4 and to another OPEC meeting said to be in the planning for mid-December in Algeria.

   Nymex crude futures fell Friday for a sixth straight day in the longest losing streak since May 7, 2007. October delivery crude fell $1.66, or 1.5%, to $106.23 a barrel, the lowest level since April 4. Front-month crude is down 27% from the record-high settlement on July 3 of $145.29 a barrel. Crude has fallen 10%, or $11.92 a barrel, since Aug. 27.

   October heating oil futures fell 4.09 cents, or 1.4%, Friday to $2.9828 a gallon, the lowest level for a front-month contract since April 3 and shed nearly 21c on the week.

   Nymex gasoline for October delivery fell 2%, or 5.43 cents, on Friday, to $2.6861 a gallon, the lowest level since April 1, and lost nearly 17c on the week.

   Front-month crude has been the cheapest of all listed Nymex contracts in the past 10 days, a price curve that suggests weak near-term demand for crude and potential for a significant stock build, as refiners are rewarded for building inventories at relatively cheap prices now.

   But, at least in the U.S., Gustav is overriding, at least temporarily, those traditional moves.

   –(David Bird, senior energy correspondent for Dow Jones Newswires, has covered global oil markets for more than 20 years.

3. GDP on the tape with mid-year reserves and Haynesville vertical well. Not a lot to grab onto in terms of news but not bad results on the reserve growth.

4. Poor bottom fishers in FNM & FRE

5. Not enough information to determine if this was an LNG carrier.

   Mon Sep 8, 4:20 AM ET

   KUALA LUMPUR, Malaysia – Pirates armed with rocket-propelled grenades attacked three vessels off Somalia’s coast but failed to hijack them because of quick action by crew members, a maritime official said Monday.

   A Chinese cargo ship, a Singaporean liquefied gas carrier and a Thai bulk carrier managed to thwart the pirates in the Gulf of Aden by increasing speed and taking evasive maneuvers, said Noel Choong of the International Maritime Bureau.

6. Z,
   Would you expect the Saudi’s to hold crude prices down through the November election?

   If the GOM operators who shut down last week have to shut down again week (although the stormpath path is likely somewhat different) won’t this start to take a big toll on the production numbers?

7. Shiver me timbers. Pirates!
   What next? Marooned on deserted islands? Green energy quotes?
   apbd

8. Crys – yes, or at least away from the old highs. They may start shipping less but I don’t think they cut quotas.

   On the Gulf, most of it did not get back on and now won’t through this week as platform do U-turns back to the beach. It will show up in the numbers with this week’s reports but the Street will discount it pretty severely as one time in nature. For gas prices, I think right now damage is the only thing that saves the near term day.

9. By Gregory Meyer
   Of DOW JONES NEWSWIRES

   NEW YORK (Dow Jones)–Crude oil futures climbed Monday as traders braced
   themselves for another a hurricane in the energy-rich Gulf of Mexico.
   Light, sweet crude for October delivery was recently up $2.06, or 1.9%, at
   $108.29 a barrel on the New York Mercantile Exchange. Brent crude on the ICE
   Futures exchange rose $1.25 to $105.34 a barrel.
   Crude oil gained as Hurricane Ike neared the U.S. Gulf Coast, home to a
   quarter of U.S. crude-oil output and 40% of its refining capacity. The storm
   was centered over Cuba as a Category 2 storm Monday, the National Hurricane
   Center reported on its Web site, and should move into the Gulf late Tuesday.
   Oil declined every day last week after Hurricane Gustav’s Gulf landfall didn’t
   match fears of potential damage to energy infrastructure. The U.S. Minerals
   Management Service reported Sunday that about 80%, or 1 million barrels a day,
   of Gulf oil output remained off line after Gustav.
   Products refined from crude were especially strong in light of Ike’s approach.
   Front-month October reformulated gasoline blendstock, or RBOB, was up 10.69
   cents, or 4% to $2.7930 a gallon. October heating oil rose 8.04 cents, or 2.7%,
   to $3.0632 a gallon.
   The Organization of Petroleum Exporting Countries is meeting Tuesday in Vienna
   to discuss output policy amid oil’s fall from a $145 peak in July. While few
   expect the cartel will formally cut production quotas, the market remains on
   edge over its plans.
   “In the face of seven down days in a row, an OPEC meeting and a hurricane
   potentially entering the Gulf, it seems pretty reasonable to be up a couple
   bucks,” said Peter Donovan, vice president at Vantage Trading on the Nymex
   floor.
   Oil remained higher in spite of a powerful rally in the dollar, whose recent
   vigor has helped drive investors out of commodities. The euro was recently
   neared a one-year low against the greenback, and was trading at $1.4209 from
   $1.4237 late Friday.

   -By Gregory Meyer, Dow Jones Newswires

   Dow Jones Newswires
   09-08-08 0949ET

10. Crys – just as far as storm impact goes, I still think refining is the place to be. Ike is on target to hit more of the refining segment than Gustav where much of the power has still not come back on.

11. If the GFDL track turns out to be accurate, what effect would the projected hit about midway between Galveston and N. O. have relative to other landfalls?

12. Elwo – very hard on platforms and the refining segment. I’ll scrounge up a map.

13. Morning all. As you say Z looks likely plenty of volatility ahead this week. I see Ike isn’t scheduled to make landfall until Saturday so likely we see a few up and downers first in the oil market. Likely we retest the lows again and maybe a touch lower….

14. Elwo – check here and cursor over refineries.

    http://tonto.eia.doe.gov/state/

15. Z,
    In anticipation of the Gulf refinery production pinch will Europeans send tanker loads of refined gasoline into the US market………..and if so, will they be enough to compensate for the shortfall….at least on the East Coast?

16. Broader market. We need to take out 1307 on spx to confirm the low is in – until then the market is still at risk of another move to the downside. Cycles are predicting a low to be in place sometime in this timeframe but it ‘could’ stretch out into the 3rd week in September.

17. Nicky – yep, OPEC I think unlikely to do much but talk. Funny a couple of months ago with oil flying high even the Saudis said the market was well supplied. Then, at the behest of Bush, they went ahead and upped production and now, with oil low, they don’t talk about cutting even though they have said the world is about to see stock piles zoom. Tell me that’s not political.

18. Crys – Europe is awash in gasoline so my thought is they will send more here. I don’t think the Northeast will have a problem unless we start seeing extended outages.

19. Thanks for the map. It reinforces my confusion as to why the energy market seems to be taking Ike so much in stride.

20. NEW YORK (Dow Jones)–BP PLC (BP) is evacuating non-essential personnel from
    the Gulf of Mexico ahead of Hurricane Ike, the company said Monday.
    Most energy companies are still restoring production after a total evacuation
    before Hurricane Gustav at the end of August. About 80% of oil and 70% of
    natural gas production is still offline.
    Ike is currently passing over Cuba as a Category 2 storm. The hurricane is
    likely to crosses the Gulf this week, before hitting the Texas or Louisiana
    coast on Saturday, according to the National Hurricane Center.

    -By Brian Baskin, Dow Jones Newswires

    Dow Jones Newswires
    09-08-08 1013ET

21. Elwo – hear ya on that; the refiners are up however but not by epic amounts.

22. Z: Your numbers today show a range of 3 – 8 for high and low for CHK CFPS in the last three years. Your numbers before had a low of 4. Which is correct? If three is correct, is there any reason this stock can not drop $10/sh. Thks

23. Tom – My low for CHK CFPS multiple is 3x back as far as I see in my spreadsheet. 3.0x was achieved back in 2004. $10 would be an insane price for CHK, can’t see it, not based on their holdings, cost structure. But if NG goes to $2 then yes, $10 could happen.

24. By Steve Gelsi

    Most energy stocks rose with the broader market Monday, with buying in the
    sector tied to rising oil prices, the approach of Hurricane Ike and relief over
    the U.S. government’s bailout of Fannie Mae (FNM) and Freddie Mac (FRE).

    Oil for October delivery gained $1.62 to $107.85 a barrel in electronic
    trading on Globex. Hurricane Ike churned over Cuba on Monday morning, weakening
    to a Category 2 storm as it made landfall, but forecasters predict the storm
    will move into the Gulf of Mexico and hit somewhere between Texas and Alabama
    by this weekend.

    Traders are also focusing on the Organization of Petroleum Exporting Countries
    meeting scheduled Tuesday in Vienna. The oil cartel’s widely expected to keep
    its production unchanged.

    The Amex Oil Index jumped 4.63 points to 1227. The Philadelphia Oil Service
    Index advanced 1.2% to 269, while the Amex Natural Gas Index fell 0.5% to 559.

    Among energy stocks in the spotlight, ConocoPhillips (COP) agreed to pay up to
    $8 billion for a 50% stake in coal seam assets of Australia’s Origin Energy
    Ltd., including a $5 billion upfront payment. Shares of ConocoPhillips rose 2
    cents to $75.

    On a broader level, hurricanes Gustav and Ike are expected to take a bite out
    of third-quarter profit for the component companies making up the Philadelphia
    Oil Service Index, Dan Pickering of Tudor Pickering Holt said in a note to
    clients.

    “Two hurricanes back-to-back keeps Gulf of Mexico (drilling) activity muted
    for two weeks, perhaps three,” he said. “Remember, the Gulf of Mexico (is)
    generally a high-margin business with high fixed costs.”

    Every major oil-service player will see some impact, but Smith International
    (SII), Superior Energy Services (SPN), Hercules Offshore (HERO) and Oceaneering
    International (OII) may have the most exposure, he said.

    Meanwhile, Transocean (RIG) was upgraded to hold from sell by Deutsche Bank,
    as the broker sees “more realistic” expectations embedded in the stock.
    “Additionally we believe RIG’s substantial backlog and visibility on cash flow
    provide some defensive qualities in the current challenging market
    environment,” the broker said.

    Transocean’s shares fell 16 cents to $122.

    Baker Hughes (BHI) said rig counts worldwide rose 87 to 3,523 in August, with
    the number of rigs in operation in the U.S. rose 55 to 1,987. The provider of
    oilfield services counts the number of drilling rigs actively exploring for or
    developing oil or natural gas in the United States, Canada and international
    markets.

    Shares of Baker Hughes rose 15 cents to $72.53.

    Overseas, Royal Dutch Shell’s (RDSA) natural gas plan for Iraq has received
    provisional clearance from the Iraqi government, opening up the chance for
    Shell to invest $3 billion to $4 billion to gather 500 million to 600 million
    cubic feet a day of associated natural gas in Iraq currently going to waste,
    Global Insight noted.

    U.S.-listed shares of Royal Dutch Shell fell 49 cents to $62.
    -Steve Gelsi

    Dow Jones Newswires
    09-08-08 1029ET

25. The broad market is up, oil is up, nat gas is up, and the E&Ps are down. I know “the market can be irrational a lot lomger than you can be solvent”, but this is ridiculous.

26. Elwo – I think the stocks would be up were it not for the broad market being up. Oil’s rally is nothing for where the hurricane is going and OPEC is, well, looming.

27. Ike – looks to be popping out the other side of Cuba.

    http://tropics.hamweather.com/2008/atlantic/ike/clir/loop.html

28. Stocks look to be just treading water now, waiting on Ike and OPEC. The broad market meanwhile is all over the place, dropping 150 points in a couple of minutes then bouncing. Gasoline outpacing gain in crude 4 to 1, heating oil 2 to 1.

29. HOUSTON, Sept 8 (Reuters) – Shell Oil Co RDSA.L said on
    Monday it plans to evacuate all Gulf of Mexico offshore
    personnel by Wednesday ahead of Hurricane Ike.
    Production will remain at minimum levels before being
    completely shut by Wednesday, the company said.
    (Reporting by Erwin Seba)

    Mon Sep 8 15:10:06 2008 -GMT

30. Are we going to see GUS and Ike action in NG. I would see this as more of an opportunity. I’m looking at 2005 and it’s interesting that imports went up by 1 and YOY consumption dropped in Sept and then Oct. So the draws seem to have been only effected by two weeks. Yet the domestic supply was effected by 5 and 4 BCFPD for the month of Sept and Oct. which would add up to 275 BCF over the period.
    Considering that Kat Rita did the damage that it did it seemed that inventories kept up although GOM production has yet to recover.
    Considering the minor nuisance that GUS and Ike are it may have the same if not greater effect through downtime unless you see lower consumption or other supply to replace it.

31. PQ – Low multiples Looks real cheap. Market concurs with your assessment this AM

32. I am hearing Anadarko looking at Cabot…from my friends on Wall Street

33. Are small cap NG’s in danger of being gobbled up on the cheap

34. Uncle Phil

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

35. There are a lot of rumors around that consolidation must be just around the corner. APC for COG makes some sense in terms of basin overlap however a lot of names make sense. What you need is a current that has not been beat down as much as the target. If you look at the table in today’s post you can see the dichotomy large to lessor cap in terms of the fall from the peak. I know it won’t be EOG as a buyer. But DVN, APA and APC are likely acquirors in this environment and Hacket at APC has a history of doing big deals. COG would be an afterthought for him…but it could be a cheapish way to get more involved in the Haynesville (it would more than double their acreage there if my last acre counts are not dated too much).

36. Oil red.

37. I may do a little quick trading again here. Thinking about it anyway.

38. Z, any strategy for the hk 40’s?

    any idea about the love for e&p’s going to come back by year end?

39. Consolidation – at giveways or what kind of premiums. The first one to go will raise the stakes for those to follow.

40. Why isn’t GMXR are your radar in todays post

41. Concerned about the HK $30s, not any hope for the $40s, planning to sell if possible on any sector pop. Does the love come back prior to year end? Not to the degree of a couple of months ago but we should see a good bounce in the names between now and November.

42. GMXR just wasn’t on the spreadsheet I used back the peak so it was not in the update. Nothing against them at all, just not in that spread and I wanted to look at how little bottom line expectations have changed relative to the give back we’ve seen in the names.

43. fair warning.. don’t drink anything..

    Just told the girlfriend my port-holio has retreated 40% since peak early July.. she says “win some, lose some”

    anyway.. cog interesting.. super high vol on cogii’s

44. Wow is this the best the stock market can do with the F and F bailout? $ rallying, euro failing again, metals fading, oil fading…..

45. Hear Nicky…so the dollar is up why? Because things are so bad the U.S. has to assume the debt of F&F???!!! So the $ now goes up when the U.S. prints more money…hmmm…

46. Nicky – here’s your lower low on oil…now what?

47. Sept 8 (Reuters) – The recovery of oil and natural gas production in the
    Gulf of Mexico in the wake of Hurricane Gustav halted due to a new hurricane
    threat that was triggering a fresh round of evacuations.
    Hurricane Ike was pummeling Cuba Monday morning and was expected to reach
    the Gulf of Mexico by Wednesday.
    The following outlines the impact of last week’s Hurricane Gustav on the
    energy sector:
    ***************************HIGHLIGHTS*************************
    *Hurricane Ike halts Gulf oil recovery 3
    *3 refineries, 1.8 pct of US capacity, still shut
    *79.8 percent US Gulf oil shut, 70.0 pct US Gulf gas shut
    *Shell stops returning workers, plans full Gulf evac ahead of Ike
    *Anadarko plans U.S. Gulf evacuations due Ike
    *Louisiana Offshore Oil Port restarts at slowed pace
    *Some 180,000 Entergy customers still lack power
    *DOE to deliver 250,000 barrels of oil to Marathon
    ******************CRUDE OIL, NATURAL GAS********************
    *79.8 percent of U.S. Gulf’s 1.3 million barrels per day crude output shut
    Sunday, down from 87.5 pct Saturday, MMS says.
    *70.0 pct of the Gulf’s 7.4 billion cubic feet per day natural gas output
    shut Sunday, down from 74.1 pct Thursday
    HEADLINES
    *Anadarko plans U.S. Gulf evacuations due Ike
    *Shell plans full Gulf evac by Wed ahead of Ike
    *Shell says finds minor topside damage at Mars, West Delta 143 and Cognac
    *Marathon evacuates US Gulf oil platform due Ike n
    *BP BP.L: Flyovers show no damage, crews to do checks
    *Chevron restarting some offshore output, hubs look OK
    *Exxon Mobil XOM restores some production, still assessing damage
    *****************************REFINING****************************
    REFINERIES STILL SHUT (Louisiana unless otherwise noted):
    *ConocoPhillips COP 195,000 Alliance – no power
    *Alon ALJ 80,000 Krotz Springs
    *Shell 55,000 St. Rose
    REFINERIES STILL AT REDUCED RATES:
    *Valero 195,000 Memphis, Tennessee big cuts due Capline
    *Valero 325,000 Port Arthur, 130,000 Houston, 245,000 Texas City, Texas

    *Citgo 430,000 Lake Charles
    *Motiva 285,000 Port Arthur,Texas
    *BP 467,700 Texas City, Texas
    *Pasadena Refining 100,000,Texas
    RESTARTS AND RECOVERY:
    *Valero VLO 250,000 St. Charles
    *Motiva 235,000 Convent refinery restarted
    *Placid 56,000 Port Allen restarted
    *Motiva Norco 236,000 restarted
    *Exxon 503,000 bpd Baton Rouge, 193,000 Chalmette restarted

    *Murphy MUR 120,000 Meraux restarted
    *Calcasieu 80,000 Lake Charles restarted
    *Marathon 265,000 Garyville restarted
    *Total 232,000 Port Arthur restarted
    *ConocoPhillips Lake Charles restarted n
    *Chevron ramps up 330,000 Pascagoula after run cuts
    *Exxon Mobil says Baytown and Beaumont, Texas, refineries back to normal
    ********************ELECTRIC POWER IMPACT*************************
    *Some 180,000 Entergy customers still lack power
    *Entergy to restore most La. power in a week
    *Entergy to restore power for 11 of 12 La. refiners
    *Entergy’s Waterford 3 to restart Saturday, River Bend still shut
    **********************PORTS, WATERWAYS****************************
    *LOOP restarts at reduced rates, no damage
    *Waterways mostly reopened
    *********************PIPELINES, GAS PLANTS************************
    *Enbridge EEP to end force maj. on UTOS, Stingray
    *Henry Hub lifts most force maj., lacks compression
    *NYMEX keeps force maj. in place for August, September contracts
    *Capline restarts at reduced rates
    *Houma-to-Houston crude line to restart Saturday
    *El Paso’s EP Tennessee, Southern Natural begins coming back
    *Colonial, Plantation pipelines at reduced rates
    *Centennial pipeline restarts
    *SPR Bayou Choctaw, La, still shut; West Hackberry no damage – DOE
    (Reporting by Bruce Nichols, Erwin Seba; Editing by Richard Valdmanis)

    Mon Sep 8 16:01:14 2008 -GMT

48. Z – I personally don’t see huge downside for oil here (famous last words!) – not at this moment anyway. Looks to me like an ending diagonal.

    SPX has support at 1242 – 1245.

49. tater – JOYG is even better buy off 8%.

50. The give back on the Dow is impressive today. Nasdaq down pretty sharply now.

    Gasoline and natural gas the only thing in the energy complex that is green and I suspect the only things close to trading with an eye to Ike. Waiting and watching.

51. Coals getting blown out again.

    Nicky – um, glad to hear that re oil and downside.

52. Buyout rumor on COG only able to keep the stock flat. That’s pretty tough.

53. By Gregory Meyer
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–Crude oil futures fell Monday, reversing earlier gains
    as the dollar strengthened.
    Light, sweet crude for October delivery was recently down 93 cents, or 0.9%,
    at $105.30 a barrel on the New York Mercantile Exchange. Brent crude on the ICE
    Futures exchange fell $1.19 to $102.90 a barrel.
    The dollar rose to an 11-month high against the euro Monday, undercutting
    dollar-denominated commodities’ attraction to investors seeking to hedge
    currency risks. The euro was recently $1.4121, from $1.4237 late Friday.
    “Look at the strength of the dollar,” said Nauman Barakat, senior vice
    president at Macquarie Futures USA in New York. “At this stage it’s what is
    driving the market.”
    Oil trading remained on edge as Hurricane Ike was on a path to strike the
    Texas coastline near the Houston-Galveston area this weekend, the National
    Hurricane Center said. The U.S. Gulf Coast is home to a quarter of U.S.
    crude-oil output and 40% of its refining capacity.
    But predictions for Ike are divergent. The center’s five-day forecast track
    shows Ike could strike anywhere from Texas’ southern border with Mexico to
    Alabama. It’s expected to enter the Gulf of Mexico late Tuesday.
    “The Gulf of Mexico is a huge area,” Barakat said. “So it could be totally
    devastating or it could be a storm in a teacup.”
    Oil declined every day last week after Hurricane Gustav’s Gulf landfall didn’t
    match fears of potential damage to energy infrastructure. The U.S. Minerals
    Management Service reported Sunday that about 80%, or 1 million barrels a day,
    of Gulf oil output remained off line after Gustav.
    Gasoline was bid up in light of Ike’s approach. Front-month October
    reformulated gasoline blendstock, or RBOB, was up 2.97 cents, or 1.1% to
    $2.7158 a gallon. October heating oil fell 50 points, or 0.2%, to $2.9778 a
    gallon.
    The Organization of Petroleum Exporting Countries is meeting Tuesday in Vienna
    to discuss output policy amid oil’s fall from a $145 peak in July. While few
    expect the cartel will formally cut production quotas, market participants are
    focused on the group’s next move.

    -By Gregory Meyer, Dow Jones Newswires

    Dow Jones Newswires
    09-08-08 1236ET

54. NEW YORK (Dow Jones)–Rig operators are evacuating employees from the Gulf of
    Mexico as Hurricane Ike approaches, the three largest deepwater drillers in the
    region said Monday.
    Transocean Inc. (RIG), Diamond Offshore Drilling Inc. (DO) and Noble Corp.
    (NE) are all evacuating offshore employees. Ike is expected to threaten the oil
    and gas producing portion of the U.S. Gulf by Thursday, according to the
    National Hurricane Center.
    The three companies operate 23 of the 27 deepwater rigs active in the Gulf,
    according to Rigzone, an industry news and data service.
    All of the rigs had evacuated before the arrival of Hurricane Gustav early
    last week.
    “We were just repopulating the rigs,” said John Breed, a spokesman at Noble,
    which operates five moored deepwater rigs in the Gulf.
    Transocean has 11 deepwater rigs in the area. Gustav had damaged two of the
    rigs, while a third, the Transocean Amirante, is being towed to Mobile, Ala. as
    a precaution after its mooring system took damage during the last storm. The
    company’s remaining rigs have the capability of propelling themselves to a safe
    location in the Gulf, said Guy Cantwell, a spokesman.

    -By Brian Baskin, Dow Jones Newswires
    Dow Jones Newswires
    09-08-08 1246ET

55. Days like today disgust me.

56. Z – good support where we are at the 105 area. Then you have support at 100.48 which is a 75% retracement of the 2007 – 2008 rally. There is also a Gann support line that comes in at the 101 area.

57. “ConocoPhillips’s investment values Origin’s coal-seam gas resource at A$1.65 per gigajoule of proven, probable and possible resources based on an LNG project with two production units.” (If gigajoule is .95 MCF and A$= USD.8126) Value is $1.40 MCF.

58. MD – I know you know this but just to clarify for those who might not, that value COP paid is an in the ground reserve price for gas that’s 6 years from first sale and in Australia. Can’t even begin to compare that to prices in the U.S., only to other LNG asset buys.

59. Hear ya VTZ…no rhyme or reason, just watch the dollar. Of course, if oil goes back to $10 like in ’98, the U.S. government would NOT be bailing out the oil companies. More likely, they’d throw a party while scratching their heads over the unemployment pop.

60. RIG reporting minor damage to two rigs, and moderate damage to a third, no timelines for repairs given. I’m seeing short press releases here and there that indicate Gustav was not as wimpy as the market believed. There will be delays in hookups beyond just Ike cruising through.

61. SD being sandbagged

62. How long do you think before rigs are manned again after Ike comes through early weekend. That’s providing they pass inspection.

63. md – seems to be a punt the more recent names day as well with CLR getting hammered. Only thing doing even half way decent is the refiners and they are flat to mixed.

64. Fun little thing to play with

    http://tropicalatlantic.com/plots/09-googlemaps.shtml

65. Depends on the storm and rig location. If you mean all rigs probably a week. They had not gotten everyone back on yet following Gustav and not just because of Ike on the way. Staging location Port Fourchon was hit pretty hard by Gus.

66. Thanks Sam, huge time waster there. Just what I need on a day like today. Will add to link list. I reorganized the weather tab the other day pretty hastily but if you have suggestions, adds please let me know.

67. Z – fyi my oil sands piece is done although I’m going to update the cost piece I did because of developments in the last couple weeks… capex continues to grow further out of control

68. VIENNA (Dow Jones)–Global oil markets are adequately supplied, which will
    lead to oversupply by the year’s end, OPEC President Chakib Khelil said Monday.
    “There is plenty of oil on the market,” Khelil said.
    The OPEC president said the oil market will be oversupplied at the end of the
    year. “Everybody agrees there will be an oversupply of between a half to
    one-and-a-half million (barrels a day),” he said.
    Khelil, who is also Algeria’s oil minister, acknowledged that oil prices have
    weakened as the dollar has strengthened in recent weeks.
    The OPEC president is in Vienna for an OPEC ministerial meeting on Tuesday, at
    which the group is expected to hold current output levels unchanged as it
    surveys the steep drop in oil prices in recent months.

    -By Benoit Faucon, Dow Jones

    Dow Jones Newswires
    09-08-08 1407ET

69. Sam – couldn’t get link in #64 to work maybe I am missing something from google maps.

70. oil back to green…barely. That comment from OPEC pres is not new but a reiteration of their last monthly minutes statement. They meet again in December and I would expect they will lower then. This is, by the way, after the election.

    VTZ – excellent, send at your convenience to the zmanalpha@gmail.com address.

71. Uncle Jim seems to becoming a favorite:

    “It is hard to predict the timing of a recovery in natural gas prices, but patient investors in natural gas names will eventually be vindicated, I think. Though perhaps not in my lifetime (just kidding, I hope).”

    http://seekingalpha.com/article/94323-why-it-s-going-to-be-a-long-recession

72. Fred – Not sure Why it won’t work. Works for me.

73. Fred, you may need to get a plug for the google maps site. Works for me too, and if you are extremely bored, you can plot the eye as it crosses your neighborhood, lol.

    Refiners making another attempt at putting in gains.

74. Latest track looks like H-town:

    http://tropics.hamweather.com/2008/atlantic/ike/trackmap_zoom1.html

75. VTZ – fyi, DVN got approval for Jackfish 2.

76. fred #48,
    JOYG – I spent about a half hour in that one last week. Made a little bit, decided I really had no clue what the trade involved and got out before something bad happened.
    I am just getting started today, needed to run my little guy to the doc, so I am just playing catch-up.

77. HAL getting clobbered. All the Street research I am now reading says no one wants to touch oil service as no one believes the estimates because everyone sees activity falling. The interesting thing is that the estimates have not risen dramatically since the start of the year and really only moved up slightly after the 1Q and 2Q reporting periods, despite a sharply improved outlook. I think people (fund managers) are completely missing how it is that HAL gets paid. When the group comes back I would expect money to be thrown at SLB, HAL, BHI, RIG first.

78. TSO putting in a breakout, to my not technical eye. Continuing to hold the Sept and Oct $20 calls there and the VLO $35s.

79. good day all, it’s tini time! 🙂

80. Kuwait says no need to cut production.

    PQ says no apparent structural damage

81. Z – Everyone files for approvals in order to have the right to build because there is a large line-up at the Energy Resources Conservation Board (ERCB), but it means nothing if the capital costs keep increasing (and they are… you can’t even keep track of the costs from month to month due to the escalation).

    BA energy has undergrounds built and regulatory approval and the site all ready to go and they cant find enough financing to build their upgrader. They just laid off Jacobs this week and will be delaying their project because nobody wants to take the risks due to the extreme cost escalation.

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