Thursday … And Nero Fiddled

112 thoughts on “Thursday … And Nero Fiddled”

1. By Nick Heath
   Of DOW JONES NEWSWIRES

   LONDON (Dow Jones)– Crude oil futures fell more than $2 Thursday as doubts
   grew over crude oil’s ability to build on recent rises amid ongoing economic
   growth fears.
   Concerns demand will continue to decline due to an economic slowdown were
   bolstered by the uncertain progress of the U.S. administration’s proposed $700-
   billion financial rescue package, that its architects say is necessary to
   prevent the U.S. economy from descending into a steeper downturn.
   The U.S. dollar’s reversal of much of its earlier intraday weakness added
   pressure on crude oil prices Thursday, while expectations that U.S. crude oil
   stocks could start rebuilding in the coming weeks following latest
   hurricane-related draws also weighed, analysts said.
   “This whole uncertainty (about the bailout) is making it tough for oil to do
   anything,” said Jim Rintoul, analyst at London-based trade advisory
   TheOilTrader.com. “Today and tomorrow people are just going to be watching what
   Congress decides.”
   At 1213 GMT, the front-month November Brent contract on London’s ICE futures
   exchange was down $2.10 at $100.35 a barrel.
   The front-month November light, sweet, crude contract on the New York
   Mercantile Exchange was trading $2.03 lower at $103.70 a barrel.
   The ICE’s gasoil contract for October delivery was down $25.25 at $961 a
   metric ton, while Nymex gasoline for October delivery was down 176 points at
   257.71 cents a gallon.
   Market participants suggested Thursday that the reaction lower to Wednesday’s
   U.S. Department of Energy inventory data was due in part to widespread
   expectations that crude and products stocks would drop due to hurricane related
   shut downs, signs that U.S. demand continues to shrink, but also that market
   attention currently lies elsewhere.
   With prices having failed to build on last week’s bounce, recent buying
   interest has started to exhaust, some suggested, and – allied with widespread
   worries over economic growth in the U.S. and beyond – helped trigger the
   selling Thursday. “The overall picture is one of gloom and uncertainty, the
   market is very well supplied… and confidence is waning…this can’t but have
   a negative impact on the markets,” said Hamza Hamza, fund manager at Sucden
   U.K. Ltd.
   Adding additional pressure on prices, U.S. crude stocks risk swelling in
   coming weeks on the delivery of delayed imports and returning Gulf of Mexico
   production. Should recovery in refinery utilization rates fail to keep up,
   crude inventories could be boosted further.
   “As cargoes have not been discharging the oil sitting afloat is increasing and
   should lead to a crude tsunami over the next two weeks,” said Olivier Jakob of
   Swiss consultancy Petromatrix.
   The U.S. Department of Energy reported Wednesday that just over 1.2 million
   barrels of refining capacity remains shut down to to hurricanes Ike and Gustav,
   while the U.S. Minerals Management Service said Wednesday that 62.5% of the
   Gulf of Mexico’s estimated 1.3 million barrels a day of oil production is still
   shut-in.
   Mexican state oil firm Petroleos Mexicanos said late Wednesday that it has
   shut in 250,000 barrels a day in output after U.S. refinery shut-ins left
   domestic storage capacity saturated, although it expects to get production back
   to normal levels by the end of the week.
   Signs of further crude demand erosion continue to emerge elsewhere, meanwhile.
   Japan’s Ministry of Finance Thursday reported imports of crude oil and
   condensate last month fell 3.3% on year to 4.13 million barrels a day.
   The decline may not be one-time, and the trend may continue as a grim economic
   outlook may curb energy usage, analysts and industry officials said.
   -By Nick Heath; Dow Jones Newswires
   Dow Jones Newswires
   09-25-08 0824ET

2. NFX on the tape saying it lost one platform in the shallow water, two non-operated platforms damaged. Causing them to defer production and cut guidance by about 1.7%. Although it is not a big cut I’d say someone knew it was coming yesterday as the stock fell 5% on no news.

3. Good morning Z-
   In light of your analysis of gasoline situation, would you give a quick snapshot of your thoughts: WNR vs SUN as Dec. timeframe plays. (Chartwise both look similar, in my mind the Northern/Northeastern heating oil/distillates demand will make SUN a better choice).

4. K – I would not touch WNR. Lot of debt, questionable management decisions in past, inability to guide the Street. So if it is a choice between those two I’d take, the bigger, east coast exposed (heating oil pretty tight to in the words of the EIA yesterday) SUN all day long.

5. Don’t want to sound like an ass, but (love that word, now I’m free to go ahead and be an ass) your #2 is the whole argument that got me into TA in the first place.

6. WNR’s acquisition of Giant Industries was a complete disaster, particularly in light of paying top dollar for low-quality assets and borrowing to the hilt to pay for it. And how do they think they can keep paying a dividend?

7. I don’t think it makes you an ass for saying that. There may be other support for the case that I’m not aware of. What I’d tell you is that a 5% drop in the stock on a 2% reduction in 2008 guidance after the stock has taken the hit it has and after 3 production guidance boosts this year, which only fundamental analysis of their plays foresaw, is overdone. This is not like Katrina where they were lower for 2 years and yet the stock has been crushed. This one is story that has made a very sharp fundamental transition from short reserve life to long, from dependence on exploration success to repeatable success etc.

   Antrim – yep, that’s what I was referring to, that and their inability to keep the Street in touch with the day to day ops so that each quarter is a negative surprise when times are tough in crack spread land.

8. By the way, if you skipped reading the post today (I know its shocking but some do) the PXP news is just as good for CHK as it is for PXP. This will insure PXP has the wherewithal to pay for the carry of CHK’s Haynesville program.

9. China puts 3 dudes in orbit.

10. Yeah my list is pretty long. I love listening to the political speeches on TV, they always have that long winded nice intro, and then you hear the qualifying “but” or “in addition I would like to add” and then you hear what they really mean to say, which usually isn’t very nice at all.
    Just want to give a heads up, as you did a very nice job of yesterday, that the refiners have very distinct resistance areas that they are coming up into. Don’t want anybody to enter the party right when the waters get rough. If they break out, there is a lot of room to run, so really no need to be early.

11. Agreed Tater. Same can be said of much of the energy complex right now. Continuing to tread pretty lightly.

12. Tater – just off the cuff, and I know you hate that, but which of the refiners looks best purely from a TA perspective off this list.

    ALJ, VLO, TSO, SUN, HOC and then of the majors XOM, COP, and CVX. Seriously, not looking for anything but a quick glance.

13. The RIG chart is also looking interesting today.

14. The entire energy complex is very much under performing today and coal is just getting hammered.

15. PCX is 20% off of yesterday’s highs. Seems like everybody holding the thing sold into that post-upgrade rally. Coal was generally weak yesterday, so it’s even under performing natural gas.

16. BTW, The south is out of gas.

17. Nat Gas 51Bcf

18. Sam-
    No exageration, first hand experience.

19. Thanks Sane, was on the phone. Somewhat smallish number but myself and the Street were burned by bigger than expected numbers 2 weeks ago. 1 week does not a trend make but its hard to see why it was so short. Could be pricing of the Strip issues in that there is not enough incentive to put the gas away but I think it is probably a function of multiple regional shut ins and the lingering effects of Gulf and Gulf Coast difficulties.

20. Antrim – no demand local demand right now, people just lumping it (coal) in with gas prices and selling it down.

    Gas prices are probably 30 cents above what they were pre Ike in the South.

21. Sorry, I left for a bit. I’ll get on that.

22. antrim – BAC forced WNR to suspend their div(CEO owns ~50% of float) in exchange for an increase of the revolver and a temporary waiver of a convenient violation.

23. Any thoughts on both coal and natural gas prices, with colder weather. Is it natural to assume that prices will improve?

24. RIG – let it show it can get above the 50 EMA.

    XOM, COP, CVX – Tough call as they all have problems. Gun to head CVX has a better long term chart. XOM is probably easier to figure out. Just an aside, OXY looks better than just about any oil/gas chart. Do you know why that would be?

    ALJ, VLO, TSO, SUN, HOC, FTO – All have more or less the same situation on their charts, they went way up and are now back around their ’05 levels and are putting in basing actions. Problem with picking is the closer a stock is to “breaking out”, the closer it actually is to resistance (which is what it would be breaking out of). Gun to head, TSO, FTO, HOC because their charts have pretty clear levels to trade off of.

    Running to a meeting at 10:30. I know the above is pretty qualified and therefore lame, but in truth, I wouldn’t get long any of them right now. Let them break above, then pullback to the breakout level, then decide. Jesse Livermore – “It’s the waiting.”

25. Fred – I wasn’t aware of that with WNR. It is stupid for them to even think of paying a dividend.

26. Gasoline outperforming on all the “lowest level since 1967” headlines today. It sets up an interesting situation. The US is low on gasoline so we import a little more but really that’s a drop in the buck compared to the need to produce more…just at the time refiners are shifting to a great % of distillate production for the winter. Meanwhile, we are low on distillates too and at a time when we should be building inventories much of the infrastructure that makes product will be offline for another couple of weeks. And we won’t be increasing imports of diesel which are very small anyway and more than offset by the amount the US exports. If you get a normal winter, prices in the northeast for HO are going to be very high. So while demand for crude may stay weak globally, prices of products in the U.S. are likely to remain elevated. This could set up a pretty strong first half of 2009 for the refiners which will start to be reflected in their prices in the 4Q08.

27. EL – generally gas upticks in the 4Q period although not as much as you’d think. Will try to remember to put a chart in on that in the gas wrap piece.Coal is a mixed bag and highly dependent now on the export market which is a bit of a new phenomenon. I think people don’t want to own the stocks going into quarter end but after that look for a recovery.

28. Tater – thanks. Re OXY, nothing leaps off the page at me as to why they’d be doing better than their larger Major comps. Agree very much re waiting.

    Oil trying to break green.

    Antrim – they are the gang that couldn’t shoot straight of the refining pack.

29. antrim – Yeah, CEO liked paying himself but they’re operating too close to the edge and could be gone in a heartbeat.

30. While the U.S. is in put out the fire mode, they should buy the distressed assets off the balance sheets of the refiners, lol. When the economy gets back on its feet there won’t be enough capacity to go around.

    Oil now seems to be buying the whole “Bailout will repair the economy” argument.

    I think I will have to add to my CLR position soon.

31. add CLR via options or equity?

32. ZTRADE: Added CLR October $45 Calls for $3.60 on a 4% down day in the stock.

33. Z – Yeah, Bush plan turns s#*t to gold, look at LEHMQ go.

34. unreal

35. And so it starts…

    $4 billion Heartland oil sand upgrader project halted. This was to be a 77,500 bopd facility and was to have begun operations in 2011.

36. the oct42.5 on chk seem to be stuck in the mud…

37. Z – That was the BA Energy upgrader project I referenced the other day. They can’t find financing although they have begun construction.

38. The group is pretty stuck in the mud right now. Waiting on Congress is not what the market is used to. Commodities are torn between thoughts of weak current demand and a recovery sometime next year. They generally look out anywhere from 3 to 12 months when they are not trading less on fundamentals and more on sentiment. CHK’s 2009 CFPS estimate has come off from 11.87 to 10.57 in the last 2 months, with a lot of that fall in the last couple of days. I think it comes off another 40 or 50 cents in the next week to reflect the pullback in production growth next year. So its trading at 4x next years CF…that’s low for a high to mid teens top line grower that will have a good chance of beating numbers on volumes.

39. The reason they can’t find financing is probably because their 4 is probably more like a 6 or 8 now but they haven’t done an updated cost estimate.

40. VTZ – it looks like they have canned construction there. Somebody should make a list of these and send to Pelosi since she seems to think there is plenty of oil for $35, lol.

41. r: #38 – appreciate your thoughts.

42. RL – I appreciate your question on it. My sense is that yesterday, at least one analyst was busy taking numbers down there (everyone has to, that’s a given) but making waves about it. Probably that scrub over at JP Morgan. That’s the only reason I can think of, aside from the gas decline, that would have made it an underperformer yesterday. The real question remains, do guys like Goldman who carry NAV’s closer to $100 per share finally grow a spine and leave their neutral ratings behind for something a little more bullish.

43. Z – what are you thoughts on FWLT?

44. Yeah they haven’t built anything substantial for a good 6-12 months. Anyways, I’m out for a day.

45. CLR – now that’s more like it. Just saying that should kill the trade but I have plenty of wood to knock on.

    Here’s another idea to send to Pelosi. While we are dolling out money. Why not buy Ford a Billion plant to make 65 mpg diesels. They sell them here b/c 1) they have a plant over there that makes them and 2) the emissions standards are different. So I say, buy them the plant, let them sell the cars and the resulting drop in demand will be like a tax cut for the American people. I bet I can get you a pretty good IRR for that. The plant would only cost $350 million by the way but I figure we go ahead and scale it up. The trade deficit will improve both on capital goods and oil as a result.

46. RL – FWLT? Don’t have one right now on the big industrial builders. I think that area gets political as I’ve hear do stimulus packages of late that would include significant $ for infrastructure but at the same time I’m a little worried about project financing availability right now.

47. Z- you killed on those CLR calls…nice trade

48. RL – Not until I sell it.

49. Hmmm…the gain on the Dow, in points, divided by 100 = (wait for it) the gain on crude.

50. I don’t know who turned me on to PRGN, but they were at a Dahlman Global Transp. Conf. You can listen to their presentation at http://wsw.com/webcast/dahlman2

51. El-D – I think that was one of Bill’s mentions. Interesting stock, I continue to watch the SEA decline daily.

52. They claim that the current $2.00 dividend is secure for the next 3 years. Lets see $2.00/10.175= 19.65%.

53. Eld- will have a look. Guess it depends on how much they are charter vs spot market.

    Dow up 300, oil not keeping up with that but still strong. Group pretty green.

54. RIO DE JANEIRO (Dow Jones)–A series of recent oil discoveries in Brazil’s
    deepwater subsalt region could quadruple the country’s oil reserves, the
    president of the Brazilian Petroleum Geologists Association said Thursday.
    Marcio Mello, president of the association, told the local Estado news agency
    that the recent discoveries could put Brazil’s proven reserves to 55 billion
    barrels of oil equivalent, up from current reserves of 14 billion BOE.
    That would move Brazil up in the global oil reserves rankings, from 24th to
    12th, Mello said.
    “The subsalt is not going to put us in the position of a Saudi Arabia, but
    it’s very significant,” Mello said. “Few countries have more reserves than
    this.”
    Mello made the comments on the sidelines of the “Future of Subsalt” event
    hosted by Estado.
    The geologist added that many aspects of Brazil’s subsalt layer were being
    lost in the hoopla surrounding recent discoveries in the Santos Basin, off the
    coast of Sao Paulo and Rio de Janeiro states.
    According to Mello, the subsalt layer runs from southern Santa Catarina state
    to basins as far north as Sergipe and Alagoas states. Petrobras and government
    officials typically refer to the subsalt layer’s northern limit as Espirito
    Santo state, Mello said.
    The problem, however, is that not enough exploration is going on outside of
    the Espirito Santo and Santos basins, Mello said.
    “Here, we only drill a maximum of about 250 wells a year. It will be
    impossible to evaluate the potential of the subsalt region in less than 50
    years if we don’t redouble our efforts,” Mello said.
    For example, about 1,200 to 1,500 wells are drilled each year in the Gulf of
    Mexico, Mello said.
    In addition, the allure of Brazil’s subsalt deposits has crimped development
    of shallow water reserves above the salt layer, Mello said.
    “We have today 14 billion barrels above the subsalt layer, and it’s possible
    to discover another 14 billion to 20 billion barrels,” Mello said.
    Mello noted that shallow water deposits in the Santos Basin – where subsalt
    talk is all the rage – could hold immense natural gas reserves. Petrobras is
    currently developing the Mexilhao gas field, which is located in shallow waters
    of the Santos Basin.
    The shallow water deposits, Mello said, could contain gas reserves of between
    20 trillion and 30 trillion cubic feet. That’s more than the proven reserves of
    Bolivia, pegged at between 12 trillion and 20 trillion cubic feet.
    “There are enormous reserves right in front of the primary consumer market,
    which could solve our energy problems,” Mello said.
    -By Jeff Fick, Dow Jones Newswires

    Dow Jones Newswires
    09-25-08 1345ET

55. Oil doing a major rollover on the day.

56. http://www.gomr.mms.gov/homepg/whatsnew/newsreal/2008/080924.pdf

    Ike destroyed 52 platforms as of today, up from 49 last week. Looks like 13 mbopd and 90 MMcfgpd gone…that’s pretty small.

    29 other platforms have extensive damage and will take 3 to 6 months to repair

    33 others are in the moderate damage category with 1 to 3 month repair timelines.

57. So the thinking goes, bailout plan approval = up stock market = down gold.

58. Another bad day for NFX. I see they sent out a press release three hours ago regarding production estimates. Any thoughts Z?

59. Nothing really in addition to #2 and #7. They just are not getting credit for the transition or the production boosts. But they get hit for the production dip due to a storm. Usually the Street lets you off the hook for storm related losses/hiccups.

60. NEW YORK, Sept 25 (Reuters) – Oil and natural gas
    production in the Gulf of Mexico continued to increase on
    Thursday as companies brought their facilities back online
    after Hurricane Ike, the Minerals Management Service said.
    Some 59.3 percent of U.S. production in the Gulf of Mexico
    of 1.3 million barrels per day of oil and 56.4 percent of the
    region’s 7.4 billion cubic feet per day of natural gas was
    shut, from 62.5 percent and 57.1 percent, respectively, on
    Wednesday, the report said.
    (New York Energy Desk)

    Thu Sep 25 18:01:16 2008 -GMT

61. Off subject but timely – Note, I got 22

    http://www.yardbarker.com/college_football/articles/Most_College_Football_Wins_Division_1_A/300197

62. Compiled By Erwin Shrader
    Of THE WALL STREET JOURNAL ONLINE

    NEW YORK (Dow Jones)–The Bush administration’s rescue plan for the financial
    industry is badly bruised, but congressional leaders appear to be nursing it to
    the finish line.
    Emerging from a two-hour negotiating session among lawmakers, Sen. Chris Dodd
    said they had reached an agreement in principle on a bailout and that it would
    soon be presented to the administration. “We are very confident that we can act
    expeditiously,” the Connecticut Democrat said.
    Appearing alongside Dodd, Sen. Bob Bennett, a Utah Republican, said, “I now
    expect that we will indeed have a plan that can pass the House, pass the Senate
    [and] be signed by the president.”
    The lawmakers didn’t spell out changes they have made to the Treasury
    Department’s proposal, largely to address taxpayers’ concerns and outright
    anger. But clearly the administration has had to bend to certain congressional
    demands. Further details are expected to surface after an extraordinary summit
    meeting in the afternoon at the White House. President Bush, who spoke to the
    nation last night, has summoned top lawmakers, including the two presidential
    nominees, in an effort to impress on Congress and the American people the need
    to pass the Treasury’s $700 billion bailout plan.
    Republican John McCain and Democrat Barack Obama have been sounding a similar
    warning, albeit with caveats. On Thursday, McCain said “the whole nation was in
    danger” and that doing nothing wasn’t an option. Obama, in pressing action,
    added that it is “outrageous” that taxpayers must bear the burden for Wall
    Street “greed and risk,” saying financial executives are also accountable.
    With the bailout plan advancing, investors took heart. In afternoon trading,
    the Dow Jones Industrial Average was up 197 points, or 1.8%, at 11023. The
    Nasdaq Composite Index was up 1.6% to 2190. The S&P 500 gained 1.9% to 1208.
    Crude-oil prices were up almost $1.50 at $107.21 a barrel. Gold contracts fell
    $17.20 to $877.80 per ounce in New York. The dollar was mixed.

63. Weather – Nothing to affect GOM at this time. Models expect some action next week though.

64. Thanks Sam.

    By the way, I know Tater was dealing with roofers yesterday and I just want to say I understand and I may be marketing a book by one of my contractors in the near future.

    “Getting to No. A complete guide to finding new ways to fail”

65. Way too negative ZMAN.

66. You have not met my electrician.

67. Good afternoon everyone,
    Funny you should mention the shippers-
    I was looking at egle this afternoon and what prompted it was a colulmn suggesting that some of the contracts to build might be cancelled (due to credit/dbi rates ect…)and this might alleviate the future worry about over capacity.
    Egle and Prgn(if remember correctly have long term contracts)hmmm….
    Thinking of taking a shot

68. Thanks D – its a good thought. Like I was saying earlier. Big projects that rely on debt financing are in jeopardy right now and that industry has had over supply looming for the last year or so. Could be good news or at least worth a trade. Will throw some shipper thoughts together for tomorrow. Just been watching them get bashed.

69. I believe there was a Dalhman downgrage today(not familair with the firm seems to have caused more selling though)

    On another note read an interesting comment by T, Crescenzi that when the ted spread (t-bill/libor is over 3% (3.17 saw somewhere today)or so there has been a history of 1000 point moves in the market when it narrows-

    Saw it narrowed today.

    Maybe happier days are ahead?(at least for a few months?)
    The move has been over a few month periods

70. Dahlman is a pretty big axe in the bulker space, kind of like Cantor. I’d be interested in seeing either one of those guys or Jefferies’ take on the macro in the space.

71. DOW JONES NEWSWIRES

    Boone Pickens reported on Thursday the purchase of 319,488 shares of Clean
    Energy Fuels Corp. (CLNE), of which he is the founder and a director.
    The stock was acquired by Boone Pickens Interests Ltd. on Wednesday for $15.65
    a share, according to a filing with the Securities and Exchange Commission.
    After the purchases, Boone and his affiliates reported holding 20.2 million
    shares, including 1.9 million held by his wife, Madeleine.
    Madeleine Pickens has reported the sale of 1.1 million Clean Energy shares
    this month.
    Boone Pickens founded Pickens Fuel Corp., the predecessor of Clean Energy
    Fuels Corp., in 1997. The company is a provider of natural gas for
    transportation.
    He advocates “creating a new renewable energy network [to] break our
    addiction to foreign oil,” according to his personal Web site.
    Shares of Seal Beach, Calif.-based Clean Energy Fuels traded Thursday
    afternoon at $16.39, up 4.73%.
    -Brian Kalish; Dow Jones Newswires

    Dow Jones Newswires
    09-25-08 1457ET

72. Thanks for the CLNE Sam.

73. SD SandRidge Energy: Summary of Deutsche Bank conference presentation (24.09 +0.25) -Update-

    At the conference, co says that reserves are growing from methane portion of their Pinon field. They have grown proved reserves company wide to 1.92 Tcfe at the end of 1H08. Co goes into detail explaining what they have captured with 3-d imaging in their Pinon Field in West Texas. They only dig thrusts in the Dugout Creek and Warwick Thrust. They do not count anything in Frog Creek Thrust in their estimated total reserves of 5.1 Tcfe and the 1.1 Tcfe in proven reserves in the field. They have drilled 600 wells in the Pinon… Regarding the Occidental contract, Occidental has to accept production in certain regions for 30 years… Co is hedged ~ 80% of production at a price ~ $9.13 mmbtu. Co explains that they can reduce their capex from $2 bln to $700 mln and still achieve 4% growth in production… Regarding 3rd parties: Co says that 40% of their hedges are with Morgan Stanley and ~20% with Bank of America. Co also had some with Lehman that were worthless before the investment bank went under… Co says that their NAV based on proven reserve is $34 and based on 3P (total proven and unproven) is $96… Co says they are flexible enough to cut down operations if the price of gas continues to erode. They are also looking to sell assets. Co says most of their acreage is on 5 yr leases with options for 5, so their land assets aren’t in jeopardy if they slow down operations. Co says that their access to 3D imaging and pipeline allows them to operate in the Pinon without competition

74. Thanks Bleemus. You sure on that 4% production growth number? Seems pretty low but that hacking back of capex is extreme too.

75. Afternoon all. Oil in la la land. No longer attached to the $ moves or so it seems today. Believing the earlier rally in the broader market that the worst is now behind us obviuosly.
    Once the economic data becomes the main focus again next week it will rollover again.

76. Somebody tell that weathergirl on CNBC that we are at 41 year lows on gasoline storage, not 18 year lows. I guess I’m splitting hairs but if you are going to report the news get it right.

77. Speaking of the shippers, note the huge move in TOPS today on potential buyout rumor.

78. Broader market – the lifespan of this rally is into 30th September plus or minus a day so I hope they can get some points on the table before then. I am then expecting a sell off into the 5th/7th October. I hate to say it but surely this is a case of buy the rumor and sell the fact as where’s the good news going to come from after this. Even Bill Gross on CNBC said earlier that EVEN if this works we have a horrible year ahead next year.

79. ATN added to the list of banned short sell stocks.

80. Z – Go to Fox news, they are “Fair and balanced” and get it right (Know what I mean?)!

81. A – CVS was also. I guess they will ban Short selling eveything before it’s over.

82. What’s the breakout point for TSO for a potential run?

83. ATN??? Why in the world would that qualify?

84. Okay so I knew that technically the $ was going to bounce as I have said for days now. However can somebody please explain to me on a fundamental basis why the $ is bouncing when everyone says this bailout is very negative for the $?

85. I saw that about CVS today and noted the nice little spike.

86. Ram – I was thinking the old high at 19.62. Don’t know exactly Taters level.

    Sam – that’s one way to spark a rally.

87. TOPS – looks like people think DRYS buys them at $6.

88. Nicky – I thought you said the $ was going to bounce big, like to 90. This is a pretty small 2 day move so far. I saw an argument by a currency analyst saying she thought the money would not be all spent at once and therefore the dollar has upside to other currencies. I thought we had already pretty much gotten our dollar bounce in discounting a weaker Europe and so the bailout to me should send the dollar lower.

89. By Brian Baskin
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–Crude oil futures settled higher Thursday in the hope
    that a federal bailout of financial firms would prevent further declines in
    U.S. oil demand.
    Light, sweet crude for November delivery settled $2.29, or 2.2%, higher at
    $108.02 a barrel on the New York Mercantile Exchange. Brent crude on the ICE
    futures exchange closed up $2.28 at $104.73 a barrel.
    Oil prices increased as Congress appeared closer to submitting a final plan to
    rescue financial firms. The package is designed to prevent a full meltdown on
    Wall Street, which would likely have a dramatic effect on oil demand by
    freezing industrial growth and sending unemployment skyrocketing.
    The prospects of a government bailout resonated across the financial world, as
    U.S. stock indices were also up about 2% in Thursday afternoon trading.
    “Financials are up huge today, equities are up huge today; I think crude is
    just following along,” said Matt Zeman, president of trading at LaSalle Futures
    in Chicago.
    The dollar also strengthened against the euro as the bailout package took
    shape, which may have played a hand in limiting crude’s gains. Oil often moves
    in opposition to the dollar, as investors use commodities as an inflation
    hedge. The euro recently traded at $1.4595.
    Futures approached, but didn’t break, a key technical support level around
    $110 a barrel, indicating that there was little appetite for risk, market
    participants said. Volume was extremely light prior to a spurt of last-minute
    trading before the close.
    “It’s been extremely quiet today,” said Tony Rosado, a broker with GA Global
    Markets. “Everything that’s being done is very cautious. Nobody has any kind of
    gung-ho scenario.”
    The mood contrasts with sentiment at the start of the week, when oil prices
    hit $130 a barrel at one point on Monday as investors scrambled to buy in order
    to avoid ending October with a net short position. The record gains were
    thought by some in the market to be the result of tight supplies along the Gulf
    Coast in the aftermath of Hurricane Ike. By mid-week the market had discounted
    the storm, as oil and product inventory draws came in relatively close to
    expectations.
    Front-month October reformulated gasoline blendstock, or RBOB, settled 10.26
    cents, or 4%, higher at $2.6973 a gallon. October heating oil settled 1.25
    cents, or 0.4%, higher at $3.0258 a gallon.

    -By Brian Baskin, Dow Jones Newswires

    Dow Jones Newswires
    09-25-08 1511ET

90. Stepping out for 20 minutes.

91. Nicky – This should do the US $ in at some point;

    http://www.bloomberg.com/apps/news?pid=20601087&sid=aeJQFuvxEkIM&refer=home

    http://www.bloomberg.com/apps/news?pid=20601087&sid=aCl7bFUJzWRk

92. Sorry, stepped out for a bit. That was from a news service. Forgot which one I picked it up from. Didn’t verify their numbers.

93. Z – yes i said the other day it may be $ bullish if the money wasn’t all given at once and I am seeing some mention of that this afternoon.

    I do not expect the $ to go up in a straight line from here. It actually made a low last night which was v down. Now I expect to see a 3 wave bounce to the upside before another move lower. Then we should see the move up to new highs.

94. By Gregory Meyer
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–Complex, privately struck oil trades are migrating onto
    exchanges as Wall Street’s crisis stokes fears of counterparty risk.
    In the wake of Lehman Brothers Holdings Inc.’s (LEH) bankruptcy filing last
    week and uncertainty over other traders’ access to credit, parties making deals
    in the over-the-counter oil market are increasingly turning to exchange
    clearing houses to ensure payment when it’s due.
    The $9 trillion off-exchangecommodities market is far bigger than the market
    for benchmark oil futures traded on the New York Mercantile or ICE Futures
    exchanges. It’s also more opaque, with deals quietly inked between two parties
    at terms that usually aren’t disclosed to the wider world.
    Wall Street firms are heavyweights in the market in their role as dealers of
    swaps, complicated derivatives that let market participants from oil companies
    to pension funds make bets on price moves without needing to worry about taking
    delivery of oil. Left uncleared, a party to a swap deal has to trust its
    trading partner won’t default on it, an arrangement that until recently has
    been seen as safe.
    But with Lehman’s collapse and recent shifts in the business models of Morgan
    Stanley (MS) and Goldman Sachs Group Inc. (GS), both big Wall Street oil
    traders and swap dealers, more contracts are being sent to clearing houses to
    guarantee payment.
    In the week after Lehman’s bankruptcy filing, volumes of major
    over-the-counter oil contracts cleared through the Nymex soared. Between
    Friday, Sept. 12 and the following Friday, cleared volume inbenchmark U.S.
    crude “calendar swaps,” which are pegged to average daily oil prices each month
    and don’t result in delivery, rose 14-fold, according to data from the
    exchange. U.S. crude financial futures quintupled. A derivative based on North
    Sea crude prices nearly doubled. All are over-the-counter products that Nymex
    clears for a fee.
    “My group took some phone calls from parties saying, you know what, we’re
    looking to mitigate some bilateral risk, we’re going to be submitting some
    trades,” said Tom LaSala, Nymex’s chief regulatory officer. He said the
    perceptions of new bilateral risk went “beyond Lehman,” and were “including but
    certainly not limited to” the investment bank.

    Move Away From Obscure Deals

    To be sure, volume in over-the-counter oil trades cleared through Nymex is
    still small in comparison to the benchmark oil futures traded on exchanges.
    Some swaps that banks design for particular customers may also be too
    specialized to clear on an exchange. Though as traders recoil from risk, they
    may abandon some obscure swaps and turn to contracts they can move into the
    perceived safety of a clearing house.
    “Some of these exotic products that have come out of the OTC world may go by
    the wayside,” said Andy Lebow, senior vice president for energy at brokerage MF
    Global Ltd. (MF). “I suspect we’ll see less of those and more vanilla
    contracts.”
    Clearing is an essential feature of futures and options exchanges, serving to
    guarantee trades and mark prices daily. Over-the-counter trades, by contrast,
    lack that transparency. Fears in the credit derivatives market, fueled in part
    by a lack of information, have led bank regulators and lawmakers to demand a
    central clearing system in that business. In Washington, politicians have also
    called for more oversight of over-the-counter energy trading amid worries about
    high fuel prices.
    For Nymex parent CME Group Inc. (CME), which also runs the Chicago Mercantile
    Exchange and Chicago Board of Trade, more clearing means more business.
    “Bilateral risk is immense in times like these,” LaSala said.
    The Commodity Futures Trading Commission last week said it was working to help
    facilitate an orderly transfer of Lehman’s positions. Earlier this month an
    agency staff report called for more clearing of over-the-counter commodity
    deals, arguing it improves “market integrity, transparency, and availability of
    information.”
    After the past week’s market turmoil, there are signs traders don’t need
    government encouragement.
    “You’re going to see an avalanche of trading taken out of the OTC market,”
    said Michael Korn, who brokers over-the-counter energy options at Skokie Energy
    Corp. in Princeton, N.J.

    Goldman, Morgan Effect?

    Most over-the-counter U.S. natural gas trading already is cleared through
    Nymex or the ICE platform, owned by Atlanta-based IntercontinentalExchange Inc.
    (ICE) – a move that reflects the market shake-up in the wake of Enron Corp.’s
    collapse.
    But in oil, most over-the-counter trading is handled by voice brokers who
    arrange trades between parties. A smaller share of trades is cleared,
    reflecting the large number of buyers and sellers who remain in the market.
    Still in question is the effect of recent upheaval among major swap dealers.
    Goldman Sachs and Morgan Stanley this week moved to convert into bank holding
    companies, potentially reining in their oil trading as they’re subject to
    greater regulation and capital reserve requirements. Their new status “may
    reduce their risk profile,” said Michael Wittner, global head of oil research
    at Societe Generale, in a note this week. “This may reduce liquidity in the
    markets, and this key new development is something that we will have to watch
    closely in the coming months.”
    But each has at least two years to comply with rules governing bank holding
    companies. Morgan Stanley sees no changes in its over-the-counter oil commodity
    business, and also plans to seek a permanent exemption to keep its physical
    commodities business, which includes pipelines and barges. “Morgan Stanley
    believes that it will be able to continue to operate its commodities business
    as presently constituted in all material respects,” a spokeswoman said.
    A Goldman Sachs spokesman said “the change will have no impact on our
    commodities business.”

    -By Gregory Meyer, Dow Jones Newswires

    Dow Jones Newswires
    09-25-08 1534ET

95. By Brian Baskin
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–Oil’s rise of almost $17 over the past week is more of a
    last gasp for the bull market than the beginning of a run to new record highs.
    Oil prices rebounded after hitting a seven-month low of $91.15 a barrel last
    week, as a U.S. government plan to rescue financial markets from meltdown took
    shape. Further gains came as world oil supplies appeared to tighten, including
    a slow restart of Gulf of Mexico production following two hurricanes and Saudi
    Arabia’s cut in exports to some of its biggest customers.
    November crude futures settled $2.29, or 2.2%, higher Thursday at $108.02 a
    barrel on the New York Mercantile Exchange, a level reached only once since
    Sept. 3.
    Yet analysts caution that world oil demand, at its weakest level in at least
    five years, is likely to be a driving force – downward – behind oil prices for
    the rest of the year. U.S. and European demand is down from a year ago, and
    some consider it only a matter of time before the contagion spreads to
    fast-growing developing economies. The recent supply cuts and the bailout might
    set a floor under the market, but are unlikely to spark a rally.
    The U.S. bailout, hurricanes and Saudi Arabia’s output cut distracted the
    market from its single-minded focus on weakening oil demand since peaking near
    $150 a barrel in mid-July. These three factors added another degree of
    unpredictability to a market that has often moved opposite the direction given
    by fundamental supply and demand factors.
    Predicting the direction of oil futures is now like “driving in a fog,”
    JPMorgan Chase & Co. (JPM) analysts said in a report Wednesday.
    JPMorgan believes prices will “pivot around $99” for the remainder of the
    year.
    “The global economic outlook is weak … this means that price rallies will be
    capped,” said Harry Tchilinguirian, senior oil analyst with BNP Paribas, who
    sees prices stabilizing around $100 a barrel.

    Demand Distractions

    The demand picture has only gotten worse in recent weeks, as major U.S.
    investment banks and insurers failed, accepted federal aid or were bought out.
    Lawmakers are worried that a long-term freeze in lending will stifle new
    business, leading to reduced economic activity and rising unemployment, both
    potentially catastrophic for oil demand.
    A bailout, which Congress agreed to on Thursday in a modified form, is seen in
    the oil market as the best shot at preventing that doomsday scenario.
    U.S. demand for oil products is at a four-year low, off about 4% from a year
    ago. The International Energy Agency and other forecasters have reduced their
    2008 demand growth projections on an almost monthly basis, as the economic
    slowdown in the U.S. and Europe drags on longer than expected.
    Oil producers can no longer count on fast-growing developing economies to make
    up for lost U.S. and European demand. The IEA, an energy watchdog agency for
    the world’s most industrialized countries, still expects strong demand growth
    in China, but not everyone is so optimistic. China cut interest rates recently,
    indicating that the government may be concerned about preserving the current
    high growth rate as export customers enter recession, said Paul Ting, president
    of U.S.-based consultancy Paul Ting Energy Vision LLC.
    In any event, the gap between China’s growing oil usage and declining
    consumption in the U.S. is growing. Ting estimates that earlier in the year,
    Chinese demand grew at about the amount that the U.S. dropped. In August, China
    was able to compensate for only half the decline in the U.S., he said.
    “The fate of oil prices over the course of the next year or so is very much a
    function of demand deterioration,” Ting said. “U.S. demand has declined by a
    much greater amount than the growth coming out of China.”

    OPEC Wild Card

    Last week, traders cast aside their preoccupation with falling demand to focus
    on supplies as U.S. oil and gasoline inventories plunged in Hurricane Ike’s
    aftermath.
    Hurricanes Gustav and Ike caused little long-term damage to energy
    infrastructure in the Gulf of Mexico, but have so far prevented more 27 million
    barrels of oil from being produced since Labor Day. The two storms have also
    disrupted refining on the Gulf Coast, depleting gasoline stocks to a 41-year
    low.
    Refiners have restored about two-thirds of the capacity shut down before Ike
    made landfall, while about 40% of offshore production has come back in the
    Gulf.
    The market was anticipating cuts by the Organization of Petroleum Exporting
    Countries even as the storms caused U.S. inventories to drop. The group agreed
    in early September to adhere to production quotas, implying that Saudi Arabia
    would need to reduce its output by 550,000 barrels a day.
    Saudi Arabia has reportedly cut supplies to some of its biggest global
    customers, though tanker tracking services have offered conflicting accounts of
    total OPEC exports.
    The hurricanes and Saudi cut helped send oil from near $90 last week to over
    $120 a barrel on Monday. However, neither hurricanes nor OPEC can change the
    overall supply picture, which remains robust relative to weakening demand,
    analysts said.
    “(The cuts) might make up for it in the short term … but at the end of the
    day the outlook for the U.S. and global economies means commodities will come
    under pressure,” said Rachel Ziemba, an analyst with the RGE Monitor, a
    financial research Web site. Ziemba sees oil prices stabilizing between $90 and
    $100 a barrel, depending on whether OPEC enacts further cuts.
    Ting also sees OPEC as the wild card, as the group has the ability to reduce
    production quotas as demand sinks. Whether OPEC members have the will to comply
    with these cuts will determine whether oil stabilizes around $90 a barrel or
    ricochets between $80 and $120, he said.
    “That’s going to be the line in the sand,” Ting said. “Either oil moves up if
    OPEC is very disciplined, (or) if it’s difficult for them to engineer a
    coordinated cut, we could see a deterioration in the oil price.”

    -By Brian Baskin, Dow Jones Newswires
    Dow Jones Newswires
    09-25-08 1543ET

96. 4-Star Stocks Poised to Pop: Petrohawk Energy

    http://www.fool.com/investing/general/2008/09/25/4-star-stocks-poised-to-pop-petrohawk-energy.aspx

97. Change in dow divided by 100 = change in oil again. Silly but true.

    Seemslikebeerthirty.

98. It tis, it tis. Tini in 6 minutes. Hoo Rah!

99. On tops

    Probably will happen 6 dollar buyout

    On bulkers–be careful, spot rates have plumented. Many companies bot ships at record highs due to the strong market. The loan covenants say they have to maintain less than 65 % debt to asset coverage so if ships values fall they have to come up with more colateral–sound familiar??

    I’m in DWT and FREE and wish I wasnt. FREE has about a 3year coverage with long term contracts.NMM has alot of tme charter coverage but not much equity. The divys could be at risk if rates stay low

    Drys is down from mid 70’s to low 40’s in less than a month

    The rate enviroment is like 4 to 5 dollar NG

100. more on top

     1. the cfo resigned
     2.the ceo go 1.7 m shares to waive his severence payment

     eorge Economou could be about to make a bid for Top Ships at a price well above the latter’s current value.

     In a filing to the US Securities & Exchange Commission (SEC), Economou announced an “exclusivity agreement” with Top to explore the possible purchase over the next fortnight.

     “Top Ships Inc announced today that it has entered into an exclusivity agreement with an affiliate of George Economou, the Greek shipowner, providing for the exploration by such affiliate of the possible acquisition of the company at a potential price of $6.00 per share,” a statement from Athens-based Top read on Thursday.

     “The exclusivity agreement also provides that the company has agreed to reimburse such affiliate’s out-of-pocket expenses, up to $1.0 million, in certain circumstances,” Top’s statement continued.

     The exclusivity agreement expires on 8 October but neither side explained what constitute the “certain circumstance” under which Top would refund Economou’s affiliate $1m.

     The affiliate in question is Sphinx Investment Corp, a wholly-owned subsidiary of Liberia-registered Maryport Navigation Corp which is controlled by DryShips chief executive Economou.

     Sphinx currently owns 4,133,333 “sole vote power” units in Evangelos Pistiolis-led Top, equating to 14.76% of the total. Economou, thus, currently holds around 4.1m shares in Top.

     The mooted $6-per-share offer is well above Top’s closing price of $3.81 on Wednesday, a day the tanker and bulker owner saw its stock slip almost 5.5%.

     That closing price is just a single cent off Top’s 52-week low price.

     Evangelos Pistiolis.

     Top is currently valued at $78.14m whereas Economou’s offer at $6-per-share, should it materialize, would value the owner at $123.05m.

     It was only on three weeks ago that Top filed an SEC document showing that Pistiolis had taken restricted shares in exchange for waving payment rights in any possible change of management scenario.

     “The consideration used to purchase the securities reported herein was the waiver by Mr Pistiolis of the right to receive pursuant to his employment contract with the issuer three years’ annual base salary in the event of a change in control (as defined in the employment contract) of the issuer in exchange for receiving the securities reported herein, which are restricted shares,” the 4 September filing read.

101. Not sure if you are interested in coal but I found a an interesting buyout deal.

     CLF for ANR. Deal is 0.95 shares of CLF plus $22 cash for each share of ANR. Shareholders vote on it Oct 3rd. Only thing giving it a question mark is a hedge fund is trying to keep it from happening. If interested let me know your thoughts.

102. Jim Rogers on the bailout:

103. Senator Shelby has just walked out of the White House and announced no deal has been reached!!

104. I found this interesting.

     Jim Rogers on financial crisis…

105. oops, just saw that FiveandDimer posted it too. Too funny.

106. Ram #82 and Z #86,

     I’m looking at a chart Tater did on TSO which shows a bold resistance line at 18.80. I also remember he indicated the play began if it could hold above 18.80. Some water has gone over the dam since then but I think it still is valid.

107. Nicky #84,

     Just a thought. I think the $ is up on some relief from fear of a seize-up in our banking system which would be devastating for the $.

     Bailout S/T = plus for $, Bailout L/T = minus for $.

108. Hi Mahout – yes you may be right. Oil isn’t going with the $ trade at all. So what happens if the bailout deal starts to look shaky again tomorrow does the $ sell off and oil sell off too?

     Broader market futures looking okay right now.

     Mike Darda said on Fast Money if you look at the credit markets right now they are telling you something about this deal ie they are still absolutely frozen.

109. Nicky #108,

     I would not be surprised if that’s exactly what happens tomorrow. However, I am supremely confident(let me revise that)I kinda think that there will be a Bailout plan enacted quickly simply because not to do so would put many entrenched sitting Senators and Representatives at great election risk in just a few days.

110. Thanks Mahout.

111. Nicky,

     Further, I for one do not think the Bailout plan as presently outlined to us will work. The real important issues revolve around these insane instruments in huge quantities largely unregulated, some completely unregulated. The unlimited creation of these nutty instruments such as credit default swaps(CDS) plus an unreasonable FASB rule that requires Marking to Market when in some cases that does not make sense, and the lack of uniform standards on these financial instruments, and the total lack of transparency on these matters and the instruments themselves has brought us to this crisis. Yes, greed has played a part. But we will always have greed. But we didn’t have CDS’s until JPM invented them and got away with it. They created an unregulated and unsupervised monster.

112. Nicky,

     A simple way to state it is we need reform from the ground up not from the top down that we have in the proposed Bailout legislation.

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