Tuesday Morning – More Earnings

136 thoughts on “Tuesday Morning – More Earnings”

1. FSLR called to open at $170…that’s just sick.

2. By Nick Heath
   Of DOW JONES NEWSWIRES

   LONDON (Dow Jones)–Crude oil edged higher in Europe Tuesday, driven by
   stronger regional equity markets, but expectations of weakening demand linked
   to a slowdown in global economies still kept a handle on prices.
   ICE Brent crude fell back below $60 a barrel to a new 20-month low at one
   stage, with traders still reacting to Monday’s raft of bearish U.S., European
   and Chinese manufacturing data, analysts said.
   “There’s obviously great concern on the global growth outlook. The real
   economy has definitely not bottomed out yet,” said Walter de Wet, head of
   commodity research at Standard Bank in Johannesburg.
   Equity markets are expected to remain an intermittent influence on crude
   prices, particularly in the run up to the announcement of the winner of
   Tuesday’s U.S. Presidential election, analysts said.
   “We feel that despite some occasional disconnects between oil and equity price
   movements, any large swings in the stock market will continue to have an impact
   in the oil markets,” said Marius Paun, energy broker at ODL Securities in
   London. “All eyes will surely be on the U.S. presidential elections, as a quick
   reaction in equities cannot be ruled out that could easily spill over into
   oil.”
   At 1221 GMT, the front-month December Brent contract on London’s ICE futures
   exchange was up 27 cents at $60.75 a barrel, having earlier fallen to $58.38 a
   barrel, its lowest since Feb. 21, 2007.
   The front-month December light, sweet, crude contract on the New York
   Mercantile Exchange was trading 62 cents higher at $64.53 a barrel, up from an
   intraday low at $62.25 a barrel.
   The ICE’s gasoil contract for November delivery was down $6 at $639.00 a
   metric ton, while Nymex gasoline for December delivery was up 175 points at 138
   cents a gallon.
   Crude buyers continue to wait for confirmation of Saudi Arabia’s response to
   the Organization of Petroleum Exporting Countries’ recently announced 1.5
   million barrels a day production cut.
   Industry analysts say while Saudi Arabia, Iran, Kuwait and the United Arab
   Emirates will probably shoulder the bulk of the supply cuts, Iran, Kuwait and
   the U.A.E have already been reported taking steps to adhere to the reduction.
   “This is causing some apprehension, as it indicates that the Saudis do not
   seem to be rolling back supply with the same degree of urgency that others
   have,” said Edward Meir, analyst at MF Global in New York.
   Some industry sources in Europe said Saudi was unlikely to contact its
   European buyers on volume cuts until December official selling prices are out,
   expected later this week.
   Meanwhile, lagging oil products prices have raised the specter of refiners
   reducing their runs to avoid making a loss on the products they sell. It’s a
   development that, should it emerge, would further erode demand for crude.
   Nymex gasoline refining margins, or crack spreads, were seen at around -$6 a
   barrel according to industry sources Tuesday, implying a negative return for
   producing gasoline.
   An official from the French CGT union said late Monday that French oil major
   Total SA (TOT) may pare back its gasoline production capacity in Europe amid
   what it sees as an “irreversible” decline in demand from the U.S. Staff at
   Total’s European refineries are being asked to reflect on how best to adapt,
   the union official said.
   “(At these levels) refiners will not produce anything other than the basic
   minimum gasoline output,” said Jim Rintoul, analyst at London-based trade
   advisory TheOilTrader.com. “During the 1990s, refineries were closing because
   margins were so poor. We might now see another cycle of cost cutting in the
   refinery sector.”

   -By Nick Heath, Dow Jones Newswires (Angela Henshall in London and Kai-Pin Yee in Singapore contributed to this
   item)

   Dow Jones Newswires
   11-04-08 0740ET

3. New ETF’s

   3x BEAR FUNDS
   BGZ      3x large cap
   TZA      3x small cap                 
   ERX      3x emerging market bear
   FAX      3x financial market bear

   3x BULL FUNDS
   BGU     3x large cap bull
   TNA      3x small cap bull
   ERX      3x energy bull
   FAS      3x financial bull

4. Thanks Sam, good to have ya back.

   ERX eh? Cool beans.

5. Chrysler on the tape this morning, saying that the “worst of the storm is over.”

   Wonder if they are talking about the weather?

   Anyway, corporate credit (CDS) clearly better this morning.

   Let’s call it IG 191 (-8 from close) to start.

6. Any thoughts re PQ earnings and operations release?

7. Thanks Bird

   On EOG CC

   No change in their core philosophies so far. Will let you guys know.

8. oops just noticed above..sorry

9. John – my thoughts are in the post.

10. EOG CC:

    Plan not to grow N. American gas below $8. In short, will not grow gas if gas is price too low.

    Do see good growth in liquids

    Don’t see themselves doing M&A or large acreage positions

    Drilling inventory of 15 years, so no hurry to add new prospects

    If there is a moderate or cold winter they will pursue the higher growth path (14%).

    Already seeing some decrease in some service costs

11. EOG CC #2

    70 MMcfgpd curtailed in Rockies due to low price in October.

    80 MMcfgpd curtailed accidentally in Trinidad due to mechanical problem.

    Still going to hit their 2008 15% target

12. Oil up as Saudi (doesn’t) deliver, lol. Real battle between falling demand and falling supply now to dictate price.

13. IG 193 (wider)… direction counts more than levels (because levels are still amazingly, stupidly, scary wide in credit)

14. Those EOG calls gonna pay off nicely…

15. EOG CC #3.

    At $55 oil, they see 100% IRR on their Core acreage Bakken wells, 30% on the non-core acreage wells.

    Pilot CO2 trial results due mid 2009 to see if they can increase 10% recovery factor.

    BC Horn River – believe their 3 wells are the best completed there to date.

    North Barnett oil – slow ramp first quarter late 1Q09. Looking for 250 bopd per well here. This is the first rate given. May be low to some people’s expectations but EOG has never said it would be quick to build.

    Haynesville – 150,000 acres, not yet fracced on first well.

16. EOG CC #4

    Said they “may surprise some people with regard to international results in 2009 (N. Sea, Trinidad, China)”

17. EOG balance sheet management sounds just about perfect for this environment. Not too conservative, but debt level and maturities very appropriate and manageable. Like the undrawn $1B revolver too. Good liquidity backstop.

18. EOG CC#5

    Estimated debt to cash flow on $75/$7 deck, EOG could pay off its debt entirely within 3 months. Wow. That’s stronger/faster than I said in the post because I really didn’t think they’d get that aggressive. They say this is the Street’s current amalgamated view of what they could do and not what they will do but they are presenting it and not refuting it. Wow.

19. EOG CC #6

    Gas Macro Thoughts From Mark Papa:

    Thinks supply with only grow 0.6 Bcfgpd in 2009. That’s like slamming on the brakes from 100 MPH. He’ll need to back that comment up in the Q&A.

20. EOG Q&A #1

    Gas Macro from Papa:

    Canada down 0.9 Bcfgpd
    Gulf of Mex down 0.5
    Barnett up 0.2 (that’s just way low to current Street thinking)
    Rockies up 0.3 (limited by Rexx)
    LNG up 0.4
    Rig Count (200 to 400 drop overall)
    EOG has moved 3 rigs out of the Barnett, seeing others doing same.

21. EOG Q&A #2

    Talking about not doing M&A but see lots of farm in opportunities next year. Maybe doing a lot of this 2009. Don’t see getting into any competitive bidding war for properties.

    The tone of the call is perfect for this environment. If I were not already long I’d be adding here.

22. EOG Q&A #3

    Bakken capacity. “Subsumed” by all the success.

    Trucking half of their volumes now (which is costly). By mid year they see getting the pipeline capacity in place to alleviate the trucking differential. Nice. Also building a rich gas pipeline to take away the gas they are stripping. Being built by EOG.

23. z – i’ve been hopping between calls… did EOG say anything about communication between 3 forks and middle bakken?

24. Not that I heard but I did grab a cup of coffee for a minute…I don’t think so.

25. Correction #3

    ERY = 1000® EnergyDirexion Energy Bear 3x Shares ERY Index -300%

    NOT ERX!!!!!

    http://www.ibtimes.com/prnews/20081103/direxion-launches-eight-new-leveraged-etfs.htm

26. EOG Q&A #4

    BEXP, CLR, WLL probably get a boost off this EOG call.

    I think analysts will get off this call, maybe mid call and pound table here.

    Thanks for the correction Sam

27. EOG Q&A #5

    Costs coming down: 5% decline so far in Rigs and other areas plus fuel costs down.

    Three Forks Sanish – don’t see too much prospectivity in the Parshall/Austin. Outside of that area they think it is highly prospective. I recall them saying last quarter the TFS was prospective only on a spotty basis. This is a different, more bullish tone. 2/3 of their acreage is outside Parshall area.

28. don’t forget about the little call option in the Bakken… KOG

29. ZTRADE: $10KP TRADE

    Sold the (2 of the 5) EOG $85 November calls for $3.50, up 63%. Still holding the November $75 calls here. See comments in the post and comment area for reasoning here after a very good quarter, I’m just locking in a rapid rise in the most sensitive call position.

30. By Gregory Meyer
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–Crude oil futures rebounded more than $2 a barrel
    Tuesday on signs recent cuts from the Organization of Petroleum Exporting
    Countries are taking hold.
    Light, sweet crude for December delivery was recently up $2.52, or 3.9%, at
    $66.43 a barrel on the New York Mercantile Exchange. Brent crude on the ICE
    Futures exchange rose $2.38 to $62.86 a barrel.
    In September, OPEC members committed to comply with output quotas, effectively
    taking barrels off the global oil market. Amid a sharp decline in crude prices,
    the cartel in late October agreed to further trim output by 1.5 million barrels
    a day, effective Nov. 1.
    The effects of the first decision began to materialize last month, a Dow Jones
    Newswires survey showed. OPEC’s daily production fell by 90,000 barrels a day
    from September to 32.050 million barrels a day. Output by the group’s 12
    members with production quotas fell more dramatically, with countries pumping
    150,000 barrels a day, or 0.5%, less at 29.800 million barrels a day, according
    to the survey, which is based on input from oil traders, analysts and industry
    sources.
    “It seems OPEC members are adhering to their cuts,” said Timothy Jennings,
    president of brokerage Vantage Trading in New York. “That provides as a basis”
    for the move higher.
    Traders also pointed to a Reuters report that top OPEC exporter Saudi Arabia
    has already significantly cut crude supplies to some customers. One source
    cited by the news service estimated Saudi Arabia’s exports at about 900,000
    barrels a day lower than August levels.
    In Asia, oil refiners and a major global oil company told Dow Jones Newswires
    Tuesday that they haven’t yet received formal notice from Saudi Arabia on term
    supply allocations to the region.
    Crude also followed Asian and European stock markets higher, as equities have
    become a key indicator of economic sentiment for oil traders concerned about
    the strength of global demand. In the U.S., stocks opened higher as the
    presidential election was underway.
    Besides digesting election results, the market on Wednesday will also take in
    a fresh set of weekly data on U.S. oil stockpiles, supply and demand. In the
    week ended Oct. 31, analysts polled by Dow Jones Newswires predict inventories
    of crude rose by 1.2 million barrels, gasoline fell by 500,000 barrels, and
    distillates, which include diesel and heating oil, rose by 1 million barrels.
    The poll forecast the rate of refinery use rose by 0.4 percentage point to
    85.7% of capacity.
    On the Nymex, oil products futures were stronger than crude. Front-month
    December reformulated gasoline blendstock, or RBOB, rose 7.30 cents, or 5.4% to
    $1.4355 a gallon. December heating oil rose 11.12 cents, or 5.6%, to $2.0940 a
    gallon.

    -By Gregory Meyer, Dow Jones Newswires

    Dow Jones Newswires
    11-04-08 0939ET

31. Thanks Bird, I won’t. Note the TFS comment in 27.

32. #31. yep. thanks. caught it!

33. Bird – I’ve never been a big fan of BEXP but I think they are in the right place at the right time for the Bakken at is cresting $8. CLR obviously too and I am a fan of those guys.

    FSLR at 171. Zoiks.

    HK putting on a little rebound here a little better than the group.

    GMXR – missed the dip, too busy, stupid miss there.

34. more GMXR – may add that anyway with any cooling today, nasty spreads so you don’t want to pay up.

35. EOG Q&A #5

    Haynesville – split pretty even between Tx and La. Frac results on next Q call. 2nd well drilling now.

    LNG thoughts: See it up 0.4 Bcfgpd and there is no capacity to take more into Asia at this time. Think lowest price anyone will get for their LNG will be to take it to the U.S.

36. CNBC as always ahead of the game talking about Solar stocks up today due to a perceived Obama victory.

37. Z – “more into Asia” from where? Not quite getting this comment.

38. He’s saying that new liquefaction coming on globally cannot be shipped to Asia as Asia is maxed out on regas capacity.

    Half listening to the APC call now.

39. Morning Z.. #27 implication for CLR regarding Parshall etc.. assuming positive but not sure

40. Gary – yep, CLR not a big player in the Parshall, but the biggest holder of Bakken area so the implication is confirming what CLR and WLL are saying outside partial, dual zone potential from the m. Bakken and TFS.

41. Tater – FSLR when you get a chance please?

42. Good moring Z — Are you looking to enter RIG before the call tomorrow?

43. ZTRADE:

    Sold the FSLR November $125 Call (QHBKE) for $51, up 325% since entry on 10/24. I continue to hold the January $210 Calls in the $10KP.

44. Morning Coug – I may take DO or NE or RIG pre that call. Probably DO but it will be a small position.

45. Natural gas up 33 cents to 7.17 on the back of up 4.5% oil which is turn up on the Saudi comments and a falling dollar. December UNG calls now down about 30%, still holding. Chart on gas looks constructive to me.

46. I’ll tell ya, its not often that I get to sell a call for $51. Glad to own the $10KP January $210 calls on FSLR today as they are finally back above water but I will be quick to take profits if this mo-mo dies in a “buy the poll, sell the election” event.

47. Z- Thanks for #44. Congrats on the FSLR trade. Very nice.

48. Wow, number 1 performer in the large cap E&P group today: CHK.

49. #48 – spoke to a couple of friends of mine that work in the convertibles space. They said they are seeing the forced selling by hedge funds drying up in their space. (They are jumping up and down about how cheap everything is convertibles wise.) This may be beginning to carryover into equities like CHK that were on the forced sale list for quite a while.

50. Thanks 1520, good thought, that.

51. IG 187

52. ZTRADE: $10KP Trade

    Sold the EOG $75 Novembers Calls (EOGKO) for $12, up 100% since entry on 10/17. I continue to hold the half position in the Nov $85 Calls here.

53. FSLR –
    DId some research on the TA resistance areas that I have on the 60 min chart at the link (probably the last page). If you look at the orange lines, they did prove to be temp areas of resistance. The stuff I read-up on says that if one area is broken, the next area will act as a big magnet for price. Apparently true in this case. Personally, I tend to think that you are totally dialed in on this stock and you just need to what you think is right.
    TA – I don’t see anything to dispute what I saw when I made the chart, 180 still looks like an area of resistance.

54. SD staging a breakout of sorts

55. ng up 43 cents with the 1 yr strip up about 40 cents

    very bullish for ng companies

56. Dman – see that, moving with the other stuff but better since it has been so beaten down. Earnings later this week. Still holding my almost dead Nov 17.50 calls.

    Bill – people really listening to Mark Papa at EOG. His call that supply will be flat next year is a big change from popular thinking. Glad that Aubrey has already reported so he can’t say that the Barnett is going to grow more than 0.3 Bcfgpd through him alone next year.

57. The following is a press release from Standard & Poor’s:

    PARIS (Standard & Poor’s) Nov. 4, 2008–Upward rating momentum for Russia and
    its oil and gas industry has come to an abrupt end with the dramatic drop in
    oil prices and major turmoil in the global financial markets. Still, our
    ratings and outlooks on the majority of Russian oil and gas companies remain
    unchanged, said Standard & Poor’s Ratings Services in a report published
    today, titled “Russian Government Initiatives Mitigate Liquidity Pressures In
    Emerging-Market Oil & Gas Industry.”
    “We expect the various liquidity measures taken by the Russian government
    and initiatives to reduce the tax burden on the oil industry to have a
    stabilizing effect, particularly as liquidity and cash flows in fourth-quarter
    2008 will be significantly impacted by lower oil prices and the export tax
    lag,” said Standard & Poor’s credit analyst Karl Nietvelt.
    These measures, combined with our use of conservative oil price
    assumptions when analyzing oil and gas companies, means that the impact on the
    ratings in the sector in Russia, Kazakhstan, and South Africa is likely to be
    limited.

58. By Jim Jelter

    Energy stocks moved higher in early trade Tuesday, pulled up by a big rally in
    crude-oil prices and stellar gains by some of the biggest names in the
    oil-services sector.
    The Amex Oil Index was recently ahead 5.5% at 987 points, turning around
    Monday’s modest retreat.
    Underpinning the gains was a $4.17 leap in crude-oil futures to $68.10 a
    barrel on the New York Mercantile Exchange, which traders were pegging to a
    weaker U.S. dollar as Americans troop to the polls to elect a new president.
    Anadarko Petroleum Corp. (APC) was leading percentage gainers, up nearly 9% at
    $36.08 a share.
    Anadarko reported after Monday’s closing bell a third-quarter net profit of
    $2.17 billion, or $4.62 a share, up from $481 million, or $1.03 a share, in the
    year-ago period. The company said that excluding one-time items, the profit was
    $1.62 a share, far outpacing the $1.48 analysts polled by Thomson Reuters had
    expected. Higher energy prices were the main ingredient in the report, pushing
    revenue to $6.15 billion from $3 billion last year.
    Other big gainers in the oil group included Royal Dutch Shell (RDSA) and
    ConocoPhillips (COP), both up about 6.6%, while refiner Valero Energy Corp.
    (VLO) was showing a 6.7% gain.
    The Amex Natural Gas Index was up 6% at 450 points, led by Southwestern Energy
    Co.’s (SWN) 12% leap to $38.15 a share.
    But the biggest sector gains were seen Tuesday on the Philadelphia Oil
    Services Index, which was sporting a 7.4% advance to 159 points. All of the
    index’s 15 components were solidly in the green Tuesday, led by 12% gains for
    Weatherford International Ltd. (WFT), National Oilwell Varco Inc. (NOV) and
    Rowan Companies (RDC).
    -By Jim Jelter

    Dow Jones Newswires
    11-04-08 1120ET

59. Thanks for that story Sam.

    Care to give your market reaction thoughts on the following, inquiring minds and all?

    Obama win with Senate at >=60 Dem, at under 60 dem.
    McCain in both cases too. Thanks.

60. Z,

    Are you still holding the SWNKH ?

61. Re SWNKE, yep, up 40% from negative this morning, that one I played the wrong option on for earnings and am getting a bit lucky right now. Probably should have played same or higher strike December calls.

62. sorry, should have typed SWNKH in last comment.

63. Any thoughts about volume today?

64. Re Volume – pretty tepid.

65. Fair warning, the HK Nov $15 calls are on the table for a half position sale above the market.

66. Bothering me. So much happy happy joy joy action on TV, I’m beginning to feel like we are about to get the Mr Hyde treatment soon. Maybe I’m just getting conditioned into having that kind of attitude.

67. FYI, the $10KP is about 50% cash after that last sale and I may go to 70% before the end of the day. Not fearful of missing some kind of election rally but don’t want to be caught up in hard profit taking session…rather have the firepower to take advantage of that event.

68. Tater, we’re in sync then as I typed 67 before I saw your 66.

    Bird – how’s the credit market hanging?

69. Z, still holding the HK 17.50’s?

70. ZMAN – Still thinking about losing the November XOM’s soon?

71. Yes Popeye, 3 December $17.50 HK calls held in the $10KP.

72. Ram – yep, they are starting to play catchup to the other Majors today and look nice on a chart (to my layman’s eye at least). Just a little concerned that there may be an acceptance speech with their name on it. Silly, I know and were it the common and not an option I wouldn’t be concerned at all.

    If the market going up today is a validation of an Obama victory, is oil up 9% the same? Hmmm. I’ve always thought that putting more burden on the oil companies will result in less, not more, capital expended towards exploration and development, which translates into higher, not lower prices.

73. I’m part of the offer on those HK November $15 calls so if any wants to come take them off my hands so I can go to lunch that would be great, lol.

74. BTW I paid 2.46 for diesel at the marine fuel dock (no road taxes) yesterday.

75. Dollar down 2.2%
    Oil up 9%
    NG up 6%

    Thanks for the color Pop. Someone asked me the other day why it is so much more expensive than gasoline and I said environmental requirements and taxes. What does diesel go for at a regular station in your area?

76. How much do you want for them?

77. Volume on USO looking to be heavy

78. I’m offering at $5.

    Good day to be a refiner, oil may be up 9.5% but mogas is up 12.5%, heat up 9.6%

    UNG hanging with NG up 6%

79. #59 – Smart folks I deal with are shorting today. I’m neutral. Why? Because this economy is still going down. Earnings are falling. On and on. I don’t think we are at the bottom. I think that this will be a “Stock traders” market for the next year or so. You get a 20% or even a 10% return, take it. I like MER preferred F right here at $17.22 with a yield of 10.50%. Callable at $25. Let’s say it’s called in 5 years, that’s a 20% total return per year. MER is being bght by BAC, so I think it’s alright. Stock pickers market.

80. Thanks Sam, appreciate the input/insight.

81. TAN up another 15%. Shoulda,woulda,coulda…still may.

82. 2.67 is the lowest price in the LA (CA) area. 2.85 is probably av.

83. By Gregory Meyer
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–Crude oil futures shot above $71 a barrel Tuesday as the
    dollar lost value against the euro and signs emerged that recent cuts from the
    Organization of Petroleum Exporting Countries are taking hold.
    Light, sweet crude for December delivery was recently up $6.97, or 10.9%, at
    $70.88 a barrel on the New York Mercantile Exchange, after climbing as high as
    $71.09, the highest since Oct. 22.
    Brent crude on the ICE Futures exchange rose $6.47 to $66.95 a barrel.
    Oil traded steadily higher as the dollar weakened against the euro, requiring
    more of the U.S. currency to buy a barrel of the dollar-denominated commodity.
    The euro was recently $1.3027, from $1.2645 late Monday.
    “You’re just seeing the dollar give back a lot of its gains in last couple
    sessions. That’s leading a lot of commodities higher,” said Raymond Carbone,
    president of brokerage Paramount Options in New York.
    In September, OPEC members committed to comply with output quotas, effectively
    taking barrels off the global oil market. Amid a sharp decline in crude prices,
    the cartel in late October agreed to further trim output by 1.5 million barrels
    a day, effective Nov. 1.
    The effects of the first decision began to materialize last month, a Dow Jones
    Newswires survey showed. OPEC’s daily production in October fell by 90,000
    barrels a day from September, to 32.050 million barrels a day. Output by the
    group’s 12 members with production quotas fell more dramatically, with
    countries pumping 150,000 barrels a day, or 0.5%, less at 29.800 million
    barrels a day, according to the survey, which is based on input from oil
    traders, analysts and industry sources.
    OPEC member Algeria trimmed oil production by 71,000 barrels a day starting in
    November, the APS news agency reported Tuesday.
    “It seems OPEC members are adhering to their cuts,” said Timothy Jennings,
    president of brokerage Vantage Trading in New York. “That provides as a basis”
    for the move higher.
    Crude also followed stock markets higher, as equities have become a key
    indicator of economic sentiment for oil traders concerned about the strength of
    global demand. In the U.S., the Dow Jones Industrial Average was recently up
    more than 270 points.
    The oil market Wednesday will take in a fresh set of weekly data on U.S. oil
    stockpiles, supply and demand. In the week ended Oct. 31, analysts polled by
    Dow Jones Newswires predict inventories of crude rose by 1.2 million barrels,
    gasoline fell by 500,000 barrels, and distillates, which include diesel and
    heating oil, rose by 1 million barrels.
    The poll forecast the rate of refinery use rose by 0.4 percentage point to
    85.7% of capacity.
    Refined oil products led the market. Front-month December heating oil was up
    21.42 cents, or 10.8%, to $2.1970 a gallon on forecasts of cold weather in the
    U.S. Northeast and Midwest over the next two weeks.
    Front-month December reformulated gasoline blendstock, or RBOB, rose 19.66
    cents, or 14.4% to $1.5591 a gallon.

    -By Gregory Meyer, Dow Jones Newswires; 201-938-4377; greg.meyer@dowjones.com

    Click here to go to Dow Jones NewsPlus, a web front page of today’s most
    important business and market news, analysis and commentary:
    http://www.djnewsplus.com/al?rnd=qYsyrujoKFsPavOl5yfDKQ%3D%3D. You can use this
    link on the day this article is published and the following day.

    Dow Jones Newswires
    11-04-08 1224ET

84. Investors less than wowed by PQ results. Not going to add any calls there for now.

85. Sam or anyone, do you see the estimates yet for the EIA numbers tomorrow?

86. Dman #77,
    Interested to get your thoughts on that.

87. Nothing yet. Usally I see it closer to the close.

88. By David Bird
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–The U.S. Department of Energy said Tuesday it doesn’t
    expect to issue any more crude oil loans from the Strategic Petroleum Reserve
    to refiners affected by hurricanes Gustav and Ike.
    DOE loaned refiners 5.389 million barrels of crude oil from the emergency
    stockpile beginning on Sept. 8. The last delivery of SPR crude was made on Oct.
    14.
    Refineries have essentially brought all units back on line that were shut down
    by the hurricanes. Crude oil processing at refineries fell to as low as 11.5
    million barrels a day in the week of Sept. 19, the lowest level since Jan. 11,
    1985, and a drop of nearly 3.8 million barrels a day, or about 25% from
    pre-storm levels at the end of August. Gulf Coast refiners bore the brunt of
    the lower operations, but some Midwest refiners had to slow operations due to
    pipelines outages.
    Refiners are scheduled to repay the oil loans by shipping crude to the
    reserve, plus an unspecified additional amount of crude as a premium payment,
    between January and May 2009.
    When refiners received the loans after the hurricanes disrupted U.S. Gulf
    Coast oil production and some pipeline flows, crude oil prices were above $100
    a barrel.
    Nymex crude oil futures for delivery between January and May 2009 now are
    trading near $70-$72 a barrel. That means that refiners receive an implied
    profit by receiving higher-valued oil from the SPR and returning oil at a lower
    cost, if the price trend continues.
    “When a refiner enters into an emergency-exchange contract, they accept the
    risk of paying back the oil regardless of the subsequent market conditions,”
    said Healy Baumgardner, a spokeswoman for DOE. “The government is made whole by
    the return of the barrels and compensated by the premium barrels regardless of
    the price.”
    DOE decided to offer the loans, rather than offer SPR crude for sale, to speed
    the process, she said. A sale would have required a presidential declaration of
    a severe supply interruption and a competitive sale process which would take 13
    days. DOE offered for sale 30 million barrels of crude and eventually sold 11
    million barrels in a coordinated global drawdown and sale of oil with the
    International Energy Agency in the aftermath of Hurricane Katrina in September
    2005.
    SPR currently holds 701.8 million barrels of crude in underground salt caverns
    along the U.S. Gulf Coast.

    -By David Bird, Dow Jones Newswires
    Dow Jones Newswires
    11-04-08 1229ET

89. NEW YORK, Nov 4 (Reuters) – Despite sharply higher futures
    benchmarks, spot gasoline values in the U.S. Gulf Coast firmed
    on Tuesday in very active dealings amid scheduling on the
    Colonial Pipeline, traders said on Tuesday.
    “This is an acknowledgment of value and a recognition that
    demand has not contracted to the apocalyptic levels that prices
    much lower than here imply,” said Mike Fitzpatrick, analyst at
    MF Global.
    Gulf distillates were at the top of their recent range.
    Colonial told shippers in a notice that it allocated cycle
    64 on the main distillate line north of Collins, Mississippi,
    as shipping demand exceeds line capacity.
    In refinery news, Marathon has shut a 52,000 barrel per day
    crude unit at its 76,000 bpd refinery in Texas City, Texas
    after a small pump fire on Monday night.
    Valero said it shut a 55,000-bpd fluid catalytic cracker at
    its refinery in Paulsboro, New Jersey for a few days of
    unplanned repairs late last week.
    In the New York Harbor, heating oil offers fell for a
    second day running. Demand for heating oil in the key Northeast
    market is expected to be about 25 percent above normal this
    week as temperatures rise, putting a damper on heating demand.
    U.S. crude futures rose $7, or nearly 11 percent, jumping
    above $70 a barrel, on signals OPEC members were cutting output
    in line with the group’s recent decision, the weaker dollar and
    stronger equities markets offsetting concerns about demand.
    Gasoline and heating oil futures also surged after Monday’s
    steep declines.
    U.S. GULF COAST
    Trade was very active with diesels and conventional
    gasoline all scheduling on the Colonial Pipeline.
    Despite a rising benchmark, Gulf Coast conventional M4
    gasoline for cycle 62 gained half a cent to trade at 6.25 cents
    under the the December RBOB screen as demand has not fallen as
    low as originally thought.
    Cycle 62 61-grade ultra low sulfur diesel was seen trading
    at 0.50 and 0.60 cents under the December heating oil screen,
    at the high end of recent ranges.

    NEW YORK HARBOR
    Prompt heating oil added to Monday’s steep loss, with
    offers falling to 2.00 cents under the sharply higher December
    futures, down from 1.75 to 1.50 cents under on Monday.
    Weighing on the fuel is the fact that a lot of barrels are
    coming from the Gulf Coast and warmer temperatures in the
    Northeast are putting a damper on heating demand.
    “A lot is coming up the pipe,” a distillates trader said.
    ULSD diesel was offered half a cent lower at December
    futures plus 7.50 cents and ditto low sulfur at 2.50 cents over
    the December. Jet fuel was again unchanged at 10 cents over.
    M4 conventional unleaded was traded for barrels by Nov. 6th
    at 6 cents over the sharply higher December print, up from 4.50
    to 5.00 cents over midday Monday, traders said.
    F4 RBOB gasoline held a 3.5-cent gain from late Monday at 8
    cents over December futures for prompt barrels.

    MIDWEST
    Chicago ultra-low sulfur diesel inched up half a penny,
    trading at 2.50 cents over the December heating oil futures.
    “It’s a late harvest,” said one Midwest broker, noting that
    soybeans are still being harvested in Missouri, during the time
    of year when harvest is stronger in the northern Midwestern
    states.
    In Group Three, the grade traded at 1.75 cents over
    futures, down 0.75 cent from Monday’s levels.
    Gasoline differentials in Group Three slipped another
    quarter cent, trading at 0.75 cent under the December RBOB
    benchmark.
    In Chicago, gasoline was pegged at 0.50/1 cent over the
    board, down about 0.75 cent from Monday.
    (Reporting by Haitham Haddadin, Janet McGurty, and Rebekah
    Kebede)

    Tue Nov 4 17:58:05 2008

90. tater, I think the heavy USO volume represents a thunderclap of recognition that (as Z has been saying for a while) OPEC mean business at this point.

    Looking at the chart, it can hardly be read as the blow-off of a bullish move, since it only just started! So I don’t see how it can mean anything other than oil is going up.

    Up 12% in a day seems a bit steep & I sold some DXO up 20% from buying it yesterday. I may be regretting that sale by tomorrow but if there is a half-decent correction I’ll buy it back. That was my first trade with one of these levered ETFs and it’s an interesting complement to the option approach.

    I suppose, given the large move today, a good question would be “how far can it go?”. It wouldn’t surprise me if we see a large trading range with a bullish bias, so it may not really get very far but we might have fun getting there.

    I’m intrigued by the 3x ETFs (mentioned by Sam in #3) as a way to play an oil move, but I’ll have to study up on the underlying ERX. Anyone have any comment on it?

91. Thanks Dman.

    Nicky will be on in a bit with levels.

92. Dman ,

    It is ERY for the energy ETF

93. Thanks for your thoughts Dman. Made a similar play and am also looking to re-enter. Walked over to vote and all I could think about was going longer oil (black stuff) and short big oil companies. I know that’s not what everybody is thinking here, but I cannot get over the “big bad oil companies” attitude that has to come to the fore here very soon. But then again, who knows what goes on behind closed doors.

94. ZTRADE: $10KP TRADE.

    Buying (10) TAN December $15 Calls (TANLC) with TAN at $13.60, up 13% today. (5) filled so far at $1.50 and I’ll probably stay at that level. This is the solar stock ETF and it is a thin trader so I have been reluctant to pay over the mid.

95. Tater – Oh don’t necessarily disagree with your thoughts in 93. Will likely flush the last of my big oil Novembers XOM this afternoon into what I think will be a rally into the close. Going to hold the Decembers into the morning at least. They are cheap but that stock will likely see some weak hands selling in the coming days.

    Got the other (5) TAN at $1.50 just now.

96. I started slowly into DUG. Noticed a couple other writers voicing agreement. Don’t know if that’s good or bad.

97. Pete,

    as best I can make out from the press release (http://biz.yahoo.com/iw/081103/0448689.html), ERX is the 3x bullish ETF and ERY is the 3x bearish ETF, whilst the underlying is the “Russell 1000 Energy Index”, which I hadn’t heard of before, so any views on it would be useful.

98. Dman

    I must of had it wrong was going off re:25 by Sambone

99. ZTRADE: $10KP TRADE

    Added (5) NE December $40 Calls (NELH) for 1.28 avg cost. This is a play on RIG earnings tomorrow. Kind of a back handed way to play it but NE is cheap and can perform well given DO’s prior comments and RIG’s comments tomorrow, especially its comments on the Jackup market.

100. Per 76, diesel is more expensive because there is a global market for diesel vs. gasoline. Meaning its the fundability and the fact that other countries are willing to pay the freight to incentivize US refiners to produce diesel and send it abroad. Diesel demand is down more than gasoline, so clearly it is not US demand. Although the taxes are slightly higher too.

101. SRP – didn’t the change to ULS requirements result in more expensive diesel in the US relative pre Oct. 2006 levels (think I have the date right)?

102. comments from the credit desk: accounts are shorting credit… not covering in this “rally.” Perception is that mrkt will be down tomorrow.

     From where I sit, it’s a tough call. Can see the mrkt heading either way tomorrow. That said, what ever direction it takes, can’t imagine the move will be small. I would expect to see a large move in the VIX… just not sure what direction. When in doubt, stay flat.

103. re #100:

     Also think about US demand associated with the rig count. Some of our rigs consume 100gals/hr. That doesn’t even take into account 22pumps on location for a Haynesville frac job, TONS of demand!

104. it only cost about 4-5 cents a gallon to make ULSD (15ppm) versus the prior ULS (500ppm). It really is global demand for power generation driving US prices. Let’s put it this way, in 2007 the US exported 270 thousand barrels a day and in August we exported 850 mbpd.

105. Thanks for setting me straight SRP. Hear on the export demand and I also here VLO saying on their call that demand from Europe remains quite robust and they see increased demand for diesel from Latin America. Any thoughts there.

106. z any thoughts on PXD as a pre-earnings play today

107. My only thought is it’s too bad refiners make less than 30% distillate and 50-55% gasoline by nature. That being said, if global slowdown means less distillate, then refiners would suffer as the gasoline margin in the Gulf and Midwest is basically zero.

108. Thanks srp

     Kyle – I like them, probably should play, watching this little pull back in the market/group for an entry. PXD has been very busy last few quarters, should have lots to talk about. One hitch is debt load but that’s probably already reflected in the stock.

109. ZMAN – thanks for the EOG trade yesterday. Got in at $2.15 and got out at $5.00 this morning.

110. Hey, don’t thank me, thank Papa & Co. for being the conservative guys that they are.

111. Market looks asleep, volume still low in energy land. Actually a little red on the screen now with many names having given back 2/3 of their run today. Should be a pretty interesting last half hour.

112. Zman,any info re:inventory report tomorrow?tks

113. BB – I have not yet seen the survey results for what the Street is expecting. Sometimes gets delayed if the reporters are excited about something else.

114. interesting comment from another PM… he trades across a lot of different commodities and notes that he is seeing a worrying indicator today. “Over the last 10 months, whenever the uraniums join the rally party, the commodity run is nearing a climax. And the uranium sector is running today.”

     Worth noting.

115. credit continues to rally, tho.

     IG 185

116. Hear ya on that Bird, rising tide lifts all boats, eventually even the crappy ones.

117. Nymex Crude Rises Above $71/Bbl

     By Gregory Meyer
     Of DOW JONES NEWSWIRES

     NEW YORK — Crude oil futures shot above $71 a barrel Tuesday as the dollar lost value against the euro and signs emerged that recent cuts from the Organization of Petroleum Exporting Countries are taking hold.

     Light, sweet crude for December delivery was recently up $6.97, or 10.9%, at $70.88 a barrel on the New York Mercantile Exchange, after climbing as high as $71.09, the highest since Oct. 22.

     Brent crude on the ICE Futures exchange rose $6.47 to $66.95 a barrel.

     Oil traded steadily higher as the dollar weakened against the euro, requiring more of the U.S. currency to buy a barrel of the dollar-denominated commodity. The euro was recently $1.3027, from $1.2645 late Monday.

     “You’re just seeing the dollar give back a lot of its gains in last couple sessions. That’s leading a lot of commodities higher,” said Raymond Carbone, president of brokerage Paramount Options in New York.

     In September, OPEC members committed to comply with output quotas, effectively taking barrels off the global oil market. Amid a sharp decline in crude prices, the cartel in late October agreed to further trim output by 1.5 million barrels a day, effective Nov. 1.

     The effects of the first decision began to materialize last month, a Dow Jones Newswires survey showed. OPEC’s daily production in October fell by 90,000 barrels a day from September, to 32.050 million barrels a day. Output by the group’s 12 members with production quotas fell more dramatically, with countries pumping 150,000 barrels a day, or 0.5%, less at 29.800 million barrels a day, according to the survey, which is based on input from oil traders, analysts and industry sources.

     OPEC member Algeria trimmed oil production by 71,000 barrels a day starting in November, the APS news agency reported Tuesday.

     “It seems OPEC members are adhering to their cuts,” said Timothy Jennings, president of brokerage Vantage Trading in New York. “That provides as a basis’ for the move higher.

     Crude also followed stock markets higher, as equities have become a key indicator of economic sentiment for oil traders concerned about the strength of global demand. In the U.S., the Dow Jones Industrial Average was recently up more than 270 points.

     The oil market Wednesday will take in a fresh set of weekly data on U.S. oil stockpiles, supply and demand. In the week ended Oct. 31, analysts polled by Dow Jones Newswires predict inventories of crude rose by 1.2 million barrels, gasoline fell by 500,000 barrels, and distillates, which include diesel and heating oil, rose by 1 million barrels.

     The poll forecast the rate of refinery use rose by 0.4 percentage point to 85.7% of capacity.

     Refined oil products led the market. Front-month December heating oil was up 21.42 cents, or 10.8%, to $2.1970 a gallon on forecasts of cold weather in the U.S. Northeast and Midwest over the next two weeks.

     Front-month December reformulated gasoline blendstock, or RBOB, rose 19.66 cents, or 14.4% to $1.5591 a gallon.

     —By Gregory Meyer, Dow Jones Newswires

118. z – i hate to be the voice of worry on this board. frankly, it’s not like me. But, what i am hearing in the media about the credit crisis thawing is just not ringing true. I agree with sambone… it’s gonna be a long, slow, slog. With lots of ups and downs. Don’t think we’ve see the low on the indices yet. I look forward to being an optimist again, someday.

119. Bird – Do I sound bullish? Wow, not my intention. Comments about raising cash, taking profits, etc…not exactly bullish. Think I wrote earlier this could be a “buy the polls, sell the election event”…I have been thinking we rally into the close but I’m not that good with the short term stuff. I know that we have had a pretty good run of late and that the energy names could settle out for a bit.

120. z – you’re right. you’ve been great about taking profits. just keep up the great leadership and continue to show that money can be made in any type of market. that is the sign of a really great investor.

121. VIX has been heading back up this afternoon. That’s a bit ominous.

122. Did not get my PXD. Think I will hold off.

123. CHK is approaching HOD.

124. Thanks for your thoughts on the late rally, I got lucky on timing for in and out of DUG. Heading back down again.

125. I see it Ram, group starting to get a late run, was looking to punt those HK $15s but it went from outperforming to vastly underperforming the group. They report later this week and I’d bet that with a fare market tomorrow we could get another chance to trade out of the November calls prior to the close tomorrow.

126. I don’t have Bloomberg for tomorrow’s stats, but PIRA (a consulting fund that i would rate as A+) has slight build in crude, slight pull in gasoline, 1.2mmbl build in distillate. Take it as another guesstimate

127. looks like i’m not going to get PXD either. strange drop in HK after being strong all day

128. HK is approaching LOD.

129. By Gregory Meyer
     Of DOW JONES NEWSWIRES

     NEW YORK (Dow Jones)–Oil futures sprang to a two-week high Tuesday, with
     buyers spurred by signs recent cuts from the Organization of Petroleum
     Exporting Countries are taking hold.
     Light, sweet crude for December delivery settled at $70.53 a barrel, up $6.62
     or 10.4%, marking the first close above $70 since Oct. 21. Brent crude on the
     ICE Futures exchange closed up $6.00 at $66.48 a barrel. Brent settlement
     prices weren’t immediately available.
     With world oil demand growth expected to slow if not reverse next year,
     analysts are wary of calling a bottom in a market that’s still down by more
     than half from record highs of last July. Facing a slump in oil revenues, OPEC
     has attempted to address the price slide and the prospect of mounting oil
     stockpiles by curtailing output. The cartel in September agreed to honor
     existing quotas, and late in October further resolved to trim output by 1.5
     million barrels a day, effective Nov. 1.
     A Dow Jones Newswires survey showed output by OPEC’s 12 members with
     production quotas fell by 150,000 barrels a day, or 0.5%, in October from the
     month before.
     Reflecting the group’s more recent decision, OPEC member Algeria trimmed oil
     production by 71,000 barrels a day starting in November, the APS news agency
     reported Tuesday. Venezuelan state oil company Petroleos de Venezuela SA has
     notified clients of the country’s move to cut output by 129,000 barrels a day
     in light of OPEC’s recent decision, the company and the oil ministry said in a
     joint statement Tuesday.
     Venezuelan Oil Minister Rafael Ramirez also noted in a release that Venezuela
     will demand an additional cut of at least 1 million barrels a day “on Dec. 17
     or sooner,” referring to the date of OPEC’s next scheduled production meeting.
     Reuters reported that top OPEC exporter Saudi Arabia has already significantly
     cut crude supplies to some customers. One source cited by the news service
     estimated Saudi Arabia’s exports at about 900,000 barrels a day lower than
     August levels.
     “The market treats OPEC production cuts with great skepticism,” said Andy
     Lebow, senior vice president for energy at brokerage MF Global Ltd. in New
     York. “It seemed today there was a little less skepticism.”
     A turnaround in the dollar’s fortunes also fueled the oil markets. After three
     straight days higher against the euro, the greenback declined, requiring more
     of the U.S. currency to buy a barrel of the dollar-denominated commodity. The
     euro was recently $1.2942, from $1.2645 late Monday.
     “You’re just seeing the dollar give back a lot of its gains in the last couple
     sessions. That’s leading a lot of commodities higher,” said Raymond Carbone,
     president of brokerage Paramount Options in New York.
     Crude oil has also moved in concert with stock markets in recent weeks as
     traders try to discern the outlook for the economy and oil demand. In the U.S.,
     the Dow Jones Industrial Average was recently up more than 200 points.
     The oil market Wednesday will take in a fresh set of weekly data on U.S. oil
     stockpiles, supply and demand. In the week ended Oct. 31, analysts polled by
     Dow Jones Newswires predict inventories of crude rose by 1.2 million barrels,
     gasoline fell by 500,000 barrels, and distillates, which include diesel and
     heating oil, rose by 1 million barrels.
     The poll forecast the rate of refinery use rose by 0.4 percentage point to
     85.7% of capacity.
     Front-month December reformulated gasoline blendstock, or RBOB, rose 17.02
     cents, or 12.5%, to settle at $1.5327 a gallon. December heating oil rose 17.88
     cents, or 9%, to $2.1616 a gallon.

     -By Gregory Meyer, Dow Jones Newswires

     Dow Jones Newswires
     11-04-08 1520ET

130. ZMAN – Are you looking at November XOM’s again?

131. Thanks SRP and Sam.

     Re HK, think when it started falling it fell through round number 18 in a low volume day, that can lead to gapping down…not too concerned (famous last words) as if the market isn’t lock limit down tomorrow they probably catch a bid into the close pre numbers.

     SRP – still no mention in anything you see regarding M&A on the corporate scale in the refining segment?

132. Strong moves up into the close for most things.

     Go Vote!

133. Not sure who wants to double down on refining given the uncertainty of 2009 demand and possible decline in distillate crack. That being said, I think all the announced reductions in ’09-’11 capex means late 2010, 2011 are setting up to be years like ’04-’06 were. I haven’t even heard the rumor of anything, much less the news.

134. Ram – I decided to hold the XOM’s.

     SRP – hear ya on that. I wonder if people will starting to calculate replacement value plus inventories less debt and say, wow, these are cheap. I would bet the group begins to discount a recovery in the U.S. economy 6 months before it shows up in the GDP numbers. That’s a guess but in the past the group has started to move back up well before the last of the nasty looking demand numbers are posted.

135. Latest trades from Intrade.com

     Obama 92

     McCain 8

136. Ugly numbers for PXD. Storm related misses, but also weaker than anticipated growth as the company reigns in spending.

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