Wrap – Week Ended 12/19/08


1) OPEC Watch: The Cartel That Cried Cut Too Often. I'm not going to belabor the point since its Sunday but this is the wrap of the prior week and I just want to go down on record as saying OPEC over-played their hand from opening headline to re-engineering the date from which the cuts were to be examined (not the last meeting or the one before but September levels), to insuring a complete lack of credibility for the new and most recent cuts (since Saudi Arabia has little in the way of incremental cuts to make it to their current quota while the rest of the notorious cheaters have to the pull the bigger weight.) We probably need a month for the tanker tracker companies to determine whether or not the new cuts are being implemented so expect a waffly market well into January after a near term dead barrel bounce.

  • Breaking down the numbers:

    • September 2008 Quota: 29.045 million barrels of oil per day.
    • October 2008 Quota: 27.308 mm bopd (set to be implemented Nov. 1).
    • Current production (as of November) was thought to be 27.7 mm bopd.
    • January 1, 2009 Quota: 24.845 mm bopd.
    • Clear as mud, I know. It's this kind of confusion that leads to prices falling from a high of $50.05 last week to $33.87 on Friday.

2) NoPEC a No Show. To make matters worse, the Cartel had made big headlines with claims Russia, Azerbaijan, and other large crude producers Mexico and Norway would attend the meeting and make cuts of their own to help alleviate oversupply and stabilize prices.

  • Russia looked good for 200 to 500,000 bopd from their current production of nearly 10 mm bopd until OPEC Meeting #151 eve and then backed out (I think they only attended the meeting to show off their bling),
  • Azerbaijan said it "may" cut 300,000 bopd but gave no firm commitment to do so and this is pretty  hard to believe anyway given the hit they would take as that represents over 40% of their current production,
  • and Mexico and Norway said thanks but no thanks and did not even attend the meeting saying natural declines were already reigning in their output. 

3) Holdings Watch- Knee Deep in December Scuds. I went into the OPEC meeting long and paid for it. I'll have an updated holdings spread sheet (pretty thin at present) out in time for the Monday post along with an updated Wiki Holdings tab. 

4) Natural gas continued to suffer along with crude last week (less so but only after weeks of pounding) despite a better than expected gas storage withdrawal that signalled that all is not yet lost by showing that cold still = withdrawals and industrial demand, while up against the ropes, is not knocked out.

5) Single Digit Midget Portfolio 2009. Many of our favorite names plus some new ones have been pushed into single digit territory in the last two to three months. Tax loss selling from now to year end will likely push many of them lower as will the fear of ceiling test write downs. I'll take a turn at separating the list into "serious rebound potential" and "reasonable to think its should be circling the drain" categories with all the metrics you've come to know and love some time between now and year end.

6) Intern #2 Watch. Intern #1 welcomes Intern #2 to the Z fold:

Curan Gray is happy and healthy as his mom.  Our sincere thanks for all the kind comments and emails. 


8 Responses to “Wrap – Week Ended 12/19/08”

  1. 1
    Wyoming Says:

    Cool Xmas present. And you can always win your neighborhood decoration award for best Nativity scene. It could be gender correct too. Congratulations.

  2. 2
    PackMan Says:

    Cute ! Both of them.

    Must look like your wife ! :>)

  3. 3
    zman Says:

    Roger that Pack!

  4. 4
    mahout Says:

    Thanks for the beautiful picture. It’s worth a thousand words. Congratulations again.

  5. 5
    gaamblor Says:

    Z, you mentioned something about answering tough CHK questions from an emailer over the weekend, intersted to see what those were.

  6. 6
    zman Says:

    G – still tracking some of those answers myself.

  7. 7
    Dman Says:

    Aw… so cute!

    Great pic.

  8. 8
    Zman’s Energy Brain ~ oil, gas, stocks, etc… » Blog Archive » Monday – Get Ready For A Holiday Light Week Says:

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