Monday Morning

That's Trillion, With A T. President Bush and President-elect Obama are joining forces to tap the TARP as quickly as possible. Bush will the request of Congress and Obama will make the case. Obama wants the $350 billion plus another $800 billion in stimulus to keep the bilge pumps running and keep the U.S. afloat. Your future unearned tax dollars being flying out the door. Not to be left out, China is expanding their stimulus package as well.

The Week Ahead:

  • Monday - 1/12 - slow day, little data out
  • Tuesday 1/13 - Treasury Budget, Pritchard Capital Energize conference
  • Wednesday - 1/14 - Goldman Sachs Global Energy Conference, Pritchard Capital conference (I'll have a schedule posted in Tuesday's post), 10:30 EST Oil Inventory Report, retail sales (expected down 1.2% ex autos)
  • Thursday - 1/15 - Single Digit Midget Piece, same conferences, PPI
  • Friday - 1/16 - CPI, Industrial Production, rig counts, CFTC data

In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Rig Count Comments
  4. Odds & Ends

 Holdings Watch: The Wiki holdings tab is updated. I'll be recapitalizing the $10KP this week.

Commodity Watch

Crude oil fell 13% last week to close at $40.36 on the February contract. The 12 month strip ended the week at $52.92. The jobs report gave traders an excuse to test $40 at the end of last week and this morning oil is off another $2 to $39.

  • OPEC Watch: Saudi Arabia plans to cut oil production by 300,000 bopd below its new production quota. 
  • Israel / Gaza Watch: Fighting shows little sign of abating but any threat by nations like Iran to use oil as a weapon is now seen as empty.
  • Goldman Sachs issued a note this morning saying surpluses will continue to pressure crude putting the companies $30 1Q09 oil estimate in jeopardy.

Natural gas fell 8% to $5.52 last week on a disappointing storage number and lack of support from crude. This morning gas is trading flat despite forecast bitter cold this week.

  • Weather Watch
    • Last week saw HDDs rally back to 209, higher than the original forecast of 199. This is far  cooler than the year ago week (152) and should provide a return to triple digit withdrawals this Thursday.
    • Forecast for this week: The coldest air of the season is supposed to freeze the mid-west and northeast by the end of the week, New York City is expected to see temps drop below 0 for the first time since 1994, and the climate prediction center is predicting gas-weighed heating degree days will rally to 243. This is much colder January weather than what was previously anticipated but it must last to be of use to the gas storage balance.

  •  Russia Watch: It looks like a deal to restart gas delivers across Ukraine to Europe could be signed today.
  • Things Aren't Slow Everywhere: from Reuters ~ US supermajor Chevron has raised natural gas production in Bangladesh by more than 11% to about 500 million cubic feet per day to meet shortages, a senior official has said. Bangladesh faces shortages of up to 250 MMcf per day, leaving it unable to supply hundreds of new manufacturing interests. "We have asked them to produce more gas from Bibiyana field to meet rising demand," said Jalal Ahmed, chairman of the state-run Petrobangla.  ZComment: Just something to think about the next time you see the words "demand destruction" and "new LNG projects" grouped together along with "U.S. shores"

Gas Rig Count: Down another 28 last week.  Total U.S. oil and gas rigs are now off 22% from their Summer 2008 highs. 

Apparently rates have yet to really come of their highs onshore and especially in the hotter plays as I gathered anecdotal information from a number of rig type guys as well as a good chat with Petrohawk. This should change soon but the land rig players have already discounted Armageddon in my book. Still, I don't see a reason to jump the gun on the names as the rig count will probably decline by as much again as it already has.

Oil Service Vs. Rig Count


And Finally, A Global Look At Offshore Drilling. In these final charts you can see that international rig counts have doubled over the last decade while U.S. rigs have more than been cut in half. The international data is monthly so the last point is December but so far, there has not been a large fall in the international rig count and the OPEC and Non OPEC national oil companies have not been shelving deepwater projects unlike some in the oil sands arena. Maybe this is around the corner but the most recent rhetoric is that it will take a sustained period of low oil prices (2+ years) to kill off/delay these projects. By that time,  the global economy should be somewhat better, driving increased petroleum demand. So take a look at these charts, then flip back to that last chart of (RIG), which has come off by more than 50% since September. Hmmm. I'll be adding (DO) or (RIG) pre 4Q earnings as I think they are getting unfairly dashed against the rocks when their seas remain fairly calm.

Odds & Ends

Analyst Watch: Argus cuts (SLB) price target from $100 to $55 while maintaining its Buy rating.

Toyota To Sell All Electric Car In U.S. by 2012. See story here.

110 Responses to “Monday Morning”

  1. 1
    Pete Says:


    Did you see this on 60 min? Reason for Oil prices


  2. 2
    zman Says:

    P – Nope, will have a look.

    Looking at RIG’s fleet status report just out.

  3. 3
    zman Says:

    RIG report – Rig’s fleet status shows almost universally higher contract rates in the deep and ultra deep segments. Some minor slippage in a few jackups, some of those at higher contract rates as well. Checking on out of service time but its not greatly changed from last report.

  4. 4
    Sambone Says:

    9:09 am

    Crude -$2/Bbl Despite Talk Of Saudi Output Cuts

    [Dow Jones]–Nymex Feb crude oil futures were down more than $2 early Mon, despite a report that Saudi Arabia, the world’s largest oil exporter, may cut its output next month below levels agreed by OPEC, in the face of a continued weak market. Reuters quoted a senior oil executive saying there was talk that the Saudis would cut output to 7.7 mln b/d in Feb, compared with its 8.051 mln b/d quota, in a move aimed at boosting prices and preventing a rise in stocks. Feb crude was down $2.32 at $38.51/bbl as the market remained focused on an oversupply of oil and the weak global economy.


    Crude Trades Lower, Weighed By Demand Pessimism
    By Nick Heath


    LONDON — Crude oil futures fell more than $2 Monday on ongoing pessimism surrounding global economic conditions and their negative implications for crude oil demand.

    Nymex crude dropped below $40 a barrel as consumption fears continued to dominate, while reports of a solution to restoring Russian natural gas to Europe via Ukraine also weighed on prices, tempering anticipation that European demand for crude and products will rise as an alternative source for heating and power generation. Anxiety surrounding conflict in Gaza meanwhile appeared to have peaked with hopes growing for a ceasfire.

    “Oil prices seem destined to test lower in coming days as many bullish factors appear to be receding whilst the economic downturn seems to be tightening its grip,” said Robert Laughlin, analyst at MF Global in London.

    At 1236 GMT, the front-month February Brent contract on London’s ICE futures exchange was down $1.35 at $43.07 a barrel.

    The front-month February light, sweet, crude contract on the New York Mercantile Exchange was trading $1.88 lower at $38.95 a barrel.

    Ahead of its expiry Monday, the ICE’s gasoil contract for January delivery was down $4.25 at $450.50 a metric ton, while Nymex gasoline for February delivery was down 214 points at 108.98 cents a gallon.

    Russia’s OAO Gazprom Monday said Ukraine had signed a deal allowing monitors to be posted on its Westbound gas pipelines in a move that should pave the way for Russian gas shipments to Europe to resume in the coming days. However, a deal on gas transit monitoring still had to be signed by the European Commission before Russia would resume delivery, news agencies reported Russian Prime Minister Vladimir Putin as saying Monday.

    Russia halted gas shipments to Europe through Ukraine last week amid a standoff over prices and fees that contributed to crude rising above $50 a barrel.

    “Sooner or later things will be signed, the problems will be gone. These issues are the only think keeping it going to the upside,” said James Hughes, market analyst at CMC Markets in London. “Without the Russia-Ukraine problem, without the Middle East, I think we could be even lower than where we currently are.”

    Sentiment remains blighted by a string of weak macroecnomic data that emerged last week, most notably bearish U.S.jobs data Friday. Allied with last week’s large build in U.S. crude oil and products stockpiles — particularly at Cushing, Okl., the delivery point for Nymex crude futures — supply issues remain of secondary importance for many in the market, participants said.

    “The issue we have at the moment is Cushing. If the biggest consumer in the world is not using oil, the price is going to come down,” said a broker based in London.

    Analysts suggest that a possible recovery in prices could come from solid indications that OPEC members are carrying though with their recent 2.2 million barrel-a-day production cut.

    “We believe a reasonable level of OPEC compliance with its second cut could stabilize and even start to reduce global inventories in the next few months, which should allow a moderate recovery in prices from current levels,” said Gordon Gray and James Evans, analysts at Collins Stewart in London.

    -By Nick Heath, Dow Jones Newswires

  5. 5
    Dman Says:

    “Petrobangla” – that’s a new one for me. When do they get added to the NG cartel (er …”GAZBANGPEC”?)

  6. 6
    elduque Says:

    BDI +12 889
    TED -.123 1.08

    Still improving. Credit markets are unfreezing

  7. 7
    BirdsofpreyRcool Says:

    Good morning. Rally in credit in Europe overnight. US credit market opened quiet and unchanged, but is creeping up a bit, even in the face of bad news.

    US jobs losses have been the steepest, fastest since 1980. This is in contrast to global market employment, where there has not been significant cutbacks to date. This can’t hold up, as Asian industrial production is estimated to have declined at a 32% pace last quarter, roughtly double the rate of decline in the Americas and Europe.

    Much of the decline in US jobs has come from the ground-zero financial services sector. This is expected to continue, with continued consolidation in the business. For example, the Citi / Morgan Stanley broker JV being discussed, would certainly result in redundant jobs. It is reasonable to think that much of the job loss in financial services will permanent, as this sector had grown out of proportion to the rest of the US economy. That said, we are still seeing jobs shed in manufacturing at an alarming pace also. Those are jobs that will need to come back — and grow — at some point. But, that is long-term stuff.

    However, continued loss in the manufacturing sector does not bode well for domestic energy usage. A theme we all know well.

  8. 8
    zman Says:

    Pete – that keeps freezing up for me, can you synopsize?

    Eld and BOP – good morning and thanks.

    Rough open. A lot of things had sell imbalances and gapped down on light volume though little in terms of news has come out since jobs on Friday. Same goes for oil except that OPEC appears even more set to cut production to offset demand losses. Probably won’t be enough in the Spring but by mid year S/D balance will be better.

  9. 9
    zman Says:

    BMO Unconventional Gas Conference – tomorrow, GDP presenting. If anyone sees a schedule on this conference please let me know.

    GST will be at the Pritchard conference tomorrow as well.

  10. 10
    BirdsofpreyRcool Says:

    Trading Desk says same pattern for this morning as last Friday… high off the open, then sell off.

    However, this pattern continuation has a tendency to rally in the afternoon to new highs. This is not confirmed yet, so will pass along an update, if it’s appropriate.

  11. 11
    zman Says:

    OII pre-announced 4Q numbers late Friday, in line with Street, which is well above previous guidance. Now, if we can just get analysts to listen next time so it doesn’t appear to be a “miss”, that would be great. To be certain, this company has a history if you go back 2 years or so of bagging the Street with low ball, overly conservative numbers but since things slowed in their inspection and repair business they have been closer to the mark and have missed a quarter. The Street continues to pad the numbers and so what should be good news has the stock off similar to everything else today.

  12. 12
    zman Says:

    In a similar vein, RIG is just pulling back from the recent bounce and I’ll look at them more closely at $50, especially if they can hold the level. The rig status report was positive, they are still set to do $16 in earnings in 2010. They do have a gap in the chart to fill at $45 and I see little reason to put down money in front of AA tonight and an obviously queezy market.

  13. 13
    zman Says:

    That RIG is set to do $15.12 in 2009 as well and those numbers are nearly set in stone unless rigs sink or otherwise go offline or people start breaking contracts. That’s just not done without going to court. So its trading at 3.4x this year’s earnings. Leveraged of course which should be a good thing as the credit markets make progress.

  14. 14
    BirdsofpreyRcool Says:

    File under the heading: Thank You Sir, May I Have Another?

    HK – Before the open CapitalOne Southcoast initialed HK with an “Add” and a tgt of $28. Firm says HK has similar upside to it’s NAV as its mid-cap growthy peers, but has more upside “optionality” with their strong HV Shale wells. That optionality would add $12 to their tgt. They think HK’s HVS acreage alone is worth $18/share.

  15. 15
    BirdsofpreyRcool Says:

    HK – the Eagle Frod Shale could also add another $7 to the valuation. So, $28/share base case + 12 HVS optionality + 7 Eagle Ford = $47.

  16. 16
    BirdsofpreyRcool Says:

    make that “Eagle Ford Shale.” I have no idea what a “Frod” is, but it sounds like it lives in a pond.

  17. 17
    Jay Reynolds Says:

    Z – 60 min synopsis – 4 pages


  18. 18
    zman Says:

    Thanks BOP.

    HK does not seem to be speaking at Goldman (maybe they are tired of the swing trading manic behavior of the once stalwart Bull) or Pritchard Capital this week. Not sure about BMO but its odd that they are ducking the conferences…I don’t think its bad, just maybe a sign that they are exasperated with the Street’s lack of swing these days with investors.

  19. 19
    BirdsofpreyRcool Says:

    z – it is odd that HK is skipping Goldman and Pritchard. Guess they don’t need to raise any capital any time soon.

  20. 20
    zman Says:

    Thanks Jay…my favorite lines from that:

    “They’re trying to make money on the market for oil?” Kroft asked.

    “Absolutely,” Gilligan replied. “On the volatility that exists in the market. They make it going up and down.”

    If you try to make money buying and selling anything else its called investing… with oil its evil speculation.

    But this is what caused me to stop reading:

    “Approximately 60 to 70 percent of the oil contracts in the futures markets are now held by speculative entities. Not by companies that need oil, not by the airlines, not by the oil companies. But by investors that are looking to make money from their speculative positions,” Gilligan explained.

    Utter fabrication:

    Non-commercial position (the speculators)
    19,000 long and 9,000 short contracts

    Commercial position:
    90,000 long, 101,000 short

    The guy they interviewed works for the buyers of gasoline and heating oil. Of course he thinks rising prices are bad. The journalist just takes his word for the 60 to 70% claim as gospel. Ticks me off but it happens all the time.

  21. 21
    zman Says:

    BOP = too true and too funny. I wonder if Congress will applaud HK for not taking the private plane on the conference circuit.

  22. 22
    Sambone Says:

    By Steve Gelsi

    Energy stocks retreated with falling oil prices on Monday, as crude futures
    moved closer to their Dec. 19 low of $32.40 a barrel and shares of petroleum
    producers lagged the broader stock market.
    The Amex Oil Index (XOI) fell 1.8% to 961. The Amex Natural Gas Index (XNG)
    dropped 2.5% to 380. The Philadelphia Oil Service Index (OSXX) fell 2% to 126.
    Movers in the energy sector included Hess Corp. (HES), down 6.1% to $52.10,
    and El Paso Corp. (EP), off 6.2% to $7.89. Driller Transocean Ltd. (RIG)
    dropped 5.7% to $51.40.
    Crude futures fell $2.10 to $38.73. Adding pressure to the energy futures
    market was news of an apparent settlement in a natural-gas dispute between
    Russian and Ukraine. The development seemed to ease short-term fears.
    After hitting an all-time record of $147.47 a barrel on July 11, crude prices
    fell 78% to $32.40 a barrel on Dec. 19, the lowest price since February 2004.
    “The decline in crude oil prices shows that the demand destruction across the
    world is likely enough to offset recent OPEC (production) cuts, and signs that
    the cartel is actually following through with those cuts,” said Brian Niemiec
    of Susquehanna Financial.
    In the renewable energy sector, shares of A-Power Energy Generating Systems
    (APWR) rose 21.4% to $5.95 after the small-cap firm announced contracts with
    General Electric Co. (GE).
    The China-based company said it will set up a joint venture to build wind
    turbines in Asia, with GE’s drivetrain technologies division retaining a
    majority stake. GE will supply A-Power with more than 900 2.7-megawatt
    gearboxes beginning in 2010.
    -Steve Gelsi
    Dow Jones Newswires
    01-12-09 1018ET

  23. 23
    zman Says:

    XOI, XNG, OIH fell below year end 2008 levels this morning.

  24. 24
    zman Says:

    BOP – Southcoast used to have a little swing in energy circles. Now it appears that very few do. I’ve seen the market reject Goldman upgrades numerous times of late despite the fact that the stocks have fallen 75% or more since their summer highs. Same goes for once upon a time axe Howard Weil and even JS Herold. Seems overly negative to say it but no one on the Street can get real traction in this market.

  25. 25
    jy Says:

    Petrohawk presenting 1-13-09 at 09:30 EST at BMO conference.

  26. 26
    BirdsofpreyRcool Says:

    z – well said. Seems programed trading (and correlations) rule the roost. Oil down, sell high-beta stuff. Problem still seems to be not enough committed long-term buyers. The generally accepted idea right now is that the January Rally has fizzled out and this is a repeat of last year. Can’t see how that’s true, as the credit market is doing much better than a year ago.

    Keep putting money in corporate bond funds people… nothing to be earned, just sitting in treasuries.

  27. 27
    BirdsofpreyRcool Says:

    jy – thanks! HK failed to mention that on their website.

  28. 28
    zman Says:

    Jy – thanks much. Likely to add a little while it off this much just in case they pr something to have to say that interesting at the conference. My news does not show that…where did you find it?

  29. 29
    tater Says:

    VTZ, if you are around, I finished up much of the charting you were looking for.

  30. 30
    choices Says:

    Bought some HK and SU late Friday-believed news was factored in but may have jumped the gun, as Z says. Also bought PDS which I hope is basing after the acquisition of Grey Hawk. My timing usuually sucks.

  31. 31
    nifkin Says:

    Just a heads up- I see HK at BMO on 1/13, then at Pritchard Wed 1/14 8-8:20 ET

  32. 32
    BirdsofpreyRcool Says:

    bought a little more HK this morning, around here. think we saw a programmed sell response to lower oil prices. 50day MA a $16.35-ish.

  33. 33
    zman Says:


    SU – Sold remaining January $22.50 Calls for $0.85, up 113%. Still holding Febs and may add more tomorrow or later Wednesday.

  34. 34
    zman Says:


    HK – Riskier – Added January HK $17.50 calls (HKAW) for $0.50 with the stock off $1 at 16.55 today and in front of two conferences this week where they may provide additional well news from the Haynesville and Eagle Ford. Nothing certain but history would argue that now is right for an operations update (I’d put odds at 1/3); either way valuation remains beaten down.

  35. 35
    zman Says:

    Choice – its easy to have sucky timing in this “love it, no wait, I hate it” market action.

    On the PDS, that’s interesting. I think the land drillers are overly beaten down at this point but I have trouble stepping into the names when I know (at least I think I know) that another 400 to 500 rigs are going to be stacked this quarter. That’s why I am looking offshore where guilt by association has taken down even the deepwater players in spite of the fact that rates keep rising and rigs keep being added (at least internationally).

  36. 36
    choices Says:

    Thanks, Z. always appreciate your comments. Which deepwater players do you like?

  37. 37
    AAA Says:

    Regarding the 60 Minutes segment,this was basically a rehash of the arguments that were flying around last summer. McMasters testified to congress then with the same argument. They never explain what happens to all the long futures contracts. They just seem to assume they are put away in a vault. If spec activity drove up prices, it seems obvious that the delivery mechanism would have a reverse effect. The oil goes somewhere. They never address that or the risk premium issue. At the same time, it seems awfully coincidental that prices collapsed the minute congress started howling about them and threatening legislation and investigations.

  38. 38
    zman Says:

    Sorry for delay, grew bored, cleaned out office freezer. How a squirrel in a block of ice got in there I can’t recall.

    I think it comes down to RIG and DO and maybe NE. RIG is the more sure thing in many peoples minds although I’m not enamored with the big size of their jackup fleet as rates there will be falling. But I think it is the XOM of the deepwater as far as name recognition goes, it is cheap and it is very locked down on 09 and 10 earnings. DO to me is more interesting long term and the dividend pass through feature attached to their dayrates should be interesting to income and growth fund managers alike.

  39. 39
    VTZ Says:

    Thanks tater, I’ll have a good look.

  40. 40
    zman Says:

    Choices, timing case in point, my FLSR trade was a double in a day from Thursday to Friday, now off 38% with a $11 down move on no news this morning.

  41. 41
    zman Says:

    Russia restarting gas bound for Europe:


  42. 42
    zman Says:

    Bird – more Street on HK. Barclays took their target down from $41 to $38 on Friday. I’m pretty sure they are using sum of the parts analysis with a discount too.

  43. 43
    Dman Says:

    VTZ – thanx for the Canadian Trusts article. Very useful info on hedging.

  44. 44
    Dman Says:

    UNG green

  45. 45
    zman Says:

    Dman – NG up 5 cents now. Focus coming back to weather end of this week. Bitter, record cold. Still matters, probably not as much while Paulson is talking, but some.

  46. 46
    BirdsofpreyRcool Says:

    Some bullish comments and observations from Simmons & Co. this morning. Obervations about the shape of the oil futures curve:

    Summary: During each of the last 4 oil market troughs, oil prices have bottomed near the point of maximum contango. While it is impossible to know the point of maximum contango until after the fact, the current contango is almost double the previous peak. The wide contango, upcoming OPEC cuts, likely disappointing non-OPEC supply and an eventual economic recovery suggest crude prices may be near a bottom.

    Data: Oil prices have historically bottomed near the point of maximum contango. The last 5 troughs in oil prices ($14/bbl in Dec’93, $12/bbl in Dec’98, $19/bbl in Dec’01 and $50/bbl in Jan’07) all occurred within a few days of the widest contango. The contango (measured by the prompt crude contract less the 24th month contract) was $4/bbl in Dec’93, $5/bbl in Dec’98, $2.50/bbl in Dec’01 and $12/bbl in Jan’07. Currently, the Feb contract is trading at about $40/bbl and the 24th month contract is trading at almost $63/bbl, its most extreme level of contango in the history of the NYMEX contracts by a wide margin.

  47. 47
    Nicky Says:

    Good morning all.

    I am still looking for oil to undercut its $35 low and finish wave 5. Getting there slowly but surely.

    Broader market – Looking for the 850 area to likely be tested before a low is in sometime in the next couple of weeks.

    I am getting less optmistic about how high the next wave will go before the market rolls over again however. The Obama honeymoon may not last long.

  48. 48
    zman Says:

    Thanks Nicky, at this pace we are only a day off those targets.

  49. 49
    jy Says:

    Re #28 HK at BMO conference. Agenda w/info on who and when here:

  50. 50
    cargocult Says:

    Any chance I can get a link to the hedging article on Canadian Royalty Trusts?

  51. 51
    zman Says:

    JY – thanks.

    Cargo – I no long have it. I can forward your email to VTZ if you like.

  52. 52
    cargocult Says:

    Thanks, I am interested in all info re Royalty Trusts.

  53. 53
    BirdsofpreyRcool Says:

    Credit rally stalled… high yield CDS index widened by a lot today. Not surprising, bonds are eyeing stocks right now.

    HY 78 1/8 down 1 1/8 points (reminder: a point is a huge one-day move in high yield)

  54. 54
    zman Says:

    JY – thanks again, can’t tell from the link if companies will webcast that either, the GS conference will not be webscast. I will try to find out if the lunch is going to be online as Netherland Sewell is speaking and it’s probably going to cover their initial thoughts on the new reserve rule ramifications. The SEC has not yet released the final version of their new rules, just the pr from the 12/29

  55. 55
    1520sbroad Says:

    #38 – squirrel??

  56. 56
    rseidman Says:

    Z: Regarding any info on Royalty Trust, I am deeply involved in a couple of them and would also benefit from any news about them. Please forward any applicable info to me as well

  57. 57
    zman Says:

    RS – I will forward the request.

    1520 – yes, I thought it was odd as well as I’ve not been hunting in a year or so.

  58. 58
    zman Says:

    More on RIG from earlier:

    Offshore driller Transocean has canceled a record $550,000-a-day rig lease with Burgundy Global Exploration after the energy company failed to deposit cash in escrow.

    Philippines-based Burgundy agreed last month to lease Transocean’s C Kirk Rhein Jr rig to search for oil in Filipino waters.

    The contract represented a 52% increase from the previous rate and the first time that type of rig commanded more than $500,000 a day.

    Switzerland-based Transocean disclosed the termination today in the monthly fleet- status report published on its web site.

    The company said it’s pursuing “appropriate remedies,” without elaborating.

  59. 59
    zman Says:

    With 58 in mind I’ll give RIG a little long to settle down.

  60. 60
    BirdsofpreyRcool Says:

    IG index back out to 210 … but, not a huge volume day.

  61. 61
    zman Says:

    re 60 … market in wait and see mode for AA

  62. 62
    zman Says:

    Tater – thanks for your crude and HK comments this morning on your chart site.

  63. 63
    zman Says:

    Heating oil and natural gas positive now on coming cold. HO is lifting crude off its lows.

    BOP – you are my good luck charm of the day, buying into HK with me.

  64. 64
    BirdsofpreyRcool Says:

    z – ha! just thinking the same about you…

    it ain’t over, ’til it’s over… but HK was cheap cheap cheap this morning.

  65. 65
    BirdsofpreyRcool Says:

    z – you still seeing red for oil but green for nat gas? (don’t have real time on futures.)

  66. 66
    BirdsofpreyRcool Says:

    mrkt turning ugly again… who’s speaking?

  67. 67
    zman Says:

    NG up a whole 7 cents now to 5.59

    HO back into the red but barely. Products have really been outperforming on all the capacity curtailments and now HO on the cold.

    Hear ya not over til its over and it would be cheap $10 higher as well. But that being said, the only way to make a buck of late in this market is to buy on other people’s weakness.

  68. 68
    zman Says:

    Can’t believe they let Madoff stay at home again. Maybe the judge is thinking he’ll make good use of his penthouse terrace.

  69. 69
    BirdsofpreyRcool Says:

    not defending the enron crew… but, what Madoff did was a HECK of a lot worse than Ken Lay and Jeff Skilling.

  70. 70
    BirdsofpreyRcool Says:

    psychopaths don’t kill themselves. they pat themselves on the back and smile big for the camera.

  71. 71
    Sambone Says:

    By Steve Gelsi

    Energy stocks retreated with falling oil prices Monday, as crude futures moved
    closer to their Dec. 19 low of $32.40 a barrel and shares of oil drillers piled
    up the biggest losses.
    The Amex Oil Index (XOI) fell 2.7% to 953, its lowest level so far this year .
    The Amex Natural Gas Index (XNG) dropped 4.4% to 372. The Philadelphia Oil
    Service Index (OSXX) fell 4.9% to 123.
    Movers in the energy sector included Hess Corp. (HES), down 6.6% to $53.83,
    and El Paso (EP), off 7.6% to $7.78. Driller Transocean (RIG) dropped 6% to
    Crude futures fell $2.91 to $37.92. Adding pressure to the energy futures
    market was news of an apparent settlement in a natural-gas dispute between
    Russian and Ukraine. The development seemed to ease short-term fears.
    After hitting an all-time record of $147.47 a barrel on July 11, crude prices
    fell 78% to $32.40 a barrel on Dec. 19, the lowest price since February 2004.
    “The decline in crude oil prices shows that the demand destruction across the
    world is likely enough to offset recent OPEC (production) cuts, and signs that
    the cartel is actually following through with those cuts,” said Brian Niemiec
    of Susquehanna Financial.
    In the renewable energy sector, shares of A-Power Energy Generating Systems
    (APWR) rose 18% to $5.76 after the small-cap firm announced contracts with
    General Electric (GE).
    The China-based company said it will set up a joint venture to build wind
    turbines in Asia, with GE’s drivetrain technologies division retaining a
    majority stake.
    GE will supply A-Power with more than 900 2.7 megawatt gearboxes beginning in
    Dow Jones Newswires
    01-12-09 1240ET

  72. 72
    Sambone Says:

    By Sharon Terlep

    DETROIT (Dow Jones)–General Motors Corp. (GM) on Monday sought to play down
    the steep decline in oil prices as the auto manufacturers tie their fortunes to
    new, more fuel-efficient vehicles.
    GM Chief Executive Rick Wagoner called the oil drop “an aberration” and said
    he expected a return to more “normal” levels as the company punted its Volt
    electric vehicle at the North American International Auto Show in Detroit.
    Oil prices in 2008 surged to record highs north of $145 a barrel and then
    experienced an unprecedented plunge as the financial crisis began filtering
    through to the world economy. During the boom in oil, gasoline prices surpassed
    $4 a gallon in the U.S., the world’s largest crude consumer. This sparked a
    cutback in miles driven and a switch to smaller, more fuel-efficient cars that
    has continued even while gasoline prices declined, as unemployment and broader
    economic weakness have taken hold.
    Fritz Henderson, GM’s chief operating officer, was more circumspect than
    Wagoner at an earlier presentation. Henderson said GM’s long-term restructuring
    plan assumed an oil price range of $130-$160 a barrel.
    He said the largest U.S. auto maker by revenue isn’t counting on oil prices to
    remain as depressed as in recent months.
    Some oil market analysts are calling for oil to dip as low as $30 before
    rebounding later in the year. However, few venture to predict when oil will
    reach back into the triple digits.
    Cheaper oil and gasoline prices have helped GM and other manufacturers with
    lower raw materials costs and improved sales of profitable trucks and
    sport-utility vehicles in the U.S. after last summer’s slump.
    However, the decline has hampered GM’s growth in increasingly important global
    markets with commodity-based economies, notably Russia, where it is the
    overseas market leader. Much of Russia’s wealth is derived from its oil and gas
    business. With prices for hydrocarbons in a slump and the currency weakening,
    Russian consumers are reining in spending.

    -By Sharon Terlep, Dow Jones Newswires
    Dow Jones Newswires
    01-12-09 1147ET

  73. 73
    zman Says:

    72. Gotta love the improper use of the football metaphor. They’re not punting the Volt. Maybe he should have chosen baseball instead.

  74. 74
    Fiveanddimer Says:

    Regarding Madoff comments above, I’m surprised that the judge did not decide to keen Madoff in jail for his own protection. I understand that certain Russian oligarchs (read mafia) lost a lot of dough in Madoff’s fund. Those guys are known to play for keeps. I wouldn’t be surprised to see Madoff show up in court with a polonium 210 glow.

  75. 75
    tater Says:

    I’ve been looking at a few of the service names with an eye on Wyoming’s comments. From what I get when I look at RIG, I cannot get the chart to work (Fib retracements) using the current low as the bottom. It just makes a garbled mess, which alerts me that we could very well be looking at a lower low coming up. Not disputing anybody else’s TA or fundamental reasoning. Just saying that the chart works a whole lot better if we use $41 as a low.
    This is not definitive, it’s speculative, but I am using it to trade on.

    RIG last chart at the link

  76. 76
    zman Says:

    Hear ya Five. I don’t get how a guy with that much access to capital is not a flight risk. He was in Geneva last summer, what do they think he was doing, shopping for chocolate and watches?

    Thanks Tater – I’m not rushing into RIG, to my laymen’s eye the chart is troubling at least down to $45.

    Market selling off now with crude looking to close mid $37s.

  77. 77
    tater Says:

    I’m seeing a lot of “troubling.” The one that bugs me the most is the sell signals that I posted about oil, and gold, and seeing the buy signal for the US dollar. If the world has to continue to buy the US currency and sell off hard assets to accomplish the trade, all kidding aside, look out below.
    I’m still trying to get in tune with the whole taxpayer wealth reapportionment package. I think it’s going to be a big head fake for equities.

  78. 78
    tater Says:

    I’m going to call it TWIRP

  79. 79
    zman Says:

    Tater – do you give much credence to the 20 and 50 day SMA’s that many of the charts are approaching from above, like HK?

  80. 80
    BirdsofpreyRcool Says:

    TWWIRP – “Taxpayers Who Work Income Redistribution Package”?

  81. 81
    Dman Says:

    tater, expanding wedge alert on UNG: from Dec 8 there is a sort of reverse pennant formation. Whereas a normal pennant (forward, pointy bit to the right) will usually break in the direction of the earlier trend, my understanding is that these reversed pennants (pointy bit to the left) often signal a trend reversal.

    What do you think?

    BTW, I may be getting the terminology wrong: I’m not sure if flags, pennants and wedges are all different names for the same thing or actually different things.

  82. 82
    Sambone Says:

    Off subject –

    #1 http://www.cnn.com/2009/US/01/12/florida.plane.crash/index.html

    #2 http://www.heritage-wealth.com/howwedoit_faq.html

    #3 http://atgeist.com/blog/marc-schrenker-crashes-plane-no-body-found/

  83. 83
    zman Says:

    Sharon Epperson saying crude finally starting to pay attention to supply and demand because its falling and demand is down. I guess the first $110 of the move didn’t count.

  84. 84
    Dman Says:

    #83 Priceless.

    BTW, your contrary indicator, I think the name was Gil: wow, he is pretty spectacular. At the time I thought maybe he was just an indicator for the stock he upgraded (KWK) but he proved very effective for the whole sector. Is he usually reliable as a sector indicator? If so, we need to keep a close eye on him.

  85. 85
    tater Says:

    Dman, I see what you are seeing, and your case could easily be made that it is some form of broadening formation on the 60 min chart, but I’m thinking that we don’t really need to get after it in that form. Step out to the bigger picture and you have a failed downtrend breakout and a possible test to the lows. Either way you slice it, we still have a situation where you have to step lightly. I’m going to stick with a KISS principle on that one.
    If you want the whole daytrading mumbo jumbo, be sure you pull a Fib grid over the action and see what you get.

  86. 86
    zman Says:

    d on phone, back in a few

  87. 87
    zman Says:

    Yep, Gil, not my favorite out there but there are worse. I watch him only loosely but I have some contacts who keep a pretty close eye and for longer than I have by far. I’m assured of the contrarian indicator status.

  88. 88
    tater Says:

    Yes on the SMA, especially the 20 SMA. It is the middle band of the standard issue Bollinger Band set-up, so it is always in play. Each name is different so you have to play with them to find which seems to make the most sense for that particular issue. Sometimes it’s both, like here for HK, bounced off the 20 SMA and is holding the 20 EMA into the close if I am seeing it correctly.

  89. 89
    zman Says:

    Thanks for the lesson as always, T.

  90. 90
    BirdsofpreyRcool Says:

    it kind of feels like the mrkt is holding its breath, ahead of the slew of earnings reports. We get AA after the close. Worth watching out for.

  91. 91
    zman Says:

    BOP – no doubt.


  92. 92
    BirdsofpreyRcool Says:

    nice way of saying “thank you for that blinding statement of the obvious”…? 😉

  93. 93
    zman Says:

    AA – expected loss of a dime and revenue of $5.26 B. I think outlook will be pretty dire, steels have been chopping production left and right. Only glimmer of good news for AA will natural gas costs, lot of gas used in the process.

  94. 94
    zman Says:

    Not at all, just thought I’d throw some numbers on it.

  95. 95
    BirdsofpreyRcool Says:

    AA looks pretty rough, at first glance… 4Q loss from cont. ops ex-items 28c/sh; est. loss 10c

  96. 96
    BirdsofpreyRcool Says:

    AA = first net loss in 6 yrs. Some of that was the Boeing strike. Good news is that they say their “liquidity remains solid.”

  97. 97
    tater Says:

    Just want to throw out a note that I think that the daily chart of MON is worth taking a look at for us here in the energy sector. The action over the last week is very much what I expect to see out of just about every name that gets mentioned around here. A big pop out of a congestion triangle on big volume and then the retest back down to the breakout gap. We will probably be dealing with that scenario should a catalyst come along to pump the sector. Makes sense to take a peek at the chart, get familiar with the price action and then decide what you would do with something that you own should we see it happen here.

  98. 98
    zman Says:

    AA just unhalted, trading $10 and slightly under.

  99. 99
    BirdsofpreyRcool Says:

    AA now trading higher… 10.27… can’t pick a direction. Kind of like this mrkt.

  100. 100
    BirdsofpreyRcool Says:

    tater – thanks for the MON head’s up. So, basically saying, sell any breakout rallies?

  101. 101
    zman Says:

    Well, AA had basically announced last Tuesday that they were going to be taking some big charges and that things were bad.

    Concerning stat of the day. Electricity generation figures show last week (as of Jan 3) down 9.3% from the year ago period. Can’t blame that on the holiday or weather. That’s just bad industrial demand and maybe some more conservation. Helps explain (to a small degree) the bite on the gas withdrawal last Thursday.

  102. 102
    tater Says:

    No, absolutely not. Just saying that this is a common pattern for a breakout, getting the return to fill the gap. Just saying that we may/will be confronted with a similar scenario so we should plan ahead of time what to do. Options?
    1. Sell the rally and make a huge profit (if we bought at a lower price). What if we bought at a higher price? Sell and re-buy? What if there is no return move? That’s no good. So be sure to think it out now.
    2. Don’t sell anything but possibly buy more on a return move? Another option.
    3. Don’t do anything but remember back to the fundamental reasons we made our purchase in the first place and ignore the daytrading dbags like Tater and their daily price swings. Stay the course, it’s just noise.
    Many different scenarios, you get the picture. Just trying to push the proactive buttons. Reactive trading can tend toward mistakes.

  103. 103
    BirdsofpreyRcool Says:

    tater – thanks! I like your trading advice. Especially the one that says: know your exit point when you enter a trade.

    That helps, a lot.

    Also, the volatility in this mrkt helps a lot. If you don’t do anything, you don’t make money. But, if you buy something at the “right price,” at some point, it seems, you make $$. Key is, to close out the trade. Or, just go to the beach and look at it again sometime in 2010. I think the stock mrkt in 2009 just goes sideways (if we’re lucky). Bonds will go up, stocks will jump all over the place.

  104. 104
    BirdsofpreyRcool Says:

    tater – a lesson i learned the hard way… gaps DO get filled. It’s an amazing phenom… but, it tends to be true.

    why is that, do you suppose?

  105. 105
    tater Says:

    Hey BOP,
    Gaps – have to remember that sometimes they really don’t get filled. That’s usually when price is in a runaway mode, they call them breakaway gaps I think, something like that. Seems like the thing in TA that always seems to pop its ugly head is that there is always some kind of exception to every “rule”. Just when you think you have it going on, the game gets changed ever so slightly.
    I saw you guys were talking about bad storms coming through. I have to admit i skimmed it but now somebody just told me. You going to do the natgas trade?

  106. 106
    PackMan Says:

    Z- 60 minutes lost its juice a long long time ago.

    Basically, they have a narrative they want to put out, and they go find “experts” or info to fit that narrative.

    That said, of course speculation was rampant in taking oil to 147.

  107. 107
    PackMan Says:

    Z- that squirrel … Pet or Meat ?

  108. 108
    zman Says:

    Re storms and natural gas, we should have 2 more encouraging withdrawals in front of us, the one this week for 100 to 120 Bcf (my early read) and then the one next week for the season high (should top 160 Bcf). That doesn’t really get you to a happy place as far as storage goes for this time of year but it beats the original forecast for January which was a string of sub 200 HDD days which, holiday or no holiday, gets you some pretty benign pulls from storage (those 60 to 70 Bcf pulls just won’t do). At least, that’s what I’m thinking right now for the post for tomorrow and I’d probably rather play it with a SWN, GDP, or GMXR trade than with UNG as we might see the second and third from the front month contracts move better leaving UNG largely out in the, um, cold.

  109. 109
    zman Says:

    The squirrel, as I recall, was a target of opportunity when the geese wouldn’t come in.

  110. 110
    PackMan Says:


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