Thursday – Natural Gas Preview and Oil Inventory Review

95 thoughts on “Thursday – Natural Gas Preview and Oil Inventory Review”

1. By Nick Heath
   Of DOW JONES NEWSWIRES
   LONDON (Dow Jones)–Crude oil futures shrugged off ongoing demand concerns and
   another set of bearish U.S. oil inventory data to move higher Thursday, with
   market participants reporting ongoing geopolitical events as the only
   discernible source of support.
   Despite worries that struggling global economies will crimp oil demand –
   kindled by further weakness across Asian and European equity markets Thursday –
   crude prices reversed earlier moves lower with geopolitics and trading linked
   to expiry of the ICE Brent February contract helping pushing Brent prices
   higher.
   The rises in Nymex light, sweet crude prices were more modest, however, as
   brimming crude stocks at Cushing, Okla, the physical delivery point for Nymex
   futures, continued to weigh on prices. The U.S. Energy Information
   Administration reported Wednesday that stockpiles at Cushing hit a record 33
   million barrels in the week ended Jan. 9.
   The European Central Bank cut interest rates by an expected 50 basis points
   Thursday in attempt to assist the region navigate tougher economic conditions,
   but the announcement had little immediate impact on crude prices.
   At 1256 GMT, the front-month February Brent contract on London’s ICE futures
   exchange was up $1.62 at $46.70 a barrel, down from an intraday high of $47.20
   a barrel.
   The front-month February light, sweet, crude contract on the New York
   Mercantile Exchange was trading 4 cents higher at $37.32 a barrel. The more
   active March contract, which becomes the front-month contract next week, was up
   64 cents at $44.83 a barrel.
   The ICE’s gasoil contract for February delivery was up $17.75 at $475.25 a
   metric ton, while Nymex gasoline for February delivery was up 176 points at
   118.53 cents a gallon.
   A failure to resolve the burgeoning gas dispute between Russia and Ukraine –
   which has resulted in a halt of Russian gas flows to Europe – remained a source
   of support for crude, particularly Brent and European traded oil products
   Thursday. Meanwhile, news of Israeli shelling of several hospitals, a U.N.
   compound and a building housing several international media groups in Gaza
   Thursday triggered widespread criticism, refreshing some jitters over the
   potential oil market impact of heightened tensions in the Middle East.
   Despite the advances, market participants remain wary of weak economic
   readings, which risk thwarting any significant moves higher. U.S. weekly
   jobless data due 1330GMT Thursday are expected to be closely watched.
   “The market is still dominated by risk aversion and uncertainty over near-term
   demand, with market participants constantly depressing spot prices,” said
   Andrey Kryuchenkov at VTBCapital in London. “General sentiment remains negative
   and with more negative data expected this month, including disappointing
   earnings results, we see little upside potential for crude unless there is a
   supply side shock or more geopolitical tension.”
   Predictions that crude demand has slowed alongside shrinking global economic
   activity were endorsed by the Organization of Petroleum Exporting Countries
   Thursday. It made additional downward revisions to forecast global oil demand
   in 2009 and hinted it may still have to cut even more production if economic
   activity and crude prices continue to stumble. The group last month agreed to
   a 2.2 million barrel-a-day output cut beginning Jan. 1. OPEC shaved about
   30,000 barrels a day off its 2009 world crude demand forecast from its previous
   report, pegging total consumption at 85.66 million barrels a day, down 180,000
   barrels a day, or less than 1%, from 2008.
   -By Nick Heath, Dow Jones Newswires (Spencer Swartz in London contributed to this item.)

   Dow Jones Newswires
   01-15-09 0835ET

2. Hmmmm, I wonder if Exxon will bid?

   NYT
   DOW JONES NEWSWIRES

   Venezuela is quietly courting Western oil companies amid falling oil prices,
   the New York Times reported Wednesday, citing energy executives and industry
   consultants.
   The bidding process, which will close in June, moved “into high gear” this
   month, with authorities expected to review bids to recover oil from new areas
   around the Orinoco Belt in southern Venezuela, the newspaper reported on its
   Web site.
   Some of the companies asked to bid include Chevron Corp. (CVX), Royal Dutch
   Shell PLC (RDSA) and France’s Total S.A. it said.
   Under bidding rules, financing for any new projects is borne by foreign companies, according to the newspaper.
   There is an estimated 235 billion barrels of recoverable oil, requiring more than $20 billion in investment to produce a combined 1.2 million barrels a day, the newspaper said.
   Nineteen companies paid $2 million each last month – twice what it costs
   elsewhere – for data on areas open for exploration in the country, the
   newspaper reported.
   Venezuela’s energy minister Rafael Ramirez, who also is president of state-run Petroleos de Venezuela S.A., didn’t respond to requests for an interview, the
   newspaper said. Chevron Corp. spokesman
   Scott Walker said the company doesn’t elaborate on bidding beyond that decisions are based on economics and other factors, it said.

   Dow Jones Newswires
   01-14-09 2240ET

3. KIEV (AFP)–Russia and Ukraine will hold talks Saturday in Moscow in a bid to
   resolve their gas dispute that has left European countries without supplies,
   the Ukrainian government said Thursday.
   “Ukraine’s Prime Minister Yulia Tymoshenko and Russia’s Prime Minister
   Vladimir Putin had a telephone conversation at midnight, and decided to hold
   talks of the two governments in Moscow on Saturday,” the government’s news
   service said, according to the Interfax news agency.
   Russia cut off supplies to Ukraine on New Year’s Day following a dispute over
   late payments and a failure to agree on a price for 2009.
   It shut off all supplies a week later, accusing Ukraine of stealing gas bound
   for Europe, a charge Kiev has denied.
   An E.U.-brokered agreement on resuming gas deliveries to Europe collapsed
   Tuesday with both sides blaming the other for the failure.

   Dow Jones Newswires
   01-14-09 1935ET

4. Re 2. I saw that. “get out of our country you capitalist dogs … oh wait, don’t go, we need your help”. XOM won’t be back with Hugo in charge. If CVX does they deserve what happens.

   FSLR on the tape with a 5MW deal in Abu Dhabi.

5. SD call starting pretty much now:

   http://web.servicebureau.net/conf/meta?i=1113036301&c=2343&m=was&u=/w_ccbn.xsl&date_ticker=SD

6. Morning all.

   Z I was coming on to ask you about the difference between WTI and Brent crude – but see you have addressed it in your comments this morning. I have never seen anything like it – quite incredible.

7. For those of you who normally skip reading the post and jump to the chat I encourage you to take a look at the distillate section today for the pix only. Very disturbing trend of too much production and falling demand. I’m getting closer to shorting the refiners and am not certain waiting for the 4Q calls is still the right move.

8. Nicky – it seems like ten buck is a bit much to given Putin all the credit. That chart link I put in comparing the two goes back so far its hard to see the divergence. Here is another, better one:

   http://charts.barchart.com/chart.asp?sym=CLG9&data=A&date=011509&den=LOW&divd=n&evnt=ADV&grid=Y&jav=ADV&size=B&sky=N&sly=N&vol=Y&late=Y&ch1=011&arga=&argb=&argc=&ov1=&argd=&arge=&argf=&ch2=&argg=&argh=&argi=&ov2=&argj=&argk=&argl=&comp1=scg9&code=BSTKIC&org=stk

9. SD Q&A starting.

   Drilling program ?: Drilling going as expected. Further south wells in Warwick Thrust are as good or better than main part of Pinon field, have not yet increased EUR.

   Ability to find 100% sweet wells is proving difficult. Still finding some with 15% CO2 in the sweet areas.

   No thoughts on increasing size of currently under construction CO2 plant.

   No results yet on Big Canyon well (high profile).

   The new capex program will allow for growth with higher co2 wells in 2010. That makes more sense. Planning ahead to meet when the Century Phase I plant opening capacity is available. Production should ramp more sharply in 2010 than the 15% or so growth of 2009.

10. SD Q&A #2

    Tremendous interest in their deep rights and the cotton valley (shallow) rights in E. Texas. Have not yet decided if they will sell or go after the Haynesville/Bossier shale themselves.

11. BDI -12 908
    TED unch .98

12. By Brian Baskin
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–Crude futures traded lower Thursday, as the lack of
    storage at the contract’s delivery point continued to push prices lower in the
    U.S. even as the oil market stabilized overseas.
    Light, sweet crude for February delivery traded $1.15, or 3.1%, lower at
    $36.13 a barrel on the New York Mercantile Exchange. Brent crude on the ICE
    futures exchange traded 90 cents higher at $45.98 a barrel.
    Storage terminals are approaching full capacity in the U.S., particularly at
    Cushing, the Nymex contract’s delivery point. With nowhere to put next month’s
    oil, the February futures contract is falling in value, exceeding the decline
    in outer-month futures and moving in the opposite direction as international
    benchmarks. February crude now trades at a $7.83 discount to March, and nearly
    a $10 discount to Brent.
    February crude expires on Jan. 22. When a similar storage crunch developed
    ahead of the January contract’s expiration, front-month futures fell sharply,
    expiring near a five-year low below $34 a barrel.
    The market appears to expect the cycle to be broken in April or May, as the
    spreads between Nymex contracts approach less-excessive levels around then. The
    narrowing reflects the belief that reduced production by the Organization of
    Petroleum Exporting Countries will eventually result in inventory drawdowns
    this spring, wrote analysts with Barclays Capital.
    “While demand conditions remain extremely poor, the cuts OPEC has made …
    should prove large enough to offset,” the analysts wrote.
    Refined products are holding up better than crude, as heating oil futures in
    particular are supported by cold weather in the U.S. Northeast, the fuel’s
    biggest market. Russia has still not restarted deliveries of natural gas to
    Europe via Ukraine, which will increase demand for oil-based fuels the longer
    the standoff continues.
    Products are likely to be dragged lower if February crude plunges ahead of
    expiration, however.
    “We are still not ruling out a renewed (oil) price decline toward the $32
    area,” said Jim Ritterbusch, president of the trading advisory firm Ritterbusch
    & Associates. “Such a decline would … provide a significant downward drag on
    the products markets.”
    Front-month February reformulated gasoline blendstock, or RBOB, recently
    traded down 1.27 cents, or 1.1%, at $1.1550 a gallon. February heating oil
    traded 74 points, or 0.5%, higher at $1.4705 a gallon.

    -By Brian Baskin, Dow Jones Newswires

    Dow Jones Newswires
    01-15-09 0945ET

13. RIG closing in on target

    Oil trading with the market and looking to test yesterday’s low again. Getting ready to buy SU again…if oil holds.

    Had to miss the tail of the SD call, stock not reacting well at all, down 8%. I will await replay availability in a couple of hours. This is now a single digit midget. Some SDMs are there because they are like biotechs with the phase 1 drug in the pipeline but no real assets. Some SDMs have been beaten down to their but are worth a lot more in a normal financial market. SD falls into the later category. Real company meets hard times with too much debt on the books for peoples liking.

14. If you believe the broad market reverse and goes green today, the FSLR $140s are probably a good bet for a double.

15. CANROY update – from Penn West – PWE –
    Co said it anticipates 2009 capital expenditures will total between C$600 mln and C$825 mln dollars. Petroleum industry costs have not yet declined to the same extent as commodity prices, thus they intend to limit our near-term capital expenditures until supply and service costs are more reflective of current commodity pricing. Co anticipates spending between C$250 mln and C$325 mln in the first half of 2009, a reduction of approximately 50 percent from first half 2008 capital expenditures.

    Sounds familiar…

    They also cut the monthly payout from 34 cents CAN to 23 cents CAN. Going forward yield is still 20%+

16. Dow headed for 8,000; S&P looking at that 820 level now. Ugly.

17. Off subject –
    I wonder how long Congress will take to give/lend more $ to BAC before they find out that part of the loan/gift will be going to MER brokers as a bonus? I think we should start a pool on when Ken Lewis will be given the boot. My guess is mid February.

18. Broader market looks to be in close to a low in wave 3, then a bounce wave 4 before a final lower low in wave 5. Bounce for wave 4 is likely to take us to between 8200 and 8300.

19. Agreed Sam. Treasury and Congress seem to be stabbing around in the dark until they find something that supports the stock market. The only thing getting stabbed for sure is the tax payer.

20. Thanks Nicky.

    Gas number in 4 minutes. Stocks selling off into it as usual. Its getting to be a tradeable 30 minute event pre numbers.

21. 94 Bcf, too small.

22. Gas down 20 cents to 4.77, trying to hold the $4.75, next stop probably $4.50. Not a thing to get bullish about. We are by now means at record storage for this time of year. That honor goes to 2007 when storage was 213 Bcf higher for the same week but the difference is demand and supply have diverged since then. Very tough to see how gas is going to get out of the heating season much above $5 let alone $6 now. People are going to be 1) in shock and 2) in search of those names with big % of production hedged, and 3) wanting to see more rigs cut (and horizontal drilling rigs at that, not just gas rigs).

    Next Thursday should provide a bounce in gas prices but it will likely be muted and short lived. Between now and then the hedged names will likely start to outperform. The Street has largely ignored hedges in its sell off but the chatter is now starting to focus on who is hedged and who isn’t.

23. I do not understand why the US continues to IMPORT NG when we are awash with the stuff and Europe/japan are willing to pay more for it. Why aren’t we exporting it?

24. Cargo – Good question. We have not been awash for very long. Simple answer of why we don’t export more is it takes time to reverse things and it is unpopular. The U.S. do send a pittance to Japan each month and Congress has raised questions about whether or not they should OUTLAW the practice. For years gas production grew or contracted by 1 to 2% per year as did demand. In the last couple of years, the shales and tight gas sand plays brought oodles of gas to market (high decline rate mind you) that helped to offset a growing decline rate in the U.S. for conventional sources (now thought to average about 38% per year). So drilling these well gets you flush production and drilling more of them gets you production growth. But this growth is in the form of 80% decline rates (1st year) so drill less and suddenly, you have less production. So that’s the U.S. story and price is about to take care of the growth there. As far as Canada goes, they have been sending less and less gas south of the border as production declines and higher domestic demand take away available volumes. There was a big building spree in the late 90’s to get more capacity from the Western Canadian Sedimentary Basin (the WCSB) which is where the majority of Canada’s big reserves have been found traditionally to the U.S. midwest, and also some gas from off the east coast (Maritimes pipe). Some the pipes are being converted to transport oil from the sands plays and that will help bring down imports as well.

    In a nutshell, there is too much gas in storage and demand stinks due to the economy. This too will change. At some point, maybe mid 2009, there will be lower imports and lower production and gas traders will start to ponder lower levels of storage in 2010.

25. FSLR only green other than that little ALJ asphalt refiner.

26. Nicky, do you think $32 or $30 is the low for crude?

    Bored now, may go for jog.

27. ( DJ ) 01/15 11:02AM *DJ Israel Agrees To Egyptian Gaza Truce Plan – Egypt Official

    do we trust egypt officials??

28. By Christine Buurma
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–Natural gas futures slid Thursday after the U.S. Energy
    Information Administration reported a draw from storage that fell short of
    analysts’ and traders’ expectations.
    Natural gas for February delivery on the New York Mercantile Exchange was
    trading 15.8 cents, or 3.18%, lower at $4.812 a million British thermal units,
    reaching a fresh two-and-a-half-year low of $4.742/MMBtu after the EIA reported
    a withdrawal from storage of 94 billion cubic feet. Futures were about 1.8%
    below where they were trading ahead of the data release.
    Analysts and traders in a Dow Jones Newswires survey had predicted a 102 bcf
    draw. The five-year average withdrawal for this time of year is 88 bcf,
    according to the EIA. In the same week last year, 91 bcf of gas were pulled
    from storage.
    The latest withdrawal brings the total amount of gas in storage to 2.736
    trillion cubic feet, 3.1% above the five-year average and 1% above last year’s
    level.
    Traders could begin to make bargain buys as prices near historic lows, said
    Allen Rather, an independent energy analyst in Victoria, Tex.
    “The market internals are way oversold,” Rather said. “Once we broke the $5.20
    level, we haven’t had any bounce or signs of capitulation.”
    Although the National Weather Service was predicting below-normal temperatures
    in the U.S. Midwest and Northeast over the next two weeks, weak economic data
    was outweighing the forecasts. Gas demand has waned as financial downturn
    prompts industrial consumers to cut back.
    “The 94 bcf net withdrawal from last week was a third consecutive report
    featuring withdrawals below expectations, reinforcing the idea that the
    supply/demand balance in the market has weakened,” wrote Tim Evans, an energy
    analyst with Citi Futures Perspective in New York, in a note to clients. “Still
    rising supply and weak industrial demand are the most likely culprits.”

    -By Christine Buurma, Dow Jones Newswires
    Dow Jones Newswires
    01-15-09 1104ET

29. Well, at least I got the FSLR right on the day. Didn’t do the trade but the idea worked. Ugh. Still think it can go a lot higher if the market will actually head towards green.

30. Quick addition to Z’s reply to cargo:

    It also takes time and money. About 4 years minimum just for construction of the export plant and a few Billion bucks. There are some options to convert some of the import facilities to export facilities but this will only export LNG we import. Sounds goofy, eh’? But gasification of US produced gas takes a liquifaction plant. One being talked about up in BC Canada. I’ll believe that one when I see it. Money of that size is just too hard to get these days.

    Ugly market; time to go back on vacation!

31. Thanks Mark, good addendum. Any thoughts on whether the Majors are any closer to buying mode.

32. Oil just cracked $35.

    Rhetoric about more cuts from OPEC should start any hour now.

33. By Brian Baskin
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–Crude futures fell sharply Thursday as weak demand
    continued to force oil into storage, pushing up against capacity in some areas.
    Light, sweet crude for February delivery traded $2.88, or 7.7%, lower at
    $34.40 a barrel on the New York Mercantile Exchange, after falling as low as
    $33.70. Futures are at their lowest point since Dec. 19, when the front-month
    contract reached $32.40 a barrel. Brent crude on the ICE futures exchange
    traded $1.28 lower at $43.80 a barrel.
    Front-month oil prices are being pressured by the lack of available storage at
    the contract’s delivery point in Cushing, Okla. Inventories are still thought
    to be rising, as demand weakens faster than the Organization of Petroleum
    Exporting Countries cuts production.
    February crude expires on Jan. 22, increasing the pressure to sell futures now
    in order to avoid taking delivery where there is little free storage. The
    market is likely to continue to be pushed lower by the situation at Cushing
    until refiners in the U.S. Midwest increase runs, or producers reduce output
    even further.
    “It’s going to be difficult over the short term to have storage levels come
    off substantially,” said Harry Tchilinguirian, senior oil analyst with BNP
    Paribas.
    The February contract is increasingly isolated from the rest of the oil
    market, however. Brent trades near a $10 premium, and oil available in the
    physical market also trades at a large premium.
    Front-month February reformulated gasoline blendstock, or RBOB, recently
    traded down 5.28 cents, or 4.5%, at $1.1149 a gallon. February heating oil
    traded down 2.58 cents, or 1.8%, at $1.4373 a gallon.

    -By Brian Baskin, Dow Jones Newswires
    Dow Jones Newswires
    01-15-09 1220ET

34. Gut wrenching spike down underway for oil. Typical wave 5 action, currently in 3 of 5, expect a bounce for 4, and then a final leg down for 5. Wouldn’t be surprised to see that coincide with the expiry of the Feb contract next Tuesday.

35. Nicky – agreed re expiry on 1/20. Oil seems to pause at the whole numbers and run lower in between them.

36. Hey Nicky,
    Again, great call. Little bit confused by your note #34. Which exactly do you think coincides with the expiry? (The final leg 5?) I get confused with the time frames. I thought you were saying yesterday that 4 up is the run to 60. Thanks.

37. KOG – someone doing a little shopping, 100K shares in 1 minute.

38. New positive presentation by CHK yesterday. What gives with today’s price action?

39. El-d. Natural gas and the market, many off in 5 to 15% today. No one cares about growth for the moment or hedges.

40. Sorry Tater. I agree its confusing and I make it even more so.

    #34 is the smaller degree waves. The big picture is that we are in wave 5 of 3 down and once it bottoms ($30 region) we should see a bounce for wave IV (60 area I mentioned yesterday before the final leg down for wave V.

    Now breaking down 5. We are now actually in 5 of 5 and within that we are in 3 which maybe close to completion and then we should see a small wave 4 bounce before the final wave down to complete 5 of 5.

    So now just concentrate on this smaller timeframe of waves which I think are getting close to completion. Once done we can look at possible targets for the rally.

41. Good afternoon. Sorry to miss posting morning comments, but not much new going on in credit land. Consider that to be “Good News” as lately we have seen a lot of corporate issuance get done — at wider than expected spreads, but done nonetheless.

    In spite of the dismal spectacle of the stock market (and especially the energy kids), the bond market is holding in there. Even though stories about bankruptcies continue to roll in (Smurfit-Stone, Charter Communications, and Spansion being the latest names on that list) credit continues to trend OK. The IG opened around 220 bps this morning and is now trading around 224, so outperforming equities. Volumes in the indices and secondary markets rather quiet today.

    Our benchmark KSU 13 due 13 is offered at 104.5. Continuing to move up from it’s debut in mid-December at 88.4

    JNK ETF is trading close to it’s $30.60 NAV, which indicates that there has been some profit-taking in this ETF. However, with a 14.5% incidated yield, it is still an attractive way to play the rebound in corporate credit.

    One major fly in our relatively happy-talk commentary, tho… the Credit Bears (yes, they are real… no, i am not making them up… and no, i am not a conspiracy theorist) have been at bay since mid-December. They covered their shorts back then and have since been biding their time, waiting to return and wreak havoc in the credit market. They have been eyeing the SPX 850 level as the signal to get back to work.

    So, if we can’t get the SPX back over 850 in a week or so, the credit Bear Raids will start to roam again. Expect to see them strike out at the finacial sector first, pressing their bets in the difficult to follow CDS market. If successful, I expect we will make new lows in the stock indices, before it’s all over.

42. Nicky, Thank you very much! I am trying to use the crude updates that you give to verify/learn EW. Helps so much to hear you present like #40. I can’t tell you how much it helps.

43. Nicky – any chance you’d put some EW on NG?

44. Crude down $4

45. Its 24 in Little Rock with light snow, going to 10 tonight. Record on this date is 5. Normal is 30 low. Expect to see a big rebound in withdrawals next week as the producing region contributes.

46. Glad to help T. If you look at the move down from the 38 area this morning you can now count 5 clear waves down. It can continue to subdivide but if it moves above 35.50 then likely we are seeing the small wave 4 correction.

    A move above the 40 region would say the whole down move was finished for now and the bigger correction is playing out.

47. Saw this comment on the web today “Aubrey McClendon has purchased the two houses next to his ($1.5MM each) to doze to make room for a formal garden.” Okies are not pleased

48. Nicky, I am the last one to be discussing EW because my eyes start rolling when we get into the sub-waves but I read some commentary from various sources that when a wave sub-divides, as you indicated in #46, it indicates that the overall move is very strong. Do you have an opinion because it obviously has importance as to where this move down will slow or turn.

    Thanks very much for your input-it helps in understanding the overall context.

    Tom

49. z – do you really jog in 24-degree weather?

50. Pete – Now’s not the time to see that…not after the $75 mm working interest bonus. Wonder as to the veracity of that.

    BOP – elliptical with CNBC attached.

51. Seeing quite a bit of bottom fishing in E&P again. My sense is, tread lightly through next week, then buy in lower, doing only small trades on mid day or end of day weakness until both oil and gas find a new bottom.

52. No it is not confirmed yet but was given by a trader with F@#@ CHK on the last of his statement

53. IG 220

    we seem to be having some sort of stock mrkt rally, pulling bonds along with it… is it just b/c we held 820? or, is there something else going on…

54. Z,

    Here is another take on the NG number. A few weeks ago things were not that out of whack on weather/SD balance but have really gotten out of hand since. Sometimes there appears to be “make-up” periods for the EIA and we mignt be in one them. Could this be possible?

    Thanks

    Bill

55. CHK 15 Jan calls look quite cheap for a quick gamble bid .25 ask .30

56. Re 52. I never made money chewing on sour grapes. The asset value there is beyond the trader’s understanding.

    Bill – it is possible yes. Lots of chemical and steel curtailment announcements over the holidays. Electricity demand has been flagging as well.

    I also suspect that production increased during this period in the Gulf and that frac spreads are low enough to leave gas “wetter” inflating the stream in the producing region. This can lead to some pretty large swings (a couple of Bcfpd possible).

    One thing is certain, no season high withdrawal next week and gas will be $4.50.

    That FSLR trade of the day from earlier is up 107%. No, I did not pull the trigger.

57. ok…. guess BAC getting additional $15b in TARP $$ is lifting all boats here….

58. IG 218 rallying with the BAC news

59. MNT – It’s been a bad week, the thing is due a bounce, even if oil and gas don’t. I took my WildZ shot of the month at SWN for a nice scud as of this morning. I will say that on days like this (and you really are looking at just today and tomorrow on an option like this) strength or relative strength begets more of the same so if something is up it will go up more on a market rally and what is weaker (like CHK today and some others) will get left behind. Not trying to talk you out of it, just thinking best to be nimble and go with strength. The flipside to that is buying at the end of the day for a perceived morning pop. In that case, the worse % mover on the day can often be the best rally name the next morning.

60. IG 217 tightening pretty rapidly… guess someone was short.

61. Majors green, some E&P, one or two service names with decent rally in the broad market underway.

    OIH going positive: Could be a good quick play there on HAL which has had a big tumble and has tight option spreads. Also, a name like RIG can fly in here.

62. Z – Thanks for the thoughts, I realise that it is nothing more than a crap shoot. But with all the negativity around and the fact that the gas number is behind us, makes me wonder whether we are in for a bit of upside.

63. MNT – re the gas number behind us. I agree, lot of negativity. This is from tonight’s gas piece, first draft (I did not go jogging)

    If we had come in triple digits, at least 110 I would have thought we would see that mild rally into next week’s number. Now, I think that still happens, probably on Tuesday (Monday is a equity market holiday) but that fear takes over sometime Wednesday unless the HDD number is some crazy 275+ beasty and then gas should move back over $5.25. Otherwise, traders sell into the number thinking “fool me three times, shame on me…”

    Looking at the rest of the withdrawal season, traders are going to do the straight-line math with the time remaining and think, “I really need to sell”. So unless the weather stays very cold and the withdrawals snap back into something like Jan/Feb levels from these November looking numbers that’s their game plan.

    Right now there are 12 weeks left in the season. To get to last year’s storage trough we need to see withdrawals average 125 Bcf. At first glance that would seem to be a tall order. Want to get to the 5 year average? Try 116 Bcf. Again, pretty tough. But then recall that we are seeing a much colder January than originally forecast and that February is still supposed (— update with Bastardi) to be bitterly cold. Taking a look at the Residential demand in the cold years shows we can get there, if we get that sustained cold.

64. Green market.

65. MNT – nearly a double on those calls of yours.

66. Off subject

    http://www.thebailoutgame.us/

67. IG 215 now. good to see this rally along with stocks.

68. This rally is GREEN. Gold stks are moving up strongly as well.

69. Nicky –

    I just wanted to say thanks very much. Your prognostications and (as yet) arcane references have sent me to the books, determined to understand what is afoot! Love getting my mind around something new.

    JR

70. jan17.50 hk calls..are you holding through tomorrow? those things were dead weight this am..now back to .25

71. By Raul Gallegos
    Of DOW JONES NEWSWIRES

    CARACAS (Dow Jones)–Venezuela’s state-owned energy company is struggling to
    pay its bills as cash flow dries up due to rock-bottom oil prices.
    Petroleos de Venezuela SA has fallen several months behind on payments to oil
    service companies and other suppliers that keep its oil business running, a
    source of concern for many in the industry.
    Oil company executives say PdVSA, as Venezuela’s flagship firm is known,
    stopped paying service firms in August and the debt to all suppliers may have
    risen by as much as $3 billion. As of September, bills owed to suppliers stood
    at $7.86 billion, a 39% jump from the same nine-month period in 2007, according
    to PdVSA figures.
    French oil services company Schlumberger Ltd. (SLB) and U.S. firm Halliburton
    Co. (HAL) are now owed a combined $800 million to $1 billion by some estimates.
    Officials at both companies declined to comment on the matter.
    “We’re having a hard time, just as many other firms in a similar position
    around the world,” Eudomario Carruyo, a PdVSA board member and head of finance
    told Dow Jones Newswires in an interview. “Our revenues just got cut in half.”
    Carruyo would not confirm the amounts owed to top suppliers. “The amounts are
    important, but they’re manageable,” he added.
    The price for Venezuela’s basket of crude and products has lost more than $100
    since reaching record levels last summer, to $37.62 a barrel, less than half of
    last year’s average.
    The outlook for world oil prices and other commodities looks grim for the
    medium term. The global economy is slowing sharply, and the U.S., Venezuela’s
    top oil customer, is expected to suffer the roughest tumble in decades.
    Under the circumstances, PdVSA is pondering its financial strategy for the
    coming year, Carruyo said. As an initial step, the company plans to renew a
    $1.16 billion credit line with a group of banks led by BNP Paribas (BNPQY) for
    “a similar amount.” Other financing options are also on the table.
    But foreign companies are already signaling concern. Regional executives for
    both Halliburton and Schlumberger have visited Venezuela over the past month to
    discuss pending bills.
    In some instances, service firms have stopped taking on new oil well service
    offers and are mainly working on those fields with standing contract
    agreements.
    In a recent meeting with service companies, a PdVSA board member asked them to
    cut down on their charges by 40%, according one executive with knowledge of the
    meeting. The proposal did not sit well with those firms.
    “This is worse than the oil strike,” an oil executive said, recalling a
    three-month oil industry strike that began in December 2002. “At least back
    then we were getting paid.”
    Members of the Venezuelan Petroleum Chamber are now planning an emergency
    meeting with PdVSA to discuss a way out.
    Amid the troubles, President Hugo Chavez has vowed to subordinate all state
    priorities to fund popular social spending programs. Indeed, PdVSA has
    sacrificed needed oil investment over the past few years to finance
    entitlements for the poor.
    “You can bring the oil price down to zero, but the revolution will go on,”
    Chavez said during his yearly address to congress Tuesday, a message that has
    become his mantra of late.
    Already the leftist leader signaled to fellow members of the Organization of
    Petroleum Exporting Countries, OPEC, that Venezuela will support any output
    cuts needed to push up oil prices. Chavez, long a champion of strengthening the
    oil cartel, has long relied on OPEC muscle to foster high crude prices.

    -By Raul Gallegos; Dow Jones Newswires

    Dow Jones Newswires
    01-15-09 1418ET

72. Pearl – yep, I am but will likely sell early in the day … depends on the tone.

73. Waxman promises quick action on climate

    Jan 15 11:18 AM US/Eastern
    By H. JOSEF HEBERT
    Associated Press Writer

    WASHINGTON (AP) – The chairman of a key House committee says he wants to pass a climate change bill before Memorial Day.

74. MNT – your trade was a triple at its peak. Nice.

75. Pop – Waxman, my anti-candidate for that spot. Unless we erect a wall into the stratosphere, those on the opposite side of the planet will benefit as they won’t be on board with “the plan”.

76. Another trade thought with tight spreads is COP which is down today vs up 1%+ moves in XOM and CVX. The cause for the down move is noise or the move in natural gas. If market goes solid green that one generally will play fast catch up. The Jan $50s are trading $0.20 x $0.21 so nice penny spread for you gunslingers.

77. Z – I have been taking a lead from the advice in the “Market Wizards” books and trading very small in the last few weeks until I get some form of improvement in my performance. As for the CHK trade I got in okay but I havent got out yet 😉 My biggest problem recently has been round tripping my option trades so I am with you when you say you are going to be trading shorter time frames. Let’s see what the market can do in the last half hour.

78. Market has very tenuous hold on gains.

79. 100 Billion to BAC? Tell me it aint true!

80. IG 218 backing down a bit with the mrkt. amazing swings today.

81. hearing small plane down in Hudson river?

82. Sambone – BAC = reading $100-200Bs to back MER + money from the TARP.

    wow.

83. BAC is only worth 50 Billion. I bet old Ken Lewis is gone and I bet ya that Hank “Bazooka” Paulson will be the new CEO. Wow!

84. sell-off corresponded to article about Democrat proposing measure to limit “credit card abuses” again. The old bill died in the Senate. The consumer finance kids sold off…

85. A US Airways plane crashed into NY’s Hudson River

86. Hope they are ok but they don’t call it US Scare for nothing. Stock sold off hard, could be the airline play I’ve been looking for re low oil. Still think that is probably CAL but it could be.

87. It seems like BAC is telling the world they have much more liabilities than assets. I’m the slow type, but isn’t that bad?

88. pilot hit a flock of geese…

89. That is why I try to shoot them.

90. makes sense to me

91. that, and they are tasty.

92. At least it was not a flock of seagulls. That would have been very messy/bad.

93. 169 people on board. sounds like everyone is ok. geese a little banged up, th.

94. re 91 – you should always eat what you kill. That is why I always thought it was a good idea for analysts to buy the stocks they recommended. But, (that paragon of virtue) Eliot Spitzer didn’t see it that way.

95. Gas storage post up

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