Wednesday – Oil Inventory Preview + Some Other Thoughts

In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Oil Inventory Preview
  4. Stuff We Care About Today - ATW, Refiners
  5. WIOWIO Part II
  6. Odds & Ends


Holdings Watch: No changes yesterday.

Commodity Watch:

Crude oil fell $1.90 to close at $49.15 on equity market weakness and a bounce in the dollar. This morning crude is trading off by about a buck.


Natural gas fell $0.17 to close at $3.56 on a combination . This morning gas is trading flat this morning.

  • Sable Island Closed: Exxon has closed its 400 MMcfepd of production from the Sable Island field off the coast of Nova Scotia. The M&NE pipeline feeds a majority of those volumes (less some minor local demand) into Maine with the ultimate target being Boston. Exxon said they are working the problem but provided no details or timeline for restart.
  • Revised Early Read On Natural Gas Storage: Consensus now calls for a build of 12 Bcf.
  • Nicky's Natural Gas Technical Analysis Comment:

We have a major support area in the 3.5 - 3.7 area and we have made a new low and the chart pattern to the downside is showing signs of completion. this is the third 9 month decline this decade which argues for a low in April 2009.  During the 1990’s (1996,1997, 1998 and 1999) nat gas found resistance in the 3.5 - 3.7 area. This resistance is now support.


Oil Inventory Preview: Estimates from the Bloomberg Survey


 API Watch: Another giant build for crude ...

  • Crude: UP 6.9 million barrels
    • Imports were seen as down nearly 0.9 million bopd (6 million barrels less than last week)
    • Refinery throughput was seen up 0.76 million bopd (500,000 barrels more on the week)
  • Gasoline: UP 2.1 million barrels
  • Distillate: DOWN 2.3 million barrels
  • Gotta say those are pretty confusing numbers when you contrast the big build in crude stocks with the drop in imports and the increase in demand for crude.  Hmmm, "lies, and damned lies, and statistics" comes to mind.  

ZComment: Normally this week crude inches up slightly as the refineries complete their Spring turns while products both fall by about 2.5 mm barrels for the week as demand picks up while the refiners are still down. Suffice it to say this year is different but you can see a nod to those old trends in the Bloomberg numbers for products. Couple of points here:

  • If API is right about imports falling back off in the magnitude they report would produce an unexpected draw on crude and a rally. Imports have been moving back up from the OPEC meeting and a majority of this move has been seen with volumes expanding along the U.S. gulf coast. So OPEC needs to get its house in order (that's a bad Chavez, down boy!).
  • Note also that WTI is priced from Cushing, Oklahoma where stocks have been slipping lower for weeks. This isn't so much demand as it is supply crimped from the Bakken and from Canadian flows. A further fall in Cushing will be supportive.
  • Gasoline demand needs to inch on above 9.1 mm bpd for me to warm to VLO and other refiners as I am thinking about doing in the next section. If demand does not pick up commensurate with a return in refining utilization gasoline stocks could become bloated meaning weak cracks through the season.
  • Distillates: Demand may be starting to lift but stocks are 30% high to the five year average. Note in the Analyst Watch I included some trucking names receiving upgraded targets to today. Diesel is probably going to be cheaper than gasoline at the peak of summer this year.


Stuff We Care About Today

ATW Acquisition Rumor: In the market yesterday, company says it's an unfounded rumor to their knowledge. I've been thinking about an entry here but not for this reason (my reasoning is earnings leverage going forward).  We had a rumor out for HAL last week and it appears bulls are trying to induce short squeezes to get out of their postions prior to earnings. Most management teams who've passed the recent CTscan that has been this market are not thinking now is the time to get aggrevissive with their hard earned cash or already beaten down internal currency (their stock). 

Refiner Comment: Warming to the idea of buying some VLO. No one expects anything out of the quarter and while distillate stocks are bloated, gasoline is just "in line". I've included estimates and prices from a month ago to highlight the recent changes in thinking on the group. The numbers are slightly lower but are not falling as fast as they have been.


CRK - Comstock Resources, $35 April Calls, will likely swap to May strikes between today and Monday

  • Operations update "any day now" may actually be further a little further off
  • Horizontal Haynesville wells #3 to #5 (H.S. to talk about although the #5 was still completing last week). 
  • 5 more Hz H.S. wells drilling at present
  • 17% debt to cap
  • < 10% hedged for 2009. Low for the group by far good for gas leverage if you see a back half 2009 recovery in prices as I do.
  • Seeing enthusiasm from the analyst crowd as to their balance sheet strength and ability to grow reserves through the dip in prices.
  • They see 3.3 Tcfe of probable reserves on their 70,000 net acres in the Haynesville. (70,000 acres / 80 acre spacing X 5 Bcfe per well X 25% risking)
  • Trades at 7.4x 2009 CFPS which is not exactly cheap these days but their cash flow numbers are going to be more sensitive to changes in gas prices and the 2010 numbers put it at 4.8x through a combination of expected Haynesville and S Texas production growth and higher natural gas prices.
  • Good land with strong balance sheet = better valuation. At first blush, reserves on a $/Mcfe basis look a bit on the high side at an implied value of $2.82/Mcfe but the reserve potential of their Haynesville acreage position, along with a balance sheet necessary to get the remaining portion of their position into held by production status, is skewing that valuation above their peers, much as it does for SWN.


Odds & Ends

Analyst Watch: SunTrust RH initiates CRK with a Buy and $44 target, UBS cuts (CEO) to Sell, (COP) to Neutral. KeyBanc raising targets on the truckers (can you say cheap fuel prices?), modestly boosts targets on (JBHT), (KNX), and (LSTR).

Cramer Vs Roubini

127 Responses to “Wednesday – Oil Inventory Preview + Some Other Thoughts”

  1. 1
    Sambone Says:

    By Nick Heath

    LONDON (Dow Jones)–Nymex crude oil futures fell more than $1 to below $48 a
    barrel Wednesday as market participants priced in the prospect of a large build
    in U.S. crude oil stocks.
    Expectations hardened that the U.S. Energy Information Administration will
    reveal at 1430 GMT that crude stocks continued to build on their 16-year highs
    last week. The American Petroleum Institute published its own data Tuesday
    showing U.S. crude stocks rose 6.9 million barrels.
    Meanwhile, European equity markets followed U.S. and Asian bourses lower,
    tarnishing optimism that the worst of the economic downturn may have passed,
    and with it falling crude demand.
    “We’re moving up and down a little bit on dollar and equities, but the numbers
    coming out from the EIA just don’t seem to be confirming any increase in
    demand. The best we can say is it’s bottoming out,” said Simon Wardell, analyst
    at Global Insight in London.
    At 1057 GMT, the front-month May Brent contract on London’s ICE futures
    exchange was down 89 cents at $50.33 a barrel.
    The front-month May light, sweet, crude contract on the New York Mercantile
    Exchange was trading $1.35 lower at $47.80 a barrel.
    Ahead of its 11GMT expiry, the ICE’s gasoil contract for April delivery was
    down $9.50 at $430.25 a metric ton, while Nymex gasoline for May delivery was
    down 365 points at 142.39 cents a gallon.
    According to a Dow Jones Newswire survey of 14 analysts, all but one predicts
    U.S. crude stocks rose last week, with estimates ranging between unchanged to
    an increase of 5 million barrels. On average, they’re seen up by 1.9 million
    Gasoline stocks meanwhile are expected to decline by 900,000 barrels,
    according to the analysts’ average, while distillate stocks are expected to
    fall by 200,000 barrels.
    Meanwhile, analysts suggested that refinery activity will become increasingly
    important in coming weeks, both in determining the fate of crude oil
    stockpiles, and illustrating the wellbeing of wider U.S. oil demand.
    In Wednesday’s data, the surveyed analysts predicted refinery utilization will
    increase by 0.1 percentage point to 81.8% of capacity.
    “The (refinery) maintenance season is coming to an end. If the runs don’t go
    up it tells you the refiners don’t see demand and see no reason to increase
    output,” said Jim Rintoul, analyst at London-based trade advisory
    TheOilTrader.com. “If runs do go up we will start to see some seasonal crude
    Signs of demand weakness elsewhere also weighed on prices Wednesday. Japan –
    the world’s third largest oil importer – saw increases in its stocks of crude
    and several major product categories. The country’s crude stocks rose in the
    week to April 4 to 16.4 million kiloliters, or about 103 million barrels, 9.4%
    higher on the year.
    Also leading crude lower, equities fell Wednesday as investors braced
    themselves ahead of what may be a rocky corporate earnings season.
    Aluminium-maker Alcoa posted disappointing results late Tuesday underscoring
    fears over sagging industrial demand.
    “Certainly, looking at the equities is a quick guide to the state of the world
    economy, and there are no signs there of any swift recovery in demand for oil,”
    said Christopher Bellew, senior vice president of energy sales at Bache
    Commodities in London. “We’ve got a way to go before we dig ourselves out of
    the deep hole we’ve got ourselves into.”

    -By Nick Heath; Dow Jones Newswires(Kimberly Vlach in London contributed to this item)

    Dow Jones Newswires
    04-08-09 0719ET

  2. 2
    Sambone Says:

    April 8 (Reuters) – Canadian Oil & Gas:
    * UBS cuts Imperial Oil Ltd IMO.TO to sell from neutral
    * UBS cuts OPTI Canada Inc OPC.TO price target to C$3.50 from C$6; rating
    * UBS cuts UTS Energy Corp UTS.TO price target to C$2 from C$2.75; rating
    * UBS cuts Compton Petroleum Corp CMT.TO to neutral from buy; price target
    C$0.95 from C$2.50
    * UBS cuts Galleon Energy Inc price target to C$6 from C$8.50; rating
    * UBS cuts NuVista Energy Ltd NVA.TO price target to C$9 from C$13; rating
    * UBS cuts Arc Energy Trust AETUN.TO price target to C$16 from C$18; rating
    * UBS cuts Bonavista Energy Trust BNPUN.TO price target to C$18 from C$21;
    rating buy
    * UBS cuts Crescent Point Energy Trust CPGUN.TO to neutral from buy; price
    target to C$25 from C$28
    * UBS cuts Penn West Energy Trust PWTUN.TO to neutral from buy; price target

    to C$11.50 from C$14.50
    * UBS cuts Enerplus Resources Fund ERFUN.TO price target to C$23 from
    C$27.50; rating buy
    * UBS cuts Harvest Energy Trust HTEUN.TO price target to C$5 from C$10.50;
    rating buy
    * UBS cuts Pengrowth Energy Trust PGFUN.TO price target to C$8.50 from C$11;

    rating buy
    * UBS cuts Progress Energy Resources Corp price target to C$10.50 from

    C$12.50; rating buy
    * UBS raises Canadian Oil Sands Trust COSUN.TO price target to C$28 from
    C$26; rating buy
    ((Bangalore Equities Newsroom))

    Wed Apr 8 11:58:11 2009

  3. 3
    Sambone Says:

    08:50 04/08 *DJ ConocoPhillips Cut To Neutral From Buy By UBS – Briefing.com >COP

  4. 4
    tater Says:



  5. 5
    bill Says:

    Like the prodigal son, i was lost but now found. Thank you z for bringing back to the fold

  6. 6
    bill Says:

    an energy stock i like is PXP.

    Cashed out over billion in hedges to pay off bank line which now is 0. Additionaly, they reset oil hedges with 55 puts, which means they have upside exposure if oil climbs and 100 % hedges on ng production at prices north of 10.

    The differentials for the calif oil is getting better and they own 20 % of chk haynesville

    Finally, a little good news yesterday..

    A group of independent producers is set to receive more than $1 billion in recovered costs after the federal government declined to appeal a court’s order to pay the costs for some offshore California leases that were never developed

  7. 7
    bill Says:

    its worth about 80 m to pxp from their 10k

    On November 15, 2005, the United States Court of Federal Claims issued a ruling granting the plaintiffs’ motion for summary judgment as to liability and partial summary judgment as to damages in the breach of contract lawsuit Amber Resources Company et al. v. United States, Case No. 02-30c. The court’s ruling also denied the United States’ motion to dismiss and motion for summary judgment. The United States Court of Federal Claims ruled that the federal government’s imposition of new and onerous requirements that stood as a significant obstacle to oil and gas development breached agreements that it made when it sold 36 federal leases offshore California. The court further ruled that the Government must give back to the current lessees the more than $1.1 billion in lease bonuses it had received at the time of sale. On October 31, 2006, the court issued an unfavorable decision on the plaintiff’s motion for partial summary judgment concerning plaintiffs’ additional claims regarding the hundreds of millions of dollars that have been spent in the successful efforts to find oil and gas in the disputed lease area, and other matters. Plaintiffs filed a motion for final judgment on November 29, 2006 and the court granted such motion on January 11, 2007. Judgment on the $1 billion on 35 leases was filed January 12, 2007. The United States has filed an appeal and Plaintiffs filed a cross-appeal concerning the Court’s October 31, 2006 decision. The United States Court of Appeals for the Federal Circuit affirmed on August 25, 2008 the trial courts’ judgment in all respects concluding that the lessees may recover $1 billion in lease bonuses paid. The United States filed combined petitions for rehearing and rehearing en banc in October 2008, but the United States Court of Appeals for the Federal Circuit denied the Government’s combined petitions on December 5, 2008. On December 24, 2008, the United States Court of Appeals for the Federal Circuit agreed to stay the mandate for 90 days pending consideration of the Government’s possible filing of a petition for writ of certiorari. No payments will be made until all appeals have either been waived or exhausted. We are among the current lessees of the 36 leases. Our share of the $1 billion award is in excess of $80 million.

  8. 8
    zman Says:

    Glad you’re back Bill, just in time for the slow season. They’re thinking about changing it from “go away in May” to April.

    Here ya on the PXP, I’ve looked at them, never really gotten that close to buying, will do a little digging to come up to speed. I thought it was interesting they requested an out-option on the Haynesville with CHK in 2010. I guess they wanted flexibility on spending if prices remain low for a long time.

  9. 9
    zman Says:

    Thanks very much Tater, will have a look.

  10. 10
    PackMan Says:

    Anything on EOG today ?

    9:17 am, after most pre market trading closes, they started to puch the stock down.

    Is it a premarket raid ? Or a downgrade …

    could be a scalp oppty here.

  11. 11
    bill Says:

    here is a link to the topic


    looks like noble is another winner

  12. 12
    zman Says:

    Nice run through, thanks again T.

    Packman – agreed re opportunity, don’t see any broker comments or news.

  13. 13
    zman Says:

    Gotta get coffee, back in 20 minutes.

  14. 14
    bill Says:

    As most of you know, many E&P comapnies had non cash impairments at ye due to low prices.

    NG at ye was 5.71..given we are at 3.50 does this mean more impairments in q1? If so, this would be a huge equity hit and make debt equity ratio’s rise

  15. 15
    tater Says:

    Added EOG to the chart list. Not much there to go on today, but maybe in the near future.

  16. 16
    elduque Says:

    BDI -2 1463

    TED 95.11

    I am not keeping track but BDI supposedly down 21 straight days.

  17. 17
    choices Says:

    I’ve seen Phil Flynn’s name mentioned a few times here so I throw this out-he has a buy recommendation on May Nat Gas at 3.30, stop 2.90, May crude at 44.80, stop43.30-recently stopped out of his May crude from 50.75.

    Do not anything about this guy or his track record but has been bearish up until recently-comes off in his posts as a Cramer clone.

  18. 18
    choices Says:

    nat gas buy s/b 3.20-not enough coffee yet.

  19. 19
    zman Says:

    Re 14. That’s true. I think it will be viewed by the banks as a non-event. Those are non cash charges. Yes, the deplete equity on the balance sheet but the bank lines will be looking more to coverage and reserves at this point and since the reserves don’t go away, just get written down its really just an accounting issue and easily forgiven. Also, taking the charge reduces the cost basis of your reserves and thereby your DD&A rate which actually increases your earnings going forward (although it has no impact on cash flow). I think the banks in their redeterminations will discount these writedowns.

  20. 20
    zman Says:

    HAL put trade starting to work, BHI puts working well now, and filling gap on the chart.

    Re Phil – I started getting hate mail over a year ago from his traders which was an honor. He was a perma bull on oil who changed his stripes at $97 going bearish. In the mid $140s he was saying semi-bullish things but now would probably deny that. Anyway, he has been bearish for awhile now to his credit and his long term track record is not that bad. I don’t find his daily piece to be much of a value add, really just an ad, but I’m probably biased.

  21. 21
    zman Says:

    Choices – is that Smith Barney? in 18?

  22. 22
    zman Says:

    CRK not getting a lot of help from the SunTrust initiation yet.

    HAL trying to break round number support at $16. Without a return to runaway market status I think we see $15 in short order which should help with my $14 and $15 Aprils which are getting short in the tooth. I plan to be in May puts eventually but not necessarily over the earnings release on April 20th, at least not in a meaningful way unless I get some new data points.

  23. 23
    zman Says:

    ELd – Best to check here.


    Index off slightly, don’t think its 21 straight days but maybe, hard to tell from the chart. Definitely been off last two weeks but Cape and Panamax (the bigger ships inched up yesterday while the smaller ships fell enough to tip the index down). Chinese iron ore negotiations are probably 3 weeks from over which will finalize a price and probably get more ore and then coal moving to China. With that out of the way, prices should lift. Mean while, the number of ship in hot hold status is growing around the world (crew on board, doing nothing except paying the port fees for being there, lots of poker, internet surfing, fishing etc…)

  24. 24
    PackMan Says:

    looks like EOG raid successful

  25. 25
    choices Says:

    z-sorry-it refers to #17-flynn’s reco on nat gas, should be 3.20

  26. 26
    zman Says:

    Pack – if for some reason like falling imports we get an unexpected drop in crude EOG is on my hot button to buy.

  27. 27
    zman Says:

    Gotcha choices, thanks. I’d have to agree that it’s a buy down there, my current hold level is $3.50, if breaks that, I’m with Nicky. Pretty hard to find a basin in the U.S. where this current level inspires a desire to add rigs.

  28. 28
    zman Says:


    Sold the BHI April $30 Puts (BHIPV) for $2.15, up 51%, with the stock at about $28.30 and just before the EIA numbers. Continuing to hold the HAL puts.

  29. 29
    Dman Says:

    I’m guessing the EOG dip is a combination of yesterdays’ oil dip & a bear raid as earnings approaches & the rumor-mongers are clearly active and they are getting traction (eg ATW).

    Z – still on EOG: do you have a picture of their cash flow at current commodity prices? Eg. are they living within it?

  30. 30
    zman Says:

    ZTRADE: Bought $10KP 10 EOG $60 April calls for $0.75 on the oil numbers with the stock off worse than the group.

  31. 31
    zman Says:

    EIA Numbers:

    Crude: up 1.7 mm bbs
    Cushing fell again, down 900M to 30 mm barrels even.

    Gasoline: up 0.6 mm bbs
    Distillate: down 3.4 mm bbs

    Imports: 9.3 mm bopd, so slightly off, better.

    Utilization: 81.8% – essentially flat.

    Gasoline demand: 9.024 mm bpd, would have liked to see that a bit higher

    Nutshell, fairly bullish report

  32. 32
    zman Says:

    D – back to you in a couple on EOG.

  33. 33
    zman Says:

    EOg – If prices held flat here for the rest of the year probably not, but they then would not spend as much. At current estimates for the year which assumes a gradual rise in oil and gas prices in the second half they are within expected cash flow. They have some good gas hedges and no oil hedges and will get oilier. Mark Papa is very conservative guy, debt to cap is sub 20% and he will hold that flat for 2009 even if they have to scale back more in the Barnett and Bakken. For future reference, if you want to see who is and who is not within estimated cash flow you can take a look at the capex to cashflow graphs (they are 0.9x) on the E&P tab.

  34. 34
    zman Says:

    CLR, WLL like to rally strongly if crude goes green.

  35. 35
    zman Says:

    Crude green.

  36. 36
    elduque Says:

    Not sure anyone is following the ags here, but very bullish conference call on Mosaic. Basically saying that although demand is currently down it has to ramp up by the end of the year. Well worth taking the time to listen to.

  37. 37
    zman Says:

    Eld – I follow them loosely via the fertilizers, are they saying demand will pick up because planting has been low?


    CLR – $10KP added (5) April $25 calls (CLRDE) for $0.40 with the stock at $22.35 as oil goes green on the day after a more bullish report. See comment 31 on today’s post.

  38. 38
    zman Says:

    EOG goes green and the crowd goes wild.

  39. 39
    BirdsofpreyRcool Says:

    Good morning all.

    IT problems kept me busy… so a little late to put up trading comments for the day (Head Trader said to sell the morning rally, but he had no idea what would happen the rest of the day… so far, so good).

    Anway, I am posting a link to an institutional strategy piece that is well worth reading. It covers a lot of the stock market/CDS/credit spread comments we have made over the last months. Gives some good historical perspective and ties some credit market concepts together.

    Let me know if you find this helpful.


  40. 40
    zman Says:

    Morning BOP – glad to have you back in the house.

    Oil reclaiming $50 on that fairly bullish EIA report.

  41. 41
    BirdsofpreyRcool Says:

    z — those CRK calls looking pretty nice. Got to say, good move, on your part.

  42. 42
    zman Says:

    Thanks Sane not only for posting the regular API numbers but also their look at imports. I often don’t get that … turned out to be important to today!

  43. 43
    elduque Says:

    They are already seeing a pickup in phosphates and still expect a pickup in potash later in the year.

    Basic argument is that you can get by with cutting phosphate and potash production for one season, but crop yields drop dramatically after that. Expect North American demand to pick up no later than the fall and still waiting for big order from China.

    As you are probably aware POT is controlled by approx. 5 producers. Makes OPEC look like a wimp.

  44. 44
    zman Says:

    BOP – thanks. Nice to have brokers piling on it. A bit happier with the “get out” on BHI pre numbers and the adds on EOG and CLR post numbers.

  45. 45
    BirdsofpreyRcool Says:

    elduque — there are two publicly-traded fert guys in russia. you ever look at them?

  46. 46
    BirdsofpreyRcool Says:

    I think the mrkt will be tougher to call, than usual, in late spring. There is the dynamic tension between “is it getting better” and “sell in may and go away.” The latter has worked perfectly for so many years in a row… and it seems like everyone is planning to do just that this year. So, question is… when everyone thinks/does one thing, the mrkt usually does another.

    Any Big Pic thoughts here?

  47. 47
    zman Says:

    El-d – do you have a good source for products pricing? I think POT used to have some good metrics. Just wondering if the metrics there will allow to raise prices later this year with demand. I didn’t know it was in the hands of only five big players so thanks. I normally look at nitrogen (ammonia) where natural gas is your big cost. Don’t know much about potash. Am I wrong in thinking that nitrogen shipments are way off with a lower number of acres of corn planted this year?

  48. 48
    BirdsofpreyRcool Says:

    Aventine, U.S. Ethanol Producer, Files for Bankruptcy (Update3)
    2009-04-08 14:51:05.479 GMT

    By Dawn McCarty and Mario Parker
    April 8 (Bloomberg) — Aventine Renewable Energy Holdings Inc., a U.S. ethanol producer whose biggest investor is a unit of Citigroup Inc., sought bankruptcy protection from creditors after reporting a fourth-quarter net loss of $36.9 million on March 16.
    The company listed debt of $490.7 million and assets of
    $799.5 million as of Dec. 31 in Chapter 11 documents filed on April 7 in the U.S. Bankruptcy Court in Wilmington, Delaware.
    Six of the company’s affiliates also filed for bankruptcy.
    Aventine joins producers including Renew Energy LLC, Cascade Grain Products LLC and VeraSun Energy Corp. in filing for bankruptcy as an oversupply of ethanol, fluctuating corn costs and falling fuel prices hurt operations. Valero Energy Corp., the largest U.S. oil refiner, purchased some ethanol plants from VeraSun at an auction.
    Aventine, based in Pekin, Illinois, said on March 16 that its 2008 financial statements would include an explanation from accountants describing “substantial doubt” about its ability to continue as a going concern. Aventine said it might file for Chapter 11 bankruptcy protection if it couldn’t obtain liquidity in the “very near term.”
    Aventine has $300 million in 10 percent unsecured term notes due 2017 and was at risk of default or bankruptcy unless it could exchange them for a payment-in-kind agreement that would defer interest payments, Standard & Poor’s Ratings Services said in a March 18 report. S&P lowered its long-term corporate credit rating on Aventine to CC from CCC+.

    Debt Rating

    S&P was reacting to a disclosure that Aventine was unable to pay contractors $24 million on two uncompleted plants. The ensuing liens in favor of the contractors violated covenants in the 2017 notes. A $15 million interest payment on the notes was due on April 1.
    Holders of the notes have the biggest unsecured claim against Aventine. Union Tank Car Co. holds the largest unsecured trade-debt claim at $1.9 million.
    Growth Energy, an industry trade group, asked the U.S.
    Environmental Protection Agency on March 6 to raise the ratio of ethanol in gasoline to 15 percent from 10 percent. The boost would create 136,101 jobs and add $24.4 billion to the economy with new plants and workers to operate them, Growth Energy said.
    About 2.7 billion gallons of annual ethanol capacity is idle, according to Archer Daniels Midland Co., the third-largest maker of the fuel.

    Pacific Ethanol

    On Feb. 27, Pacific Ethanol Inc. suspended operations at two plants, citing unfavorable market conditions. On April 2, after reporting a quarterly loss of $34.7 million the Sacramento, California-based company said it had only enough money to continue operations through April 30, unless it could restructure debt and raise capital.
    Biofuel Energy Corp., based in Denver, last month said that it may seek relief from creditors through bankruptcy after reporting an annual loss of $41 million in 2008.
    The U.S., with 193 refineries, has the capacity to produce
    12.4 billion gallons of ethanol annually, according to the Renewable Fuels Association in Washington. Output doubled from June 2006, when Aventine’s shares began trading, to 10.1 billion gallons last year, according to U.S. Energy Department data.
    Under the U.S. Energy Independence and Security Act of 2007, the nation is required to use 10.5 billion gallons of ethanol this year, climbing to 15 billion gallons by 2015.
    Aventine, whose customers include Exxon Mobil Corp. and ConocoPhillips, produced 189 million gallons of ethanol and sold another 754 million gallons from other suppliers last year.
    Metalmark Capital LLC, which was acquired by Citigroup Inc., is among the company’s largest investors.
    The case is Aventine Renewable Energy Holdings Inc., 09- 11214, U.S. Bankruptcy Court, District of Delaware (Wilmington).

  49. 49
    zman Says:

    SU taking up its former role of cloning the move in crude.

  50. 50
    BirdsofpreyRcool Says:

    Pemex May Squeeze Extra 3 Billion Barrels From Cantarell Field
    2009-04-08 06:26:57.900 GMT

    By Andres R. Martinez
    April 8 (Bloomberg) — Petroleos Mexicanos, the state oil company, may recover an extra 3 billion barrels from its Cantarell field, or 20 percent more than planned, by using a technology that extracts hard-to-reach crude.
    Pemex would inject so-called liquid foam to draw out oil from Cantarell’s rock under the process, Heber Cinco Ley, director of the Mexican Petroleum Institute, said in an interview April 6. The technology, which may be ready in three years, would shake loose oil that has seeped back into the rock walls after the field’s pressure fell, he said.
    The company’s output fell at its fastest rate since 1942 last year because of slowing production at Cantarell, which has lost pressure after producing almost a third of Pemex’s oil during the past three decades. The company expects to produce only half the 30 billion barrels Cantarell holds. Three billion barrels is enough to supply the U.S. for six months.
    “We want to be able to extend this technology to other mature fields in Mexico,” said Cinco Ley, a former deputy director for exploration and production at Mexico City-based Pemex who holds a doctorate in petroleum engineering from Stanford University. “There is still a lot of oil there.”
    Carlos Ramirez, a spokesman with Pemex, didn’t return telephone calls for comment.
    Researchers from the Universities of Texas, Houston, Stanford and the Colorado School of Mines in Golden, Colorado, are working with the Mexican Petroleum Institute on the liquid foam project, said Cinco Ley, a specialist on so-called fractured oil deposits.

    Enhanced Oil Recovery

    The technique being developed is likely a so-called enhanced oil recovery process, according to George Baker, an independent energy consultant in Houston who studies Mexico’s petroleum industry. Other producers are using similar processes such as pumping gas into fields to increase their pressure and maximize the oil they can recover, he said.
    “This is a very important measure,” Baker said in an April 7 interview. The amount of extra oil that Pemex could potentially recover from Cantarell is “the equivalent of discovering three giant oil fields,” he said.
    Cantarell was the world’s third-largest field when discovered in 1972. Pemex has pumped about 13 billion barrels from Cantarell, according to company estimates.
    The Ghawar oil field in Saudi Arabia is the world’s largest field, followed by the Burgan deposit in Kuwait.

    $29.1 Billion Budget

    The company is spending $29.1 billion on exploration and production at deepwater and onshore deposits through 2012 to offset Cantarell’s decline. Proved deposits at Pemex fell for a 10th year to 14.3 billion barrels last year.
    Chief Executive Officer Jesus Reyes Heroles said in August that output at Cantarell may fall 33 percent to 500,000 barrels a day by 2012, when it is expected to stabilize. The deposit once accounted for 2.2 million barrels a day, or about two- thirds of the company’s output.
    Pemex pumped 2.663 million barrels of oil a day in February, 8.5 percent less than a year earlier. Cantarell, stretched over 15,500 square kilometers in the Gulf of Mexico, fell behind Ku-Maloob-Zaap, an offshore field, as the second- largest field in Mexico in January.
    The company plans to raise $10.5 billion this year by issuing local and international bonds and taking loans from commercial banks to pay for its $19.5 billion capital spending budget. The company registered in February to sell 70 billion pesos of bonds during the next five years in the local market.
    In 1938, President Lazaro Cardenas seized the assets of companies that later became Chevron Corp. and Exxon Mobil Corp., the world’s largest oil company. Mexico created Pemex later that year, and prohibited private, non-Mexican companies from exploring or producing oil until last October when Congress revised the law. Pemex remains the only domestic refiner.

  51. 51
    elduque Says:

    No daily source for pricing, just read the weekly Frideay review put out on farmfutures.com

    I haven’t looked into the Russian prod.

    Not sure about Nitrogen, but I think that all products are off about 10%. However, with potash the producers have said that cutting price isn’t going to increase demand. So they are content to wait it out.

    More people in the world means more food needed.

    Good report at http://www.potashcorp.com/investor_relations/markets_information/

  52. 52
    AAA Says:

    Z, Good call re CLR/WLL, up a buck or so each.

  53. 53
    Dman Says:

    Z – follow up to my recent comment about commercial NG use: I saw a story yesterday about desperate shopping malls installing $2m wave machines to try to reel in the customers. But consumers have switched to saving, for obvious reasons. A lot of those malls will fail. Maybe the glass-roofed areas can be used as greenhouses?

    I see your point that supply will probably be the dominant issue going forward, but the commercial shoe is there waiting to drop, even if it is a second-order issue at this stage for NG.

  54. 54
    zman Says:

    Thanks AAA, guerrilla investing.

    Dman – I’ll try to see if I can get some commercial real estate vacancy square footage stats.

  55. 55
    Dman Says:

    #50 – the technology may be “ready in 3 years” !! By then they’ll be lucky to get anything out of Cantarell: I saw the numbers for early this year: there was an 8% drop from one month to the next. They don’t mention the flow rates this technique will generate. It all looks a bit desperate.

  56. 56
    Dman Says:

    Z – a perfect ambush on the oil numbers. I wonder if the EOG raid was actually driven by the API crude build?

    API vs. EIA crude stocks discrepancy: just the usual noise?

  57. 57
    zman Says:

    Dman – I hear ya on Cantarell – they have to take the view that increasing the recovery factor from 12 to as much as 13% is in their best interests while the infrastructure is still in place. Slow the decline as Chicontepec and other stuff ramps. I still say given their demand and supply paths they will be a net importer shortly after Brazil becomes an exporter.

  58. 58
    choices Says:

    DO looks fairly strong here, possibly just following the crude bounce, seems a tad stronger than RIG over the last few days

  59. 59
    zman Says:

    API vs EIA. I guess so. The API numbers did look unusually squirelly. Interesting to see imports remaining low from Canada (that’s what Cushing fall is suggesting). Keep that low and get OPEC to back off some more as they tighten the screws on the last 1 mm bopd that’s still above quota while the refiners come back and you could get a nice, quick reversal on crude stocks. I’ve been saying 4 to 8 weeks away for a couple of weeks so probably 3 to 5 weeks we should see a roll in U.S. inventories begin.

  60. 60
    Dman Says:

    Z – sorry that I’m quoting things without supplying links, but I read that retail space had increased hugely (doubled, I think) over a certain period, whilst retail spending had only increased by 14% in that period. That means a lot of that space is going to go away.

    In the big picture though, I think the price of crude will be more important for NG than imploding retail/office space. Sure looks like crude wants to move up (along with most other commodities actually).

  61. 61
    zman Says:

    Choices – thanks, I see that now, not sure why that would be, thought the last update from RIG was decent, perhaps the earnings growth on DO vs RIG in 2010 makes it the safety play now. There dividend is superior as well but its been that way for awhile now.

    I’ll probably be long ATW for the conference call as they could give a little more read on some back of year rig prospects. A couple of rigs roll off, if they say, contracts in hand or nearly penned that one will be north of $21-22 range in a hurry.

  62. 62
    zman Says:

    I agree with that statement re crude impact on gas but I like to track the fundies in as many ways as possible, never know what’s going to bit you on gas. The commercial thing would be a Fall/Winter 2009 event so we’ve got time. And I have a commercial real estate speculator buddy who owes me a fave.

  63. 63
    zman Says:

    EOG back to flat, feels like profit taking. Anyone have thoughts on tomorrow’s market, are we all waiting to exhale on M to M? Any other triggers for the market tomorrow. Friendly market would see EOG back to $60 in short order.

  64. 64
    Jay Reynolds Says:

    Re #50
    I’m not so sure the infrastructure is in place, they did have the nitrogen injection in place. BUT, one of their biggest hangups was dealing with a growing water cut. “Foam” is going to mean surfactant use and greater challenges with both higher volumes of liquid/water and emulsions that have to be broken to separate the water out. Presumably that water will be used for reinjection, probably salt water?? hello probably much greater corrosion problems requiring de-oxygenation etc..

  65. 65
    zman Says:

    Thanks Jay, I just meant that the production platforms are still there. I’ve read that many of them are in sad shape with little $ being spent on upkeep in some parts of the field.

  66. 66
    choices Says:

    BOP-I guess no surprise that Treasury does not want to release results of bank stress tests-you nailed it with the PIMCO connection on PPIP but now evidently Gross is backing away from it.

  67. 67
    zman Says:

    Crude retaking $51

  68. 68
    elduque Says:

    To keep track of what is going on in real estate i use http://www.calculatedriskblog.com/

  69. 69
    elduque Says:

    Thank you for the CLR play. Once again paid for the next 2 years.

  70. 70
    zman Says:

    ELd – thanks for 68. Glad to hear 69. I plan to do more of the guerrilla raids on the release of numbers in the future.

    CRK – the lack of down move with the group suggests people knew about today’s initiation by SunTrust today.

  71. 71
    ram Says:

    Does it seem like HAL will need market weakness versus fundamentals in the short term for the put trade to work?

  72. 72
    elduque Says:

    Sometime when we have a quiet day, would it be possible to get a primer on how to read the oil release quickly.

    That is how do I figure out what is important and where is it.

    Natural gas report much clearer.

  73. 73
    zman Says:

    Ram – it will need that or a warning or another downturn in rigs tomorrow (although that only partly helps).

    Elduque: I think most of what’s important is what I put out in #31. The stuff is scattered in the first and third paragraphs of the stats release and then down throughout the data tables of the release. Maybe I can put together a picture of it with red circles if that would be helpful. Maybe put that on the definitions tab.

  74. 74
    BirdsofpreyRcool Says:

    choices — #66. Thanks. If you make the assumption that Bill Gross is always “talking his book,” you will never go wrong. If Bill likes something, he is in the best position to profit from it.

    With respect to releasing the “stress test” results. Here again, if you make the assumption that “they” are trying their best NOT to cause a run on the banks (by pointing out who is weak), then the decisions make sense. As long as the bank regulators move in and shutter/merge/sell-off the weak banks (which is what the FDIC is supposed to do), then, frankly, we don’t need to care about who is weak. “Move along, nothing to see here…” Bottom line — if we lose confidence in our banking system, nothing else is investible.

  75. 75
    zman Says:

    Re 74 – Well said.

  76. 76
    elduque Says:

    Re 73 – Yes that would be helpful. I am reaching the age where I need to be spoon fed.

  77. 77
    zman Says:

    Hear ya Eld, aren’t we all though? Time being linear and all. Take a look at long term care insurance rates if you don’t believe me. I’ll work something up and let ya know when I post it to the definitions page.

  78. 78
    Dman Says:

    BOP, if we lose whatever confidence remains in the banking system (a very real possibility) I would suggest gold and wheat would be investible. Maybe a few other things along those lines.

  79. 79
    BirdsofpreyRcool Says:

    Dman — don’t forget the shotgun shells. Backyard squirrels and bunnies beware!

  80. 80
    BirdsofpreyRcool Says:

    (I heard possums are not very tasty, tho… so, all you little ratty-looking creatures are safe.)

  81. 81
    zman Says:

    Went to a political fund raiser in the fall, had coon which apparently is a southern political fund raiser tradition. I have to highly not recommend it.

  82. 82
    BirdsofpreyRcool Says:

    OK. So add our ring-tailed buddies to the No-Eat List. I have to think the ground hogs/woodchucks would fall into a similar category.

    You can’t eat gold.

  83. 83
    BossmanG Says:

    Z, not sure if you got around to it, did you have a read through your options trading rules that you follow? think I remember you saying you need to fix a few things in it?

  84. 84
    zman Says:

    Boss – No. I completely dropped that ball. Apologies. Will find, print, review, this weekend, publish next week.

    What value does a discussion of Somali pirates add. CNBC is marginalizing itself for entertainment value. I thought that was what Cramer is for although he is much more useful than what they have on now.

  85. 85
    ram Says:

    Are the EOG and CLR trades for a short term bounce in oil? If one did not chase, could they be viable still?

  86. 86
    Nicky Says:

    Afternoon all. Fed minutes at 2pm.

  87. 87
    BossmanG Says:

    no worries Z, thanks for the update.

  88. 88
    zman Says:

    Ram – I hear what you are asking. I like them both as stock plays. Here, now. As options plays I think the easy money was “buy on red with oil lower and sell into oil being green”. I think from here, those option plays, which were pretty risky with only 6 days until expiry, are to drift with the market. I’m trying to get a handle on my thoughts for the broad market tomorrow.

    Gas comes into play as well as we have storage but that’s less of a factor most likely. So I like them as stocks but would rather buy on weakness and sell on strength in the options in this “what have you done for me in the last 15 minutes” type of market. My best guess is that EOG goes higher as that one is cheap for it (versus its historic levels) and has had a big fall from the recent high which is probably more important. I will sell today or tomorrow though because I’ve made 100% on the EOG calls since this morning and I don’t like to be greedy. If the market closes up today and runs up tomorrow I would not at all be surprised to see crude back into the $53 area (still think that’s a rounding bottom) and EOG at $62 and CLR at $25. But buying May calls, on weakness, is the safer play.

  89. 89
    zman Says:

    And then Nicky adds that and I’m tempted to punt both of those names on any sign of weakness from the minutes.

  90. 90
    zman Says:

    Can anyone reply if you didn’t get the Zblasts earlier. Occam reported not getting two of them.

  91. 91
    zman Says:

    CNBC saying minutes don’t have much in the way of wanted details. Markets waffling lower early.

  92. 92
    zman Says:

    Minutes include a bit about the energy sector feeling the effects of the slowdown. Gee, I wonder what clued them in.

  93. 93
    PackMan Says:

    Zman – 26 – you nailed it.

    I messed up …. bought some early in the high 56’s; then sold it too soon in the 57’s on the run up.

    Not focused enough on that trade today. I am mad at myself.

  94. 94
    PackMan Says:

    same thing w/ CHK …

  95. 95
    zman Says:

    I’m surprised how strong CHK is. Odd.

    The fed minutes may be giving you another shot on those by the way.

  96. 96
    BirdsofpreyRcool Says:

    Fed Officials Saw Downside Risks Predominating at Last Meeting
    2009-04-08 18:00:13.718 GMT

    By Craig Torres
    April 8 (Bloomberg) — Federal Reserve officials feared the U.S. economy might fall into a self-reinforcing cycle of rising unemployment and slumping business and consumer spending, making credit tighter in a weak financial system, minutes of the Federal Reserve’s March meeting show.
    “Participants expressed concern about downside risks to an outlook for activity that was already weak,” minutes of the March 17-18 meeting released in Washington said. “Credit conditions remained very tight, and financial markets remained fragile and unsettled, with pressures on financial institutions generally intensifying.”
    The outlook prompted the Federal Open Market Committee in a unanimous vote to boost its open-market purchases of bonds by
    $1.15 trillion, continuing its unprecedented increase in money supplied to the economy. The U.S. central bank has used its own balance sheet to provide financing for markets in commercial paper, asset-backed securities and mortgage bonds, markets it deems critical for financial stability and economic recovery.
    “Most participants viewed downside risks as predominating in the near term, mainly owing to potential adverse feedback effects as reduced employment and production weighed on consumer spending,” the minutes said. “The decline in foreign economic activity was one of the most notable developments since the January meeting.”

    MBS Purchases

    The FOMC in March decided to purchase an additional $750 billion in mortgage-backed securities, bringing total purchases this year to $1.25 trillion, and increase purchases of housing agency debt by $100 billion to $200 billion. The committee also decided to purchase $300 billion of longer-term Treasury securities over six months.
    Fed credit to the economy stood at $2 trillion April 1, up about $1.2 trillion over the past year. Fed officials have introduced new tools to resolve help liquidity shortages at banks and provide backstop financing.
    The size of the Fed’s balance sheet and demand for central bank liquidity gave policy makers “evidence” that credit markets “still were not working well,” according to the minutes.
    Policy makers didn’t interpret a rise in housing starts in February as “the beginning of a new trend.”
    The minutes also noted that Fed officials held a conference call on Feb. 7 to discuss the central bank’s participation in the Treasury Department’s financial stability plan.


    The Fed last month started the Term-Asset Backed Securities Loan Facility to provide financing and investor support for securitized consumer debt. The program could grow to $1 trillion. “The demand for TALF funding appeared likely to be modest initially” due to fears of government intervention, the minutes said. “Other participants anticipated that TALF loans would increase over time.”
    Fed officials last month kept the benchmark lending rate in a range of zero to 0.25 percent.
    At the same time, officials are mapping out ways to withdraw monetary stimulus and retreat from credit programs once markets improve.
    The Treasury and Fed published a joint agreement March 23 reinforcing the Fed’s independence on keeping inflation stable, and pledging to remove three emergency loan facilities on the Fed’s balance sheet created to support insurer American International Group Inc. and the merger of Bear Stearns Cos.
    with JPMorgan Chase & Co. a year ago.

    Recession Worsened

    Slumping home prices and the rise in mortgage delinquencies and foreclosures caused banks to pull back lending, accelerating an economic downturn that began in December 2007.
    The unemployment rate rose to 8.5 percent in March, the highest level since 1983. Employers cut 663,000 workers from payrolls, bringing total losses since the recession began to about 5.1 million, the biggest slump in the postwar era.
    Gross domestic product slumped at a 5.5 percent annual rate in the first quarter, according to an April 6 estimate by Macroeconomic Advisers LLC. The Fed staff revised down their outlook for the economy, the minutes said.
    “Looking beyond the very near term, a number of market forces and policies now in place were seen as eventually leading to economic recovery,” the minutes said.
    The Institute for Supply Management’s factory index climbed to 36.3 in March, a third consecutive increase. Purchases of existing homes rose 5.1 percent to an annual rate of 4.72 million in February as lower prices attracted buyers.
    Consumers are also benefiting from lower energy costs and lower mortgage rates. The average rate on a U.S. 30-year fixed mortgage dropped to 4.78 percent last week, the lowest in Freddie Mac data going back to 1971.

  97. 97
    ram Says:

    I was glad not to get a “ram, check your email” after submitting #85. I did not get the blasts this morning either.

  98. 98
    zman Says:

    Must be a problem with gmail. They were all sent within a minute of posting on the site. Heard from another subscriber they were not in the spam filter either.

  99. 99
    zman Says:

    Ram – you usually get them right?

  100. 100
    zman Says:

    Oil red on the fed minutes.

  101. 101
    ram Says:


  102. 102
    Popeye Says:

    ZTRADE: Bought $10KP 10 EOG $60 April calls

    CLR – $10KP added (5) April $25 calls

  103. 103
    Popeye Says:

    Also BHI puts

  104. 104
    zman Says:

    Thanks P – glad to see someone got them. I got my usual tag back and list of rejects so I didn’t see any problems. Could be an internet thing, could be a gmail thing. Looks random, let me know if you guys miss the next one.

  105. 105
    zman Says:

    Fed minutes sucked the life out of the market.

  106. 106
    zman Says:

    Your tax dollars throwing darts at the wall. 5 different plans to return the uptick rule are offered up by the SEC.


  107. 107
    zman Says:

    I find it more than a little irritating that the Fed now sees everything as being horrible when they missed the boat on this voyage on the way to the bottom. I do recall them worrying about inflation at its peak however. So now they “get it” except for the part about them being part of the problem by not fully quantifying what it is they are up to. Nice job fellas.

  108. 108
    zman Says:

    Not a positive for natural gas:


    Doesn’t make me overly concerned but something to think about as we look at the imports picture later this year.

  109. 109
    Dman Says:

    BOP – gold may well be inedible (I’ll take your word for that). But I find I can subsist on another commodity – coffee – and I seem to have more of that around most times.

    Is NG trying to sneak past while no-one’s looking?

  110. 110
    zman Says:

    Dman – maybe a little, storage consensus is still 12 Bcf injection for tomorrow. I think could come in a little light given the weather and the sharp drop in volumes from Canada. Other than the move it will cause tomorrow, a non-event in the big scheme of all things gas as we are at trough storage right now and the big questions for gas to move up, or not, remain, how fast do we refill storage, and is a wave of LNG headed to the U.S. that will be bigger than the drop in imports from the north.

  111. 111
    BirdsofpreyRcool Says:

    Quiet day… time for a rant. Z… you started this.

    The fed used to be the one part of govt that i actually respected. Although i thought that Alan Greenspan was missing the point on why interest rates remained low… (his “conundrum”) and i was really embarasses when he caved to the whole Y2K thing (shades of govt caving to “global warming” i guess [i realize i am going to catch heck for that comment]).

    At this point, i have little faith left in our govt. i wish they would just get the H*LL out of the way and let our economy find a naturalized footing. The govt continues to be the gorilla in the room. Random and brutish, in an unnatural setting, flinging poo.

  112. 112
    Alhambra Says:

    Can somebody help explain the action/strategy seen in PBR Aprils calls today?
    Stock at $34
    Apr. $20 – 20,000
    Apr. $22.5 – 36,000
    Apr. $25 – 90,000
    Apr. $27.5 – 30,000

  113. 113
    Dman Says:

    BOP – very graphic. Makes gold-eating seem polite 🙂

  114. 114
    Dman Says:

    Actually, I think comparing the govt. to gorillas might be a little harsh on the gorillas. I’m not an expert but I thought they are quite gentle mostly & spend a lot of time eating grass.

    Jim Rogers was telling all the TV heads that the best thing the G20 leaders could do was go to the bar & start drinking. He offered to buy all the drinks if only they would stay in the bar & not try to run the markets.

  115. 115
    zman Says:

    A – just looked at the numbers and they are much bigger than that now (the $25s alone show 345,000 contracts today). Very odd, sounds like a rumor, someone getting long with more leverage via options than the stock affords. Normally I’d think they sold the higher strikes and bought the lower ones. Doubt PBR getting bought as Brazil would not sell it but they have had a couple of big successes in recent days that have not really moved the stock yet, they must think some more news is on the way.

  116. 116
    BirdsofpreyRcool Says:

    Dman — I hope I didn’t offend.

    Another off-topic item… I’m not a major follower of American Idol… but, the Adam Lampert song last night was pretty amazing. For those who missed it, seems he used this version of the old Tears for Fear song, “Mad World.”

    Nice, slow paced song, for a slow-paced day.

  117. 117
    BirdsofpreyRcool Says:

    oops… make that Lambert.

  118. 118
    Dman Says:

    Inevitable global warming comment: the government hasn’t caved in to global warming in any meaningful sense. What are they doing about it? Nothing realistic. Just enough to annoy various industries but not enough to have any real effect, let alone fix the problem.

    Oh, but I think I know what you mean: they may not be doing much, but they are *talking* about it. Which, if you think about it, quite literally makes the problem worse.

    As you know, I’ve argued that C02 reduction is a joke unless it is done on a vastly greater scale and tempo than is even being talked about currently. I’ve also mentioned that a realistic approach to the problem will involve planetary engineering.

    So I was more than a little surprised to see this:


    Possibly an outbreak of realism (?)

    Not holding my breath though.

  119. 119
    Dman Says:

    BOP – I’m not from the thought police. You’d have to try a bit harder to offend me 🙂

  120. 120
    zman Says:

    Thanks for 118. Interesting. Reminds me of Aliens and Terraforming.


  121. 121
    BirdsofpreyRcool Says:


    · Equities finish a range-bound day near session highs; SP500 closes at 825, up ~1% on the day. It was a very boring afternoon, with stocks swinging within the ~815-825 range now for a few days now. Credit vacillated in lockstep w/stocks (IG12 finished about unch’d). The Fed released the minutes from its Mar 17-18 meeting at 2pmET & knocked stocks from their highs, but prices rallied off lows into the bell (we closed pretty much right where the sp500 traded at 2pmET prior to the minutes). Consumer discretionary (led by 4% ramp in retailers) & tech lead things higher (disc up ~2.7% and tech up ~1.6%); banks (dwn ~1%), telecom carriers (off ~0.7%) notable laggards. Insurance up 4% on WSJ TARP story.

    · Puts and takes in the newsflow today: earnings were more decent than bad (esp. in consumer where BBBY, JOSB, FDO, and RT all stage very impressive rallies coming away from earnings), the eco data continues to point in the right direction (wholesale inventories plunged, falling nearly double St expectations, signaling that the reduction process is continuing apace), the government is still taking substantial action to aid financials (today’s WSJ article re insurers and the TARP being the latest example), and strategic M&A is picking up (today’s homebuilder deal). On the downside, the Fed minutes made for some depressing reading (although keep in mind the meeting took place nearly 1 month ago at this point) and the banks are having an ugly day (sp500 banks index dwn >1% and the weakest major group in the whole market).

    · The Bottom Line on today (and this whole week): light volumes, news, attendance due to the holiday; stocks are still “churning” and digesting the impressive rally that kicked off 3/9 and capped off (for now) last Fri. Earnings next week (we will get #s from likes of GS, C, GE, INTC and many others) will prove decisive.

  122. 122
    Hoss Says:


    RE #45

    Russian commentary and quote.

    “Best Moscow stock market tip – don’t”


  123. 123
    BirdsofpreyRcool Says:

    Hoss — thanks for the info. I’ve made money in Russian stocks in the past (mainly Gazprom and Vimplecom). Am on the sidelines now (have been for about a yr)… can’t tell which way the winds are blowing… so, best to sit on one’s hands. Thx again.

  124. 124
    Wyoming Says:


  125. 125
    zman Says:

    Re 124: Exactly.

  126. 126
    Wyoming Says:

    Yup, thought you would like it, maybe even save me from having to type a rant, and much less embarrassing than if I would have to structure a sentence and paragraph.

  127. 127
    jat Says:


    Before we all head for the hills on this holiday weekend, any quick thoughts on the importance of the IEA report this Friday? My guess is not terribly much aside from a headline.. IEA will still be behind the curve on total oil demand destroyed (IEA still looking for global GDP growth in 2009, I think) and also will lower non-OPEC supply further? Don’t have any thoughts other than that, would appreciate your opinion.

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