Wednesday – Oil Preview Plus Catalyst List

114 thoughts on “Wednesday – Oil Preview Plus Catalyst List”

1. On CNBC a guest is talking about not knowing what the problem was in the flash crash but the govt being willing to impose new curbs. I agree with his confoundedness at this.

   I actually stripped it out of the opening part of the post but had written about two hot news headlines that came across yesterday. The first said the SEC was imposing new curbs and the second said it and CFTC were still not sure what the problem was. This reminds me of what is wrong with much of government these days. They act before they know what the problem (if it really was a problem) was to “fix” something they don’t understand. Since there is a lot they don’t understand there is a lot of legislation that misses the target. Everyone needs to slow down and take a hard look at the potential consequences of actions before they just try to, um, change things for the act of changing them. Some days you can get out of bed and actually breath the air and not feel the need to change its molecular structure. I promise.

2. And Joe Kernon saying that Congress has a panel coming back to explain the financial crisis but not until November. So of course, we are voting on financial reform this week. Sheesh, ugh, etc.

3. Good Morning Watch Summary. Thank you.

   Credit Markets are actually better this morning. We will see who follows whom, once stocks open. Our “Cash TED” indicator is back to the wides of last week (although so far from the Panic Wides of 2008 as to be like trying to see Istanbul from the top of the Empire State Building). A CDS trading desk is actually suggesting that stocks could close day unch’d, but is hoping that is not the case. I think a lot of professional investors want to see the mrkt completely rinse out, before starting the next wash cycle. If you didn’t get a chance to read it last night, BedTime Market Strategist was worth reading.

   IG -3bps tighter (good)

   HY +1/8 pt higher (barely good)

   TED 30.7bps, back to post-Thurs Plunge Day closing wide (but not as wide as TED got intra-day on May 7th)

4. Tar balls found in Key West are not same type of oil as from BP spill. This find is what helped turn that group of stocks yesterday. Nice.

5. post #1 hear, hear!!

6. BTM last night was one of the best he’s written in my short time reading him. Very well put.

7. Crude off a dime at 69.30 after testing $68 overnight. Take a look at the link in the post for you visual types. Looks like its time to bottom/small bounce from here. Dollar has had a heckuva run but I have to wonder when you hear sovereign debt and California in the same sentence more commonly. Don’t wait for CNN, they’re reporting about lost cats these days. Find your local BBC half hour or the occasional guest on CNBC for that. Wondering also if that’s the impetus for Byron Wien’s $1,500 gold target.

8. Morning all. The British reporters on CNBC were saying that the EURO is actually considered fair value here at 1.22 so what the heck is all the fuss about. German exporters loving it. The comment was that Euroland is not as good as putting a ‘spin’ on their falling currency as the US. Remember all those months the dollar fell whilst Geithner professed to support a strong dollar??

9. Goodmorning all, just got back from a vegas bachelor…first time there.
   I must say the booze/clothing/cars are much cheaper then here in canada…booze was at least 50% cheaper. Wow.

10. Same levels apply as the ones I put up late last night. But in case not everyone saw them –

    1107 is the 62% retracement of the rally off 6th May. 1091 is the 78% retracement of the same rally.

    1101 is the 200 dma.

    I am seriously open to almost anything here! We could make a low early today and head up to 1065 into Opex. Or today could be more wildness and still end lower.

    My preference is for 1101 – 1107 to hold on this wave down.

11. Howard Weil initiates EXXI with a Market Outperform and price target of $30 saying the co offers investors a high-impact exploration program supported by a cash flow stream generated primarily through development/exploitation activity as well as the acquisition of primarily mature, oily producing assets.

12. Energy XXI initiated with a Market Outperform at Howard Weil; tgt $30

13. Resistance is at 1120/1122, 1126,1135.

14. Thanks Nicky.

    Glad to see HW showing a little spine, most brokers have backed away from the market at this point until things settle out.

    RIG stating for the record that the batteries on BOP were not dead. Also stating that BP overrode their guy on the decision to continue PA’ing the well after reducing the pressure in the wellbore and receiving anomalous pressure readings. BP saying that the MMS only requires a positive pressure test, not a negative one as well.

15. Rig Gear Supplier Cameron May Prove Winner After BP Oil Spill
    2010-05-19 04:00:00.3 GMT

    By David Wethe
    May 19 (Bloomberg) — Cameron International Corp., whose stock plunged after a safety device it supplied became a focus of investigations into the Gulf of Mexico oil spill, may find its fortunes boosted by the disaster.
    Cameron and other manufacturers of drilling gear, including National Oilwell Varco Inc., may benefit should the April 20 rig explosion that triggered the Gulf spill lead to stricter regulations, said Brian Uhlmer, an analyst at Pritchard Capital Partners in Houston. Rules to improve safety would lead to a jump in sales of equipment to meet new standards, he said.
    “The likes of Cameron could see a 180-degree turn in impact from this event within a short period of time,” said Scott Gruber, an analyst at Sanford C. Bernstein & Co. in New York. “It could happen very quickly.”
    Cameron made the so-called blowout preventer on the Deepwater Horizon drilling rig that was designed to contain a surge in pressure like the one that killed 11 workers in an April 20 explosion and fire that set off the oil spill. The blast occurred while BP Plc, which leased the rig from Transocean Ltd., was drilling a well in 5,000 feet (1,524 meters) of water.
    Cameron, which has been named as a defendant in lawsuits related to the incident, dropped to a seven-month low of $34.65 in New York trading on April 29. The stock has 18 buy and 9 hold ratings from analysts. It will climb 41 percent in the next 12 months, according to the average analyst price target.
    Closer scrutiny of offshore drilling already is underway.
    The U.S. Interior Department halted drilling permits for new wells pending findings of a government study into the incident.

    Presidential Commission

    President Barack Obama plans to create a commission to investigate the drilling accident, following presidential probes in prior decades of the Three Mile Island nuclear accident and the Space Shuttle Challenger disaster, an administration official said on condition of anonymity.
    The commission will be established by executive order, possibly this week, and will have no current government officials among its members, the official said.
    Blowout preventers, known as BOPs, are among the most important pieces of safety equipment on an offshore drilling rig
    — and also one of the most expensive. A system costs about $40 million, or roughly 10 percent of the total cost of the vessel, according to Quest Offshore Resources Inc.
    The top three BOP makers, based on sales, for deep-water rigs are Cameron, National Oilwell Varco and General Electric Co.’s GE Oil & Gas unit, said Paul Hillegeist, president of Quest Offshore. Fewer than 10 companies around the world make the devices for deep-water drillers, he said.

    ‘Rocket Science’

    A BOP consists of a series of valves installed at the wellhead that close to prevent the escape of pressurized fluids from the petroleum reservoir below ground.
    The devices can be up to six stories tall, according to Houston-based National Oilwell Varco, which ranks ahead of Cameron as the biggest U.S. maker of oilfield equipment. On offshore rigs, the systems typically are installed underwater at the seafloor by remote-operated robots.
    “This stuff is rocket science,” National Oilwell Varco Chief Executive Officer Pete Miller said Sept. 10 at the Barclays Capital CEO Conference in New York.
    Katina Hargett, a spokeswoman for National Oilwell Varco, didn’t respond to telephone messages seeking comment for this story. Rhonda Barnat, a spokeswoman for Houston-based Cameron, declined to comment. Nigel O’Connor, a spokesman for GE Oil & Gas, said he couldn’t immediately comment.

    T-3 Energy

    Steve Krablin, CEO at T-3 Energy Services Inc., which also provides services and parts for the safety device, said increased regulations could mean “big opportunities” for his Houston-based company. More companies will buy backups for safety equipment, including BOPs, he said.
    “There’s already a redundancy in the industry, but that doesn’t mean there can’t be more redundancy when you become very cautious about the effects of a tragedy like this,” Krablin told investors on an April 30 conference call. “For us, most of the things that you could speculate that could come from this would have the result of increasing our revenue, not decreasing it.”
    Most offshore rigs are equipped with two BOPs, one of them a backup unit, said Leslie Cook, senior research analyst at Quest. There are currently 239 floating rigs under contract or available for work around the world, as well as 80 more that are under development, she said.
    The biggest equipment makers will probably benefit most as the oil spill passes and drillers move to meet new safety standards, said Uhlmer of Pritchard Capital.
    “Anything in the Gulf of Mexico is coming under pressure, but in the long term, their business should actually improve,” he said.

16. Thanks BOP, good points there.

17. Oil up 15 cents, inventories in 45 minutes.

18. CDS Trading Desk saying that “if we are rallying [CDS] becasue of ECB buying EUR this is a desperation call and I actually think it probably fails to have a real push tighter… so it’s worth reshorting again.”

    IG CDS -3bps

19. EOG moving on the Kitimat LNG deal, its a good deal for them logistically due to the tie in prices of their gas to an oil index. But maybe more just an excuse for the stock to bounce after the post earnings pullback.

20. #6 BTM? Who is that? Sorry if I’m a little slow this morning.

21. z — you might want to add little EGY to your catalyst list. After a couple of years of doing pretty much nothing, they actually have some well-scripted events coming up. Worth noting, imho…. especially as almost $2 of share value is pure cash.

22. #20 “BedTime Market Strategist”

23. re 21. Agreed, will do.

24. EGY — the thing about their offshore Gabon oil play is that, if the structure is there, it has oil. It’s not terribly complex geology. Structures are low-relief, tho… like 20-40 ft of closure. Also, EGY has no incentive (b/c of Gabon Concession Tax Structure) to exceed the processing capacity of their FPSO at 25kboe/d. Although, with their 2 recent well successes, they already exceed that (telling me they will choke back, or not pump, their wells as aggressively… but, a proved reserve stays a proved reserve). The growth in EGY will come from anything positive they can do with their on-shore Gabon concession and anything accretive they do with their pile o’ cash. Then, there is the Angola offshore concession. I give that a zero and actually think they lose the $10mm of cash in escrow there.

    Anyway, we could hear about an onshore Gabon partner and drilling plan any day now… and they have just spud their highest impact well permitted for this year, the SE Etame wildcat well. If successfuly, this one well could double the company’s proved reserves (yes… it is a small company, but the COO is teriffic, imho)

25. BOP, thanks

26. CNBC saying that they are voting on something to do with financial reform at 2pm this afternoon. Final vote likely to take place at 8pm tomorrow night.

27. Bullish count has us working on v of C of 2 down now. Shouldn’t go lower than 1091 for this count.

28. Bearish count has us working on v of i of some larger degree wave (still to be determined) to the downside.

29. Bullish count cannot be totally dismissed until we take out 1065.

30. Nicky – do you have the 200 day at about 1101?

31. i am looking at SU for a med term play. Any thoughts?

32. WHX down 10%.

    Eld. Not a lot of rhyme / reason to the flushing going on. Just flushing. I don’t own them and would have to see oil at least stabilize which means the S&P stabilize before I’d add.

33. Yes 200 dma is at 1101.

34. EIA oil inventory snapshot

    Crude down 20 cents pre report at 69.20

    Inventories:
    Crude UP 0.2 mm barrels
    Gasoline DOWN 0.3 mm barrels
    Distillates DOWN 1.0 mm barrels

    Demand
    Gasoline: 9.1 bpd, not great
    Distillates: 4.086 mm bpd … very good number

    ….

35. Cushing up 0.9 mm barrles to 37.9 mm barrels. Big numbers there continue.

36. Gap filled 1108, probably the low for the day…

37. Inputs to refineries rose another 150,000 bopd and the gasoline number came in where it did due to increased production gearing up for the traveling season. Expect demand to rise there next week.

    Crude going slightly green so far, more in a bit. These are not bad numbers except for that Cushing data point. Great to see distillates move into the upper middle range of demand for this time of year. That is likely to be a combination of increased trucks rolling for inventory resupply in the States and is definitely an indication of stronger export markets to Latin America for diesel.

38. HAL CEO out with a statement saying his company is “fully indemnified” for U.S. Gulf Oil spill. I would file that under true but not sure anyone is going to believe you buddy.

39. HAL popped for about a minute on 38 before selling back off. Reef, TEXW, Wyoming, GMLGDC, it seems to me HAL is stating the obvious. How hard / time consuming / costly is it to determine where there is a problem with the cement job and to fix it? Thanks.

40. One final note on EIA for a bit: Imports stayed high relative to their position all year long, this is the 4th week that’s been the case so having a small build in stocks is not a function of a pull back there but more one of refining demand.

41. We look to be working on a wave iv. Could waste a bit of time. After that lower lows.

42. Lastly, those EIA demand numbers for distillates should be very welcome news to the likes of VLO and SUN primarily but also HOC and FTO. The distillate demand increase for the last 3 weeks runs counter to a nearly 2 year long trend of nothing but poor demand. The refiners don’t care today because the market is fearful of Europe uber alles but it’s also going to matter down the road and is likely to mean better than expected 2Q earnings for the group.

43. WHX now has a potential yield of almost 17%. Is the market telling us that they can not deliver? Or perhaps this is a baby and bathwater deal? They paid .70 on Tuesday so that explains some of the drop. What does our inefficient markets dept think at this moment in time?

44. If we roll over again and enter into v down and it wants to extend then the 1090/92 area would make a nice target.

45. Cargo – I’ve gone over the distribution there backwards and forwards. The fear is not that they can’t deliver as it is a simple model, not all that affected by price, with predictable declines and cots. The two downgrades yesterday pointed out the fact that in 2017 (and one said 2015 and his assumptions were bunk) the trust will be out of reserves to produce. This was known before and is not new. I’d put them in the sour grapes camp as they missed out on the move to higher levels with hold ratings and downgraded to sell as oil and the markets were coming off, adding to the fear factor. I’m waiting out DC’s ruling tomorrow and plan on adding a third slice before the weekend. I fully expect higher oil prices next year, which matter much more to the model then than they do now and I plan on holding well in 2011 and collecting distributions the whole time.

46. By the way, the dollar has been falling all day and crude and equities just don’t seem to care.

47. SEC, CFTC at a loss to explain “flash crash” but are willing to make rules to try to stop another one. That’s just dumb.

    http://www.marketwatch.com/story/regulators-on-the-flash-crash-its-complicated-2010-05-19

48. Nicky – hears to them going ahead and taking it there so we can get another massive short covering rally on technicals.

49. Double checked – 1102.12 is the 200 dma

50. #4: Would that be due to the fact that they’ve been dropping chemicals in the spill; so would it change the type of oil found in the tar-balls?

    #47: yeah, it’s hard to explain it without placing blame and a resulting lack of confidence in the markets. (Third-world-esque if you ask me)

51. Re 4 – No. Lab tests confirm its not from Macondo.

52. HAL CEO speaking at annual meeting says “we believe we are fully indemnified”. I say, good luck proving it was the cement and even if it was, it was BP’s decision to proceed.

53. Bob Pisani explaining how the new trading curbs will lead to more volatility in the market, not less, as halts in S&P 500 stocks will lead to wide bid /ask spreads on the SPDRs.

    S&P at 1101.33

54. CSPAN 3 carrying more oil spill testimony now.

55. kog ever get its banking settled?

56. Eld – not yet, to my understanding they would press release that.

57. RIG CEO – comment on the BOP. “If you have the wrong stuff in the BOP, for instance, like the stuff that flew out of the wellbore and landed on the nearby supply boat, then the BOP is not going to work”

58. MIDDAY OVERVIEW

    Market Update – equity weakness extends from Tues ostensibly due to the German short bans. There was a brief attempt to rally this morning, but there was no real buying behind the move and we came right back for sale. We are now below 1110 (which is where we closed May 7, the Fri before the European bailout was announced) and people are increasingly watching 1102 (which is the 200day MA for the sp500 cash, a level we haven’t been under since Jul ’09). While the German news is being cited as a reason for today’s weakness, the selling is really a continuation of a weeks-long trend that is driven more by concerns about a slowing in economic activity. Based on commentary from a variety of retailers (inc. TGT this morning), it appears like May consumer sales have weakened off the pace from Mar and Apr. The Empire Manufacturing reading out on Mon, the first major economic release for the month of May, was well below expectations. While the housing starts # out yesterday were encouraging, this was for the month of Apr, which still benefited from the tax credit (data out today from the MBA revealed that mortgage purchase applications sank 27.1% in the latest reading to the lowest level since May 1997). The debt crisis in Europe continues to reverberate, w/Digitimes reporting that notebook vendors are seeing order cuts due to slackening demand from the region while TYC was on the tape today saying the euro weakness will clip a few cents from its recent earnings outlook. Some important market “tells” are flashing warning signs – in the US, industrial stocks are very weak (levered to global economic activity). Copper is off 2% and nearly giving back its Tues rally. Crude drops another 1% today and falls further below $70. The AUD, which is very levered to commodity prices (which in turn are levered to economic growth sentiment, esp. Chinese growth), has been plunging of late (its off another 2.7% today, adding to its 1.5% decline on Tues). In addition to the signs of faltering growth, the US CPI reading today revealed that the core CPI is showing the smallest increase since ’61, raising worries of a stagflationary environment (one of the reasons gold is so weak today despite heightened levels of investor fear). On top of all of this, investors are still nervous about the regulatory landscape. The Dodd bill looms on the horizon (cloture vote today @ 2pmET), although we are actually seeing a bounce in some of the stocks w/the most exposure, like C, V, MA, COF, etc (signaling that sentiment may have become too negative on this issue). In Europe, the German action is raising worries more b/c it signals a major lack of coordination among officials when it comes to implementing policy. In addition to Tues’ short bans, Germany’s plan to deal w/European budget transgressors could be an even bigger deal– “As a last resort, a managed insolvency proceeding for bankrupt states” (this was talked about on FT Alphaville pre-open and is being highlighted on Bloomberg mid-day). Bottom Line – growth + regulatory landscapes have quickly become major headwinds while a lot of big technical levels are being broken through (the 200day @ 1102 a big test for our close today). Today’s inflation #s adding new quiver for bear case arrow. The FOMC minutes today @ 2pmET may read a bit more hawkish than current market sentiment as they are from a meeting that took place in late Apr, before the European debt crisis really escalated.
    Desk Color – cash – Monday and Tuesday of this week we saw a NOTICEABLE pick up in ETF and Futures Volumes as our clients have used these vehicles to hedge out their portfolios (from macro events) while volumes in single stocks have lagged (from an institutional level.) Today, we have seen a NOTICEABLE pick up in single stock cash volumes as PM’s are going through their portfolios with a rake weeding out single stock names (both winners and losers.) ETF $ value traded as a % of total $ value is at 34% today (below the recent 37%+ avg.). Typically in times of mkt duress the Buyside almost always first manages direction (hedging), then manages basis (single stocks.) This has been clearly evident based on the activity we have seen the past few days as our clients are finally today much more focused on alpha.

    Desk color – PT – we were very busy Monday and Tuesday. We saw “unusually high notional amounts” across the desk as institutional clients rebalanced their portfolios sector wise. These big shifts in the mkt cause the sector skews within their portfolios to get out of whack. The rebalancing can be seen as a macro/hedging effort. Now we are very quiet today as your volumes on the cash desk increase as they have time to go through and look for active opportunities in single names.

    Equity sectors: Industrials are the worst space in the market today, falling 2.25% on weakness across the board, but especially in the higher-beta machinery, mining, and transport names. Materials are also down sharply, falling over 2% on weakness in everything, although precious metals are down significantly. Energy is off around 2% on weakness across the board, although E&Ps and coals are driving a lot of the underperformance as natural gas falls around 3-4%. Discretionary is off close to 2% as investors sell the space with hotels and auto parts leading the way lower. Utilities are off 1.5%, underperforming as weakness in EQT and STR offset the typical safety bid the space usually gets on down days. Tech is off 1%, but outperforming as semis are off less than 1%. Recall the group led the market lower yesterday and the SOX was off nearly 3%. Financials are off just under 1% as some strength in large cap banks and investment banks offsets weakness in regionals and insurers. Healthcare, staples, and telecoms are all off 0.5-0.75% as the three continue to outperform the broader market given their defensive nature.

    Commodities: Despite continuing market concern, Gold has fallen below $1200, and is down ~2%. Copper is trading near its lows, down >2.5%. Despite DOE Gasoline inventories coming in lower than expected – Crude sold off and is trading near its lows around $68.25, down ~1.7%. Natural Gas is also weak this morning, down >4%, even though DOE US Gas inventories came in lower than anticipated.

    FX: USD (DXY) has sold off after trading flat overnight; its trading near its lows of the day, around $86.75 down ~0.5%. The Euro rallied before the open, but has come off its highs and is up ~0.8% vs. the dollar, sitting near the $1.23 mark. The Euro has come off its highs vs. the Yen, and is down ~0.4%. The dollar has come off its lows vs. the pound and is flat after the morning. The dollar has weakened throughout the morning vs. the Yen, and is down ~1.25%. Getting more attention that the euro today is the steep decline in the Australian dollar, which is down ~3% today and has been VERY weak in the last few days. Being talked about in the last few days – the short low yielding funding currencies (like dollar or yen) to fund a long AUD trade being unwound.

    Corp. Credit: Corp Credit is outperforming equities today – IG is flattish-to-out small; HY is more inline w/equities, falling ~7/8 on the day.
    Treasuries: Treasuries have rallied from their morning lows – the 2s are unch from yesterday and are yielding 73bps while the 10s are yielding 333bps. The 2-10 yield spread has flattened to 259bps.

    Europe: Europe is underperforming the S&P500 across almost every index, despite fewer headlines than in days past. There was speculation that Greece would leave the EU/Euro Zone, but that was denied by the Greek Govt. [Reuters] Despite the news, the Greek ASE is one of the few indices to post a gain today. The Euro rallied this morning, and is hovering around the $1.23 level. Swedish OMX and the Italian Italian FTSE MIB are each down >3%. In the OMX – worst performing stocks include: Swedbank, Boliden, and Sandvik.

59. Max pains are generally quite a bit above current levels. That often happens when the market has run hard in one direction in the 2 weeks prior to expiry and it may not mean much but at least there is not an impetus from that perspective to further beat down our names. I’ll have a table out in the post tomorrow.

60. Reuters story update on the HAL indemnity comments adds that HAL was doing the cement job according to BP’s specs and third parties have confirmed that BP would have had to sign off on HLA’s work. I’m beating a dead horse but it’s a slow day.

    Nicky, any thoughts on this little rally off the 200 day?

61. Not getting to excited about this move off the low right now. Its possibly a small c wave and if so would complete around the 1112/1113 area before turning lower again. We have resistance in the 1114 to 1119 area.
    All that said I am on the lookout for a reversal and the euro has been much stronger all day with the market taking absolutely no notice.
    Fisher on Fast Money saying we should be running to oil!

62. Thanks. Given the demand figures and the fact that has been largely a dollar based move I have to agree with the oil comments.

63. there is a small inverse h and s setting up on the spx – could take us back to 1125.

64. BOP – do you know the EXXI cap budget this year off the top of your head?

65. EXXI presentation – slide 16

    http://files.shareholder.com/downloads/EXXI/817575650x0x374445/2ea347c4-1f0e-440a-bd25-13547e6a3a09/Energy%20XXI%20RodmanRenshaw%20v3.pdf

    EXXI pointing out that there are BOPs and then there are BOPs.

66. Bloomberg TV is running a headline saying Sen. Dodd to drop plan for compromise amendment on derivatives

67. #64 FY2010 = $156mm

68. Nicky – listening to the oil testimony, not sure what to make of 66. Wonder if that’s a political move regarding Blanche Lincoln.

69. Thanks, BOP, I have $147 mm from the RR report, close enough.

70. Hey BOP, have they given a average production level for 2010, I can’t tell capacity plans from actual guidance for the year, not a big deal, I get where they are going, just doing a couple of things at once at the moment.

71. Z: Is today the last day for the front month for crude? Contango still in the $10 range?

72. If we are going to make lower lows on this wave down then I think we need to stay below 1120. If we can move above there we have a good chance the low is in and of moving higher.

73. Tomorrow, 3rd trading day prior to the 25th. Yes, about $10 from prompt month to May 2011.

    BP saying catheter now siphoning 3,000 bopd.

74. RMD – GST on the tape with a lower Bossier discovery at the Donelson #4 well.

75. 2pm vote delayed

76. Senator asking about Nalco dispersant choice. Saying a BP person sits on the Nalco board.

77. Crude back to flat on the day.

78. NLC – that sounds pretty damning, especially since the court is one of public opinion.

79. Shocked and Appalled Watch:

    Congressman asked about BP’s little green flower commercials and the tax treatment of it.

    BP responded that it was an expense of $11 or $12 mm

    Congressman then stated that it should not be tax free. He said the Chairman should look into making advertising a non tax free expense. So now they want to re-write basic accounting because he doesn’t like their ads.

80. Fed Minutes – 3.2 to 3.7% growth expected this year.

81. #79 – ugh.

82. Oil up 40 cents, taking a look at $70 just before the NYMEX close.

    1520 – I got a couple of tidbits of info out of today’s ongoing testimony but for the most part it is a witch hunt. Democrat from Wisconsin talking about appropriateness of freezing BP assets. Shades of Hugo. By the way, BP produces more oil in the U.S. than anyone else. I bet they cut funding over here in the future like they would in any country deemed hostile for development.

83. 82 – agreed. I think they should run those hearings behind closed doors and then publish the minutes. I bet the grandstanding and attempts at pithy commentary would disappear.

84. June crude 69.90

    July at 72.40
    August at 73.66

    pretty steep beyond that. Unlike the front month, all of the out months are down but trading looks light.

85. Crude closing over $70.

86. GST- #4 Donaldson is a development location between the #3 Don. (20 MMCFPD) and the #4 Belin(41 MMCFPD). These are 25 BCF type wells that GST has a 49% NRI in the #4. BTW, they have 3 more development locations in this fault block, 5 pay zones in each well.

87. nicky – if we go above 1120 u like the chances of going higher or does it have to close above 1120?

88. andy doesnt have to close above 1120 just has to move above there. Resistance then becomes 1135.

89. Reports that Dems have not got the 60 votes needed. BOP said yesterday the market may like that…

90. nicky – ty

91. What would be very bearish would be a close under the 200 dma.

92. BP to attempt top kill early next week.

93. Bought some VLO June $20 calls down here, holding up at daily ascending triangle trendline support and recently printed a P&F “bear trap”….thinking it may go higher if we bounce

94. re 93. Fundamentally in line with my thinking as well. I’m just sitting on hands on additional purchases for the moment.

95. WPRT…Westport Innovations (WPRT), which is a dominant provider of natural gas engines. On the medium-duty side in transit and refuse vehicles, this is through a joint venture with Cummins (CMI). Then on the heavy-duty side, they sell LNG fuel systems, and those would be for heavy-duty Class 8 trucks.

    Big down draft on Jefferies downgrade to HOLD on May 17. Started a position today @ 15.16…some support 15ish..STRONG support 13-14ish…not going to let it get away again……

96. Hear ya MP, lot of things in that category. Many names off 25%+ in 2 weeks.

97. What a battle. 1120 proving to be formidable resistance. We are susceptible to a move back to the lows tomorrow if we can’t get above 1120.

98. Re: #93, we’re really short term oversold here, $NYMO has got to be down more today….

99. Vote failed.

100. Cloture failed on financial reform bill, somebody forgot to line up all their ducks.

101. Market sold off on that which I can’t understand except for the uncertainty.

102. I guess just another reason to sell the market. They would have sold it if it had passed too.

103. the high in the last hour looks to be the c wave for iv. Now they can take it down again in v!

104. NOG: Micheal Reger’s brother has started another Bakken co. by reverse merging into a shell, Voyager Oil ANTF.ob.

105. V – NXY on the tape selling heavy oil assets.

106. HAL popped for about a minute on 38 before selling back off. Reef, TEXW, Wyoming, GMLGDC, it seems to me HAL is stating the obvious. How hard / time consuming / costly is it to determine where there is a problem with the cement job and to fix it? Thanks.

     Anywhere from 10,000 to 1,000,000 … all in a days work, depending where you are. …

107. Thanks Wyo – got your email.

108. Another Obama Commission ?

     Anything to kick the can down the road and avoid making decisions.

     Yeesh.

     Fun Market, eh ?

     Just brutal, particularly this space.

     Hammered.

     Hope all doing well thru this.

     BOP must have quadrupled down on EXXI by this point.

109. BOP, others. Check out John Crudele article about jobs.

     Basically says that Census seems to be stockpiling workers they don’t need. Hiring a worker for even 1 hour, counts as a “job”. So hiring more workers than needed and barely or not using them inflates the jobs numbers.

     Interesting read. Yesterday’s Newspaper of Record (NY Post).

110. $NYMO closed at -105.3…very oversold

111. #108 I have to admit… hanging on to my E21 position has been an exercise in OUCH.

     But, gotta believe what you gotta believe. I picked my points, now just have to ride it out.

     The Census Employment stuff is truly Barf Material.

112. re 108. Agreed brutal.

113. South Korean investigation concludes N.K. torpedoed ship.

     http://www.marketwatch.com/story/seoul-blames-north-for-sinking-ship-shares-dip-2010-05-19

114. BedTime Market Strategist… for breakfast.

     Support.

     Global equity markets remained under pressure following Germany’s poorly communicated criminalization of various types of short selling. The S&P 500’s tendency to follow the direction of the Euro took a hiatus as the Euro rallied in the first half of U.S. trading and jitters sent U.S. stocks lower. The S&P 500 tested the 1100 support level and the 200 day moving average, then managed to erase the majority of the session’s losses. Several behavioral indicators flashed signals that were enough to give buyers an impetus to start working. Weekly mutual fund flows (equity and bond combined) experienced their first weekly outflow in 60 weeks. The Put/Call composite spiked to levels not seen since late 2008. In 3 of the last 4 sessions, the S&P 500 posted its intraday low around noon and managed to rally respectably late in the session. Yesterday was the exception as the surprise headlines spooked markets. Late rallies are a positive sign, but the market still needs to prove it has established some stability.

     Rates First, Then Asset Sales.

     The FOMC minutes provided new and important clarity on the Fed’s exit strategy. The most important development addresses the FOMC’s own chicken versus egg dilemma – whether rate hikes or asset sales should come first. The FOMC explains its current thinking as, “Most participants favored deferring asset sales for some time. A majority preferred beginning asset sales some time after the first increase in the Federal Open Market Committee’s (FOMC) target for short-term interest rates. Such an approach would postpone any asset sales until the economic recovery was well established and would maintain short-term interest rates as the Committee’s key monetary policy tool.” Another important development relates to the clarity on how the Fed’s balance sheet should be shrunk. The Fed has often talked about letting securities runoff as they mature or are prepaid, now, it looks like the Fed is very willing to sell them in the open market when the timing is right. “Most participants expressed a preference for strategies that would eventually entail sales of agency debt and MBS in order to return the size and composition of the Federal Reserve’s balance sheet to a more normal configuration more quickly than would be accomplished by simply letting MBS and agency securities run off. They agreed that sales of agency debt and MBS should be implemented in accordance with a framework communicated in advance and be conducted at a gradual pace that potentially could be adjusted in response to changes in economic and financial conditions.” Now that we know it is likely asset sales will begin after the FOMC’s first rate hike, the question is how long will they last? The FOMC indicated that, “Most preferred that the agency debt and MBS held in the portfolio be sold at a gradual pace that would complete the sales about five years after they began.”

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