20
Jun

Yuan Monday

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Market Sentiment Watch: If you missed the wrap take a quick view as it gave a decent look at some interesting developments. Today China is in focus as they have said they will allow the yuan to slowly appreciate. That's kind of a big deal. According to the People's Bank of China:

"The global economy is gradually recovering. The recovery and upturn of the Chinese economy has become more solid with the enhanced economic stability. Management and adjustments of the exchange rate must be carried out gradually to give companies time to adjust their structure and gradually absorb the impacts of yuan exchange rate fluctuations."

Just how far PBOC will allow the yuan to appreciate and on what time line is unclear and we get more details at the G20 meeting. Here's the bank's short statement on the issue.


Business From Last Week:

  • The WIOWIO portions of the posts have been put on the ZIM, ZCAT, ZLT + WIOWIO page. A couple of more names will be put on that list this week to close out the "Why I Own, What I Own" section for the near future.
  • The Oasis in the Bakken (OAS) post link is now on the Reports tab.

BP Spill Watch:

  • APC says "BP, it's your fault". Just after getting a big bill from BP. Hello big, ugly legal battle about to unfold.  BP has promised to sue APC and Mitsui for their share of the cleanup costs.
  • Senator Markey says U.S. should go after Macondo partners APC and Mitsui as responsible parties.
  • BP now capturing 25,000 bopd + associated gas which you'd think would be a good thing but instead, capturing volumes of that sort, with more obviously seeping around the cap only says wow did you guys underestimate the size of this beast.
  • BP internal document says leak could top 100,000 bopd if the BOP is removed.
  • BP's director Bob Dudley take reins of spill response from CEO Hayward.
  • Hayward went yachting over the weekend, which the White House called a "big mistake"; In unrelated news Obama and Biden hit the links for what I think was the 4th time since accident. 
  • BP is looking to raise as much as $50 billion, deal talk on the debt portion is in the 8 to 10% range. Their balance sheet is able to take on the roughly 60% that would come in the form of additional leverage.

The Week Ahead:

  • Monday 6/21:  No ecodata scheduled
  • Tuesday 6/22: Existing home sales (F = 6.11 mm)
  • Wednesday 6/23:  EIA Oil Inventory Report, New home sales (F = 405K), President Obama to meet with lawmakers on the future of the "Energy Bill".
  • Thursday 6/24: EIA Natural Storage Report, Jobless claims (F = 463 K), durable goods (F = -1.4%)
  • Friday 6/25: GDP revision (F = 3% vs last read of 3%), consumer sentiment (F = 75.5 vs last read of 75.5)

In Today's Post:

  • Holdings Watch
  • Commodity  Watch
  • Stuff We Care About Today
  • Catalyst Watch Update
  • Odds & Ends

Holdings Watch:

ZCAT (Zman Catalyst portfolio):

  • $6,000
  • 99% Cash
  • 1 position at present.

ZIM (Zman Inefficient Markets portfolio)

  • $10,300
  • 92% Cash
  • 1 position at present.

 

ZLT (Zman Long Term portfolio)

Commodity  Watch:

Crude oil rose 5% last week to close at $77.18. The 12 month crude strip is now trading at $81.01. This morning crude up $1.20.

Natural gas also rose 5% last week to close at $5 even. The 12 month strip is now trading at $5.37.  This morning gas is trading up a dime.


  • China Watch: China plans to double natural gas consumption over the next five years to reduce its reliance on coal. Probably won't hurt coal prices as 1) that's a long ways off and 2) coal consumption would still rise, just not as fast. Probably good news that will slowly filter into the market thinking on EOG as they are just on the beginning of exploitation of a large tight gas sand position. According to Chinese authorities, China gets 4% of its total energy from natural gas now vs a 70% share for coal.
  • Weather Watch:

    • Week before last Cooling Degree Days of 51 which yielded last week's injection of 87 Bcf.
    • Last week, CDDs climbed to 63, lower than the forecast of 70 but still well above last week, last year and normal as you can see in the chart below.
    • Forecast for this week: 86.

 


 

Stuff We Care About Today

I'll have a new Catalyst List out tomorrow along with another company specific report 

Other Stuff:

  • CHK - Sees investments of $200 mm from Korea Investment Corp and undisclosed amounts from China Investment Corp and Temasek Holdings of Singapore. Interesting.
  • "Gasland" premiers tonight on HBO ... if anything that kind of negative frac piece should have a positive impact on natural gas. I've gotten a number of emails about this and frankly, I don't think it will have much impact on the group other than maybe a bit of nervousness for a few days in some of the named names.

Odds & Ends

Analyst Watch:

  • BP - Oppenheimer stays at Outperform, cuts target from $55 to $45

 

 

95 Responses to “Yuan Monday”

  1. 1
    zman Says:

    Analyst Watch:

    GDP raised to Outperform at Howard Weil

  2. 2
    BirdsofpreyRcool Says:

    The “Bears With Sweaty Paws” Watch continues….

    This, from XACS#1 early this morning… credit has backed off a bit, from it’s strong showing, but still very very green.
    ——————–

    Last Wednesday we turned from tactically bearish to neutral. We went completely bullish Friday morning. The equity market’s ability to ignore the recent improvements in bank and non-financial CDS profiles appears to be faltering…. and this could lead to a sustained equity rally…Want to make your blood boil? Credit market performance so far this morning indicates that the SPX should be trading in the +25pt range….that would match the note we sent out Friday morning….Being short financials when credit is improving can be a very expensive decision…

  3. 3
    BirdsofpreyRcool Says:

    TED trending lower (finally!). Well off his wide of +48.1 bps to +43.4 bps now. Will be happier when TED settles in with a sub-30 handle.

    Meanwhile, credit doing the Happy Dance this morning. Saw some pretty BIG moves first thing this morning, cooling off a bit from that now. But still, en fuego, baby!

    IG -3 1/8 bps

    HY +3/4 pt

    Bears are worried…

  4. 4
    elijahwc Says:

    Pritchard calls the Oklahoma Cana Anadarko Woodford Shale “Sneaky Good”

    A Sneaky Good Play That is Expanding. Three wells drilled by Continental Resources Inc (CLR-$50.47) in
    Dewey, Blaine, and Grady Counties suggest that the play has expanded beyond Canadian County. Production has
    held up solidly on all three, and last month, the company received $8.59/Mcf at the wellhead from the Ballard well in
    Southeast Cana due to high BTU gas and NGL content. Devon Energy Corporation (DVN-$69.92) has committed
    nearly $600 million to the play to date and we may hear results of wells with 50% more frac stages this quarter.
    Investable Themes

  5. 5
    zman Says:

    Thanks BOP

    Eli – Also of interest in the play are NFX and the new QEP.

  6. 6
    crysball Says:

    CAM in the clear over Macondo Well BOP?

    An BBC interview with a Macondo Rig worker who reported the Hydrualic Leak on the BOP and followup actions would appear to give CAM an unsolicited PR boost in the ‘BLAME GAME’……and more hurt for BP and Transocean.

    http://news.bbc.co.uk/2/hi/world/us_and_canada/10362139.stm

  7. 7
    BirdsofpreyRcool Says:

    BP/GOM Headlines

    · BP – the co was meeting w/bankers on Fri in the hopes of launching a bond offering as soon as this Tues; the goal was to launch a 5/10-yr non-secured bond to raise at least $5-10B; the paper would yield 8-10%; the goal is to enhance market confidence – CNBC http://www.cnbc.com//id/37780627

    · BP is working on plans to raise $50B, nearly 2x the amount the company has publicly committed to raising ($10B will come from a bond sale that could occur as early as this week while another $20B in debt may also be raised; BP could see $20B of assets); the firm wants to have ample cash on hand to meet cleanup costs and also wants to bolster market confidence (London Times)

    · BP resumes collecting oil at Gulf vessel – BP said 24,500 barrels of oil were captured on Friday and 8,480 barrels of oil were picked up Saturday from the leaking oil well. Reuters

    · BP – pressure mounted on BP this weekend as CEO Hayward as seen sailing on his yacht; on Fri it was revealed that Hayward was being removed from having primary responsibility for the Gulf cleanup (London Times)

    · BP – Chip Goodyear, the former head of BHP, could be brought into BP in a senior mgmt capacity, potentially as CEO (London Times)

    · BP – oped written by Whitney Tilson and Glenn Tongue – bullish on BP (they have publicly revealed their enthusiasm for BP on CNBC in the last couple wks); the stock is very cheap and it’s not going bankrupt. Barron’s

    · BP debt – positive comments in Barron’s on BP debt – a PIMCO spokesman recently confirmed that Bill Gross has bought $100MM of BP’s shorter-maturity bonds. Barron’s

    · BP estimates of Gulf oil spill range up to 100,000 bpd – An internal company document released by BP shows the estimate of 100K bpd, far higher than the current U.S. estimate of 60K bpd. Reuters

    · BP relied on cheaper wells in Gulf on a larger scale than peers according to a WSJ study; BP used the more risky and less expensive “long string” design on 35% of its deepwater rigs. WSJ

    · APC – BP last week sent bills to its Deepwater partners, APC and Mitsui; APC declined to pay and sources say the company is preparing to sue BP. Jim Hackett, Anadarko’s chief executive, said the disaster was a “direct result of BP’s reckless decisions and actions”. If it can prove BP’s negligence, the firm will not be liable for damages caused by the disaster. London Times.

    · BP to sue APC in Gulf oil well – BP is planning to sue APC for its share of the clean up costs after APC said BP’s behavior showed gross negligence and the accident was preventable. London Telegraph http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7840455/Oil-spill-BP-to-sue-partner-in-Gulf-oil-well.html

    · APC – the co’s long-term debt rating was cut to junk by Moody’s

    · BP – the London Telegraph says BP is preparing to file suit against APC for skirting its financial responsibilities in the Gulf by refusing to pay its share of the cleanup costs – London Telegraph. http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7840455/Oil-spill-BP-to-sue-partner-in-Gulf-oil-well.html

    · Goldman sold more than 50% of its BP holdings just prior to the Deepwater spill (NY Post) http://www.nypost.com/p/news/business/goldman_great_timing_for_unloading_wEe19Ge1RQRQNUeCvOVdYI?CMP=OTC-rss&FEEDNAME

    · U.S. Gulf Coast residents brace for more oil – Residents along the Gulf coast continued to brace for oil on their shores as the Gulf spill continues. Despite the worries, Florida spokespersons have said their beaches haven’t been affected. Reuters

  8. 8
    zman Says:

    Crys – I think so for a number of reasons. Thanks for posting that. Not in now but may go back to the well, so to speak, there.

    Portugal schooling N. Korea 6-0 … and counting.

  9. 9
    zman Says:

    make that 7-0.

  10. 10
    BirdsofpreyRcool Says:

    HeadTrader says nobody doin’ nothing on the desk this morning. People still hitting the Snooze Button.

    But, rally held in Europe… so, maybe we can see it stick here too.

  11. 11
    zman Says:

    BOP – yeah, summer, world cup, Wimbledon, pretty tough for them to stay focused.

  12. 12
    zman Says:

    HAL continuing to benefit from last week’s “it’s BP’s fault” testimony, still severely depressed.

    Bakkens running, still nothing out of BEXP, that should change pretty soon. OAS getting a move with the group and market as well.

  13. 13
    Nicky Says:

    Good morning. As far as the voodoo goes the first hour and the last hour are the most bullish today. I have resistance at 1125/7 and then 1136/7. The big astro turning point does not come until either Friday or next Monday. In the meantime I think we are likely to go back and retest the gap this morning at some stage this week and then likely move higher again.

  14. 14
    zman Says:

    As soon as I typed that you saw some flippers pop out of OAS on decent volume in conjunction with the market pulling off the highs.

  15. 15
    zman Says:

    Morning Nicky, thanks much, that helps.

    WLT chart looking interesting, toying with the 200 day. China’s move on the yuan means cheaper imports for China’s commodity buys.

  16. 16
    zman Says:

    HK moving on up with several other gassy names as heat and storm threats drive gas higher.

  17. 17
    zman Says:

    ZTRADE – ZIM – HK

    Play on strength in gas in one of the most depressed names amongst the gassy stocks this year. This is one I’d rather buy on strength than weakness.

    HK – Added (15) July $23 calls for $0.52 with the stock at $23.08.

  18. 18
    zman Says:

    ZTRADE – ZIM – SWN

    Same reasoning here as with the HK trade.

    SWN – Added (10) July $46 calls with the stock at $44.90.

  19. 19
    zman Says:

    Re 17 and 18. I don’t think the Gasland piece is going to affect the stocks but I have heard a lot of worry over this. If you are in that camp you’d probably not do these as both names would be amongst those targeted.

  20. 20
    Nicky Says:

    The bullish count says this could get as high as 1150 -70.

  21. 21
    zman Says:

    re 18, those were added at $1.20.

  22. 22
    zman Says:

    re 20. Technicals seem to be entirely in charge of the market at this point.

  23. 23
    VTZ Says:

    re 22. *Computers* seem to be entirely in charge of the market at this point AND ever since the “flash crash” it’s been obvious that the trader machines have been trading back and forth on relatively light volume. Busy trying to make a market for the other computers I guess!

  24. 24
    Dman Says:

    Z – I didn’t know the O-man was a golfer. Shows how much attention I paid. So I now have to modify my parody piece:

    O-Man meets BP

    “I believe you’re the British guy”

    “Er, yes I am, but you know, we don’t actually call it British Petro…”

    “Never mind, how’s the cleanup going, have you plugged that thing yet?”

    “Well, no, not yet. Actually, it so happens you might be able to help”

    “Me? I’m a community organizer. How could I help. Oooh, I see … with the pelicans… yeah sure I can help organize that”

    “Er, no actually Mr President, the pelican clean-up community is already well organized. But the thing is, it so happens you have a lot of nuclear weapons and if you don’t mind me saying, some of them are really quite big and the Russians found that …”

    “Oops, our 20 minutes is up. Have to leave it at that – don’t want to leave Joe waiting at the links. Unsupervised, he’s almost as gaff-prone as you. But it’s OK, we’re all done here …”

  25. 25
    tomdavis12 Says:

    Z: Do you believe that as the spill expands, that the delivery of crude will be adversely effected in the GOM and therefore our NA producers will be where hot money goes?

  26. 26
    zman Says:

    V – yep, summer trading at its finest. Gold not moving much on the yuan news, I half expected it to sell down a bit in favor of other commodities.

    Dman = LOL.

    Italy – I see headlines that the U.S. will begin pulling out of Afghanistan next year. Hmmm.

  27. 27
    zman Says:

    Tom – Not to a noticeable degree, no. I do think the onshore names will outperform until we learn what new rules are going to be laid out for the offshore operators. Once we get those I think names like EXXI outperform for a time, getting back to a more normal range of forward EBITDA, say $22 to $25 with oil where it is now.

  28. 28
    VTZ Says:

    RE 26 – Now that we’ve broken out I don’t think you’ll see a big sell down. I expect buyers to continue buying weakness.

    I think that’s holding it back from breaking further away today however. In the same token, it means consolidation and makes it so the technicals don’t get too overbought.

  29. 29
    Hoss Says:

    RE Fracturing –

    EPA Announces a Schedule of Public Meetings on Hydraulic Fracturing Research Study
    http://yosemite.epa.gov/opa/admpress.nsf/d0cf6618525a9efb85257359003fb69d/e98532c86e409cc485257746005b4be5!OpenDocument

    The public meetings will be held on:
    · July 8 from 6 p.m. to 10 p.m. CDT at the Hilton Fort Worth in Fort Worth, Texas
    · July 13 from 6 p.m. to 10 p.m. MDT at the Marriot Tech Center’s Rocky Mountain Events Center in Denver, Colo.
    · July 22 from 6 p.m. to 10 p.m. EDT at the Hilton Garden Inn in Canonsburg, Pa.
    · August 12 at the Anderson Performing Arts Center at Binghamton University in Binghamton, N.Y. for 3 sessions – 8 a.m. to 12 p.m., 1 p.m. to 5 p.m., and 6 p.m. to 10 p.m. EDT

  30. 30
    nifkin Says:

    any idea what time the HOS hearing kicks off?

  31. 31
    zman Says:

    HOS?

  32. 32
    nifkin Says:

    http://www.courthousenews.com/2010/06/21/28240.htm

    Hornbeck

  33. 33
    zman Says:

    Oh, OK, thanks, dunno.

  34. 34
    zman Says:

    OAS back to even on the day after some early morning profit taking. This is one where the green shoe will be exercised. Just feels like they have follow on demand.

  35. 35
    milepost_43 Says:

    32…looks like civil cases at 10am CDT

  36. 36
    milepost_43 Says:

    http://www.laed.uscourts.gov/CASES/motions/MoHear_F.htm

  37. 37
    zman Says:

    Fool me once shame on you, fool me for the 500th time shame on me:

    http://news.yahoo.com/s/nm/us_iran_iaea_nuclear

  38. 38
    choices Says:

    http://www.gold-trust.com/QuarterlyReports/CGT%201st%20Quarter%20Report%202010.pdf

    http://www.gold-trust.com/asset_value.htm

    FWIW:Anyone interested in buying a gold bullion fund might want to look at GTU-they just did an offering and the stk price took a hit-premium now is 3+% which is well below CEF and PHYS-it is audited by E & Y.

  39. 39
    nifkin Says:

    thanks MP

  40. 40
    zman Says:

    EOG back near its cycle highs.

    WLL now within a buck of new territory for this cycle.

  41. 41
    zman Says:

    TGA continuing to rally. Interesting name.

  42. 42
    zman Says:

    Broker friend who is energy focused telling me he saw the OAS piece on Seeking Alpha, and agrees with most of it, points out that the last lease sale in the Bakken saw acreage go for from $5,500 to $12,000 per acre. I think for the whole company that would be rich but if you use the low end of the range that’s about $21 per share.

  43. 43
    zman Says:

    BOP – how’s credit looking?

  44. 44
    zman Says:

    … and what do you think of BP’s plan to raise $50 billion ($30 B from debt) before the rating agencies further nuke their ratings?

  45. 45
    zman Says:

    HAL approaching JB’s resistance levels from Friday.

  46. 46
    dij Says:

    The panel looking at the future of off shore drilling:

    Mr. Obama named the two co-chairmen, Mr. Reilly and former Senator Bob Graham, a Democrat from Florida, on May 22. But the White House did not designate the other five members until June 14. They are Frances G. Beinecke, president of the Natural Resources Defense Council; Donald Boesch, president of the University of Maryland Center for Environmental Science; Terry D. Garcia, an executive vice president at the National Geographic Society; Cherry A. Murray, dean of the Harvard University School of Engineering and Applied Sciences; and Frances Ulmer, chancellor of the University of Alaska Anchorage.

  47. 47
    zman Says:

    Dij – thanks, one engineer on board but no evidence of anyone who has drilled a well that I can see. That makes sense.

  48. 48
    BirdsofpreyRcool Says:

    follow up to #47

    http://news.yahoo.com/s/ap/20100620/ap_on_bi_ge/us_gulf_oil_spill_commission

  49. 49
    zman Says:

    Thanks for 48. These guys obviously want triple digit oil to promote use of bicycles.

  50. 50
    elduque Says:

    Baltic keeps falling like a stone.

  51. 51
    BirdsofpreyRcool Says:

    Credit markets holding onto their gains. But volume is low and it is sloooooooooooow.

    BP looking to issue $10B in the bond market. Reckon’s it will cost an extra $500mm/yr in interest expense (vs borrowing rates prior to the blowout). Don’t think people really looking at ratings right now. BP is still about 5 notches (discounting Fitch, which is 2 notches) above junk. If a fund held onto BP debt this long, the only real reason to sell is if they think it will go to junk. That is a pretty big step off a pretty tall cliff here… and comparisons to Eron are not warranted (as Enron didn’t actually own much in terms of “hard assets). Not saying it’s impossible, but don’t think BP is downgraded to junk.

    Wonder if part of BP’s desire to draw down more debt is in anticipation of fighting a potential takeover? I can see the usual guys (Shell, XOM) steering clear… but, what about the Chinese? The Indians? The Russians. (HA! THAT would not be funny… but, just sayin’…)

  52. 52
    ram Says:

    “Let the first commission member who peddles up to Capital Hill launch the first stone.”

  53. 53
    dij Says:

    perhaps no engineers, but with an initial 15 million in funding, the panel can hire all the technical advice it needs.

  54. 54
    zman Says:

    re 51, thanks. BP has hired to GS to fend off takeovers.

    Dij – true, did you see the link BOP put up after you? Sounds like these guys already have their minds made up so who needs science?

  55. 55
    zman Says:

    BP NOT looking to raise major debt dollars:

    http://finance.yahoo.com/news/BP-not-eyeing-major-debt-rb-834770851.html?x=0&sec=topStories&pos=main&asset=&ccode=

  56. 56
    dij Says:

    Yes, Z, some members have certainly made their views known. They appear to all be scientists, but for Graham and Ulmer. They will make a policy recommendation.

    So perhaps all that matters is what we as…voters, or Gulf States denizens think about deep water drilling and whether it needs a more careful approach than has been the case heretofore.

  57. 57
    zman Says:

    re 56. I think they really need to come up with a spill response plan. The one the U.S./industry has is woefully inadequate.

    Nicky – so far you called today’s action to a tee.

  58. 58
    zman Says:

    Odd reversal for natural gas, could simply be profit taking.

  59. 59
    zman Says:

    Judge to rule on moratorium by Wednesday

  60. 60
    AAA Says:

    Z, re 57, no kidding.

    The makeup of this commission is disappointing, to say the least. It may not be as political as the 9/11 commission, but only because they are all singing from the same hymnbook. Expect a recommendation to suspend deepwater drilling indefinitely while we transition to clean energy. I would not be surprised to see a recommendation for a national oil company to handle all deepwater drilling. After all, obama has already taken over the banking, auto and health industries. Why not oil too?

  61. 61
    choices Says:

    Not sure if this has been posted:

    HOUSTON (Dow Jones)–Natural gas producers are choking back production from wells in the Haynesville Shale, a prolific natural gas-bearing rock formation in Texas and Louisiana, as a way of boosting the overall efficiency and life span of those wells. The technique represents an important shift in the exploitation of gas from the dense sedimentary rock formations known as shales. Frenzied development flooded the natural gas market last year with, shale gas and the recession cut deeply into natural gas demand, pushing prices to a 7 1/2-year low last September. Now more measured growth from shales could help mitigate future gas gluts and allow for more orderly development of these gas-rich assets. The progression could help support a recent upswing in prices, which have more than doubled from last year’s lows due, in part, to the prospect of hot summer weather, which increases demand for gas-fired electricity, and a busy storm season, which increases the potential of supply disruptions. Natural gas producers such as Petrohawk Energy Corp. (HK) and Devon Energy Corp. (DVN) have begun limiting initial production from their Haynesville wells. Petrohawk has cut its average initial production rate in half to about nine million cubic feet of natural gas a day. The Houston-based energy company will constrain production on all 110 operated wells it drills in the Haynesville shale this year, ultimately increasing the life and output of each well. However, the company hasn’t yet provided an indication of how much more gas each well will eventually produce.

  62. 62
    zman Says:

    My plan, which is probably just a variant of the Pickens Plan:

    1) conserve energy via better systems, more insulation etc.

    2) conserve energy by incentivizing firms in the service industry to promote telecomuting where feasible.

    3) conserve energy through encouraging a four day work week (20% of commuting gas saved right there).

    4) Allow nukes to be built again. Cut the red tape.

    5) Require better mileage out of cars

    6) Drill for natural gas onshore more

    7) Transition more vehicles to CNG. Encourage automakers to sell them in the U.S.

    8) Come of up with clear guidelines for what to do in an offshore emergency and get back to drilling there as well.

    9) Continue to push utilities to use new clean coal technologies.

    10) Only provide incentives to solar at a high efficiency rate for panels, don’t give tax breaks to get low efficiecy systems in place that will just be outdated in 5 years.

  63. 63
    dij Says:

    Rig Worker Claims BP Knew of Leak:

    http://thelede.blogs.nytimes.com/2010/06/21/rig-worker-claims-bp-knew-of-leak-in-emergency-system-before-explosion/

  64. 64
    zman Says:

    61 – yes thanks, HK has been talking this up since 2Q09, backed off it on the 3Q call, then was back on that game plan on 4Q and by 1Q10 had said all new wells would be choked back and that they are looking at it in the Eagle Ford. They were at the time of the 1Q call seeing some evidence from some of their peers that higher EURs were the results of the choked back production. They also noted that the choked back versus less choked back wells’ production curves intersected by about day 60 so it really wasn’t harmful to production growth rates either, more of just a shift to the right on the time line.

  65. 65
    zman Says:

    AAA – sounds more and more like you are right regarding APC and their ability to sue BP and get out from under the spill clean up liability.

  66. 66
    zman Says:

    Market out of steam, looking for Nicky’s late day bounce and grabbing a late lunch.

  67. 67
    TEXWS6 Says:

    re #61:

    I highly doubt that choking HVL wells back will cause natural gas prices to steady or increase. Choking one of these wells back still yields one hellacious well (10-15MMcfd). Ripping a Barnett well wide-open won’t yield what a choked back HVL well in terms of daily rate. Just something to think about with over 160 rigs running in the HVL.

  68. 68
    zman Says:

    Tex – thanks, and just to be clear, I don’t think it does either and didn’t mean to imply that.

  69. 69
    TEXWS6 Says:

    Re #68:

    Understood and agreed, just trying to set some truths out there. These are some of the largest on-shore gas wells ever drilled, so even choking them back/down will still yield substantial gas production increases.

  70. 70
    VTZ Says:

    RE 26, 28 – Well I guess I ate my words since going into my meeting because now the charts look really bearish with remaining support at 1228 and 1224 before another bout of additional liquidation.

  71. 71
    jiveyjr Says:

    not a gold bug here, but it seems gold frequently takes a hit before Fed meetings

  72. 72
    zman Says:

    V – hear ya, very different day now than what the pre market promised. Marketwatch story saying people don’t believe the Chinese will float it. Don’t really see any evidence provided, just a belief that they won’t let it rise.

  73. 73
    zman Says:

    $3 swing from high to low on WLL, similar move on EOG.

  74. 74
    AAA Says:

    Z re 65. Perhaps the gulf oil field workers should retrain to be lawyers.

    I don’t know what else BP was expecting from them. I am beginning to think BP is getting some terrible legal/PR advice. The WashPost had a front page article today listing all the democrat honchos they have hired for this. Ironically, their chief lawyer seems to be Jamie Gorelick, who is going for some kind of disaster trifecta. As Deputy Attorney General, she authored a memo that put in place a wall against sharing intelligence infor regarding terrorist threats. Then she sat on the 9/11 Committee, where her memo was a chief topic. Then she was an exec at FNM and famously cashed in millions in bonuses, along with CEO Franklin Raines and some other poltical hacks, before that ship ran aground. Now she is advising BP. Saying she has plenty of experience in massive disasters is like saying Evil Knieval had experience in motorcycle crashes. Yes, but is that who you want advising you? At least no one can accuse her of issuing the ill-fated orders regarding the well.

  75. 75
    BirdsofpreyRcool Says:

    IM from XACS#1
    ———————

    Credit has backed off its bullish opening as the day has progressed…from 5½tighter to 3½ tighter…but in no way is the credit markets signalling that the equity markets should end the day in the red….This is the 3rd day in a row, and the 4th in a week, in which credit market strength has failed to entice the equity markets.

  76. 76
    jiveyjr Says:

    good article in Barron’s this week by Whitney Tilson about historical perspective on oil spills and why he has been buying BP….

  77. 77
    zman Says:

    BOP – was just about to ask what HT is thinking, if he’s awake that is.

  78. 78
    BirdsofpreyRcool Says:

    HT saying that he has no “feel” for where the stock mrkt will close today as “no one cares about this market lately.” He isn’t doing much… and that makes HT very cranky.

  79. 79
    zman Says:

    Roger that.

  80. 80
    zman Says:

    Has anyone found an ETF to replace SEA in the dry bulk arena?

  81. 81
    zman Says:

    I’d say they’re going to have to cut Hayward loose.

    http://news.yahoo.com/s/ap/20100621/ap_on_bi_ge/eu_britain_bp

  82. 82
    BirdsofpreyRcool Says:

    What an irritating bifurcation… we still have a green bond market, but stocks are giving credit the raspberry.

  83. 83
    milepost_43 Says:

    Bakken Connector to Keystone Pipeline Proposed…..moving North Dakota oil on TransCanada’s pipeline would boost prices for producers……..

    http://abcnews.go.com/Business/wirestory?id=10972420&page=2

    first concrete proposal I have seen.

  84. 84
    zman Says:

    Beerthirty come early

  85. 85
    BirdsofpreyRcool Says:

    A Preview
    —————–

    Cook a Hamburger and Blow Up Your Polluted Fracking Town: TV
    2010-06-21 04:01:00.13 GMT

    Review by Dave Shiflett
    June 21 (Bloomberg) — When tap water burns, it’s probably time to admit there’s a problem.
    Yet not everyone agrees, which is one of the more disturbing messages of “Gasland,” an HBO documentary about pollution caused by the expanding search for “clean” natural gas in the U.S.
    The film, which airs tonight at 9 p.m. New York time, won a special jury prize at this year’s Sundance Film Festival. It was made by Josh Fox, who may go down in history as the Paul Revere of fracking — short for hydraulic fracturing, the process by which natural gas is extracted.
    The story he tells is alarming, educational and sometimes funny.
    Fox became suspicious when energy companies offered him and his neighbors near the New York-Pennsylvania border boatloads of money to drill for natural gas on their properties in the Delaware River Basin. Fox turned down $100,000 after investigating the situation and finding it fraught with danger.
    He traces the problem to the Dick Cheney-backed Energy Policy Act of 2005, which exempted fracking from the Safe Drinking Water Act and other environmental regulations.
    This unleashed a massive gas grope, according to the film, that has resulted in 450,000 gas wells in 34 states. Fracking fluids, which help release gas deposits trapped in rocks, contain neurotoxins and carcinogens. Fox says trillions of gallons of contaminated water have been produced by the process and largely left to seep back into the earth or evaporate.

    Fire Water

    When Fox heads West, he finds a new type of firewater.
    In rural Colorado several residents turn on their kitchen faucets and light the water afire. The roaring flames make you wonder if they might be able to fuel their cars with their gas- contaminated tap water.
    In Colorado and Wyoming, residents in drilling areas complain of persistent headaches, loss of smell and taste and having to buy their drinking water from Wal-Mart.
    Despite the ominous implications, Fox manages to maintain his sense of humor. During a trip through Wyoming’s Jonah Gas Field he leaves his car (wearing a gas mask) and plays “This Land is Your Land” on his banjo, a poignant choice since he’s on public land administered by the Bureau of Land Management that’s been leased out for exploration.

    Hairless Animals

    In DISH, Texas — the town was renamed after the satellite company in exchange for getting free TV service for 10 years — the air is so polluted by natural-gas exploration that it may be flammable. Mayor Calvin Tillman muses that “some guy is going to be cooking his hamburger one day and blow up the town.”
    The Marcellus Shale Field, which stretches from New York to West Virginia, is called the “Saudi Arabia of natural gas.”
    It’s also the country’s largest unfiltered watershed, supplying
    16.5 million people with drinking water.
    John Hanger, the head of Pennsylvania’s Department of Environmental Protection, downplays pollution dangers. Yet when Fox offers him a drink of water from a town where animals have begun losing their hair, he declines.
    In Congress, Fox finds lobbyists and energy executives trying to derail a bill that would regulate some of the chemicals used in fracking. U.S. Representative Dan Boren, a Democrat from Oklahoma, accuses critics of “searching for a problem that does not exist.”
    That might surprise some folks in Pennsylvania and West Virginia, where gas-well explosions caused extensive damage earlier last month. Toxic chemicals spewed into the air for 16 hours in Pennsylvania, which has halted construction of 70 wells pending environmental review.
    Maybe Boren would change his perspective if he took a sip of some high-octane water.
    Stars: ***

    *T

    What the Stars Mean:

    ****          Excellent
    ***           Good
    **            Average
    *             Poor
    (No stars)    Worthless

    *T

  86. 86
    AAA Says:

    I thought the frac zone was separated from aquifers by layers of rock? Of course, the article seems to mix up a lot of different issues and lump them all together as the inevitable result of nat gas production. It sounds like the flammable water issue, for example, is due to a leaking well casing rather than fraccing.

  87. 87
    BirdsofpreyRcool Says:

    AAA — i saw an episode on “The History of Us” (pretty good series on the History Channel) that showed oil as existing in caverns below the surface of the earth. Literally sloshing around like waves on the ocean. It continues to amaze me, how wrong the media gets the who e&p thing.

  88. 88
    AAA Says:

    BOP, you mean that’s not the way it is?

  89. 89
    BirdsofpreyRcool Says:

    AAA — yep. Complete with Dinosaurs on Surfboards.

    Cowabunga, dude! 😉

  90. 90
    zman Says:

    V – Goldbug worry article for you:

    http://www.marketwatch.com/story/gold-bugs-giddy-but-some-get-cautious-2010-06-21?link=kiosk

  91. 91
    VTZ Says:

    There’s definitely not an overbullish sentiment. The all-time high was hardly mentioned today or Friday.

    I forgot that this week is expiry week so there will be shenanigans ongoing all week.

  92. 92
    VTZ Says:

    Plus they need to shake out some weak hands who bought the breakout, from the looks of trading today it looks like they accomplished some of that.

    As I said earlier, I want to see how it behaves at 1224, 1228.

  93. 93
    zman Says:

    93 L bumped up to 50% chance of development in next 48 hours. It currently sits just south of Haiti.

  94. 94
    PackMan Says:

    AAA – 74 – Great Post; my thoughts exactly.

    Jamie Gorelick going for the Golden Sombrero.

  95. 95
    BirdsofpreyRcool Says:

    BedTime Market Strategist

    Summer Solstice.

    It was the first day of summer and the longest day of the year in more ways than one. The trading day started with a great deal of excitement over China returning to a currency policy that, if memory serves correctly, was never officially halted. In last night’s note, we expected the market’s reaction to be “more excitement than substance” and that proved to be the case today. Markets in Asia celebrated the news, Europe followed with optimism and the U.S. attempted to embrace the news, but by late afternoon, the S&P 500 was in negative territory. Despite the fanfare, it was another remarkably slow trading day following a string of slow sessions, including Friday’s subdued expiration. Despite the 2% intraday reversal, the S&P 500 volume still remained light. The volume over the last 7 trading days has been 27% slower than the previous 20 sessions.

    We would venture to say that the lack of enthusiasm for the rally and its inability to sustain the gains led to mild or even quiet de-risking late in the session as the Russell 2000 underperformed the Dow Industrials by 95 basis points. The S&P 500 broke back below its 200 day moving average late in the session, but managed to squeak out a close above it. Within the Nasdaq 100, more than half of the index’s loss for the session was attributable to three stocks: Apple, Google and Research In Motion. We are obviously seeing signs of a market where investors have squared positions here for the start of summer and probably won’t be making big moves unless the economic data or upcoming earnings season provide a tangible catalyst.

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