13
Oct

Wrap – Week Ended 10/12/12

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Natural Gas Watch:  The storage overhang continued to erode last week and levels are now only up 7% and 8% to year ago and five year average levels respectively. Given how bloated was at the end of March (927 Bcf over the 5 year average) and where it is now (269 Bcf) our flatter slope of the injection line theory for 2012 has held up well. In  fact, season to date we've injected 2.8 Bcfgpd less than the five year average and seasonal peak now looks set for a sub 4 Tcf level, weather willing. EIA's call for greater heating oil and natural gas demand this winter season reflects a more normal looking winter from NOAA. The non-commercial net short position remained essentially flat week to week but short covering during this rally has been a big factor in the last few weeks of rally rally mode. See Friday's post for all the tables and charts including the peak season spaghetti chart. The rest of the wrap comments along with pricing thoughts for natural gas will be incorporated into the Monday post. 

 

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13 Responses to “Wrap – Week Ended 10/12/12”

  1. 1
    brodway Says:

    Zman
    The one thing that struck me this week is the news out of CLR and the impact it potentially has on the valuation of NFX.  The Woodford can potentially get NFX on the map again as far as institutional buying and a take over candidate as valuation is very reasonable. Am i being too optimistic or could NFX be just too darn cheap?

  2. 2
    crysball Says:

    IEA   Global forecast for  Oil………interesting comments about    how  global  refining capacity  growth  will  outpace  demand,  resulting  in a global drop  in utilization  from  83%  to  79%  by  2017……..especially  interesting  is the comment  about  the  shrink  in  European  refining capacity;
    http://www.bloomberg.com/news/2012-10-12/iea-sees-oil-supply-rising-as-demand-growth-slows-to-2017.html

  3. 3
    crysball Says:

    Re:IEA   forecast  for  Oil……..supply  growth  exceeds  demand. 
    While  the 'devil is  in  the detail'………which  is  not  revealed  in the Bloomberg  article………..suspect    the IEA   is   not   fully  considereing  the  impact  of   rapid domestic demand  growth    among  producers  suche as  Saudi Arabia,   Mexico,  etc.   

  4. 4
    Zorgnak Says:

     
    S&P 500 Futures Weekly Notes/Thoughts
    Notes… Market short term over sold in a longer term up trend of price, breadth and demand volume.. Volume gap below 1424.50 to 1409.  CHVN acceptance areas at 1453.25, 1428.50 and 1396.50. 1386.50 key intermediate support with volume gap below. Currencies in balance. $USD < 80 and Euro > 1.284 key support levels for equities/commodities.  Sector rotation remains defensive with NDX down 6 consecutive days in a long term up trend. POMO supportive 10/15-18 this week and then unsupportive  for the rest of October. 
     
    Thoughts…. Poor oversold bounce last week now testing below the short term volume pivot  for buyers.  Expecting another weak bounce early in the week at or above 1409. Majority of Fed/Draghi event volume is now overhead supply above 1424.50. I’d be wrong on the bounce scenario with a rejection of acceptance at 1396.50. A break below 1386 would be a major negative for the bulls with only minor support and a volume gap below. A break above 1444.50 with increased demand volume would be unexpected and likely squeeze higher to test recent highs.  Looking to reduce market exposure on bounce below 1444.50 unless the bounce is accompanied by a volume and breadth thrust. 
    CLVN=Low Volume Rejection Zone – CHVN= High Volume Price Acceptance and Congestion Zone
    1478           CHVN
    1464             Minor Resistance
    1453-55     Minor CHVN, Acceptance
    1449.50     LVN, Minor Resistance
    1428.50    CHVN. Short term volume pivot
    1424.25     CLVN…Minor Support…traded below on Friday…Overhead supply above
    1409         CLVN. Support. Break out levels after Fed and ECB events.
    1396          CHVN, Intermediate Volume Pivot,
    1386         Minor CLVN, Support…low volume area below

  5. 5
    zman Says:

    re 1 – good question, will be addressed in the Monday post. 

  6. 6
    Zorgnak Says:

    XLE…Big cap energy trading in long term congestion at minor support. Not much edge here
    http://www.charthub.com/images/2012/10/14/Stock_Weekly_3.png

  7. 7
    Zorgnak Says:

    XOP   E&P ETF trading in balance above minor support and major acceptance. Demand volume still supportive short and longer term.
    http://www.charthub.com/images/2012/10/14/Stock_Weekly_3_2.png

  8. 8
    Zorgnak Says:

    FCG  Nat Gas ETF…Uptrend from June low intact. Trading above minor support (17)  in heavy long term congestion. Demand volume positive in all time frames.
    http://www.charthub.com/images/2012/10/14/Stock_Weekly_3_3.png

  9. 9
    zman Says:

    Watching space jump live on http://www.grindtv.com  … pretty wild, 42,000 feet in a hot air balloon and rising now

  10. 10
    Zorgnak Says:

    Crude Oil Futures Trading at intermediate and short term acceptance (92) within the long term acceptance area from 87.50-105. 87.50 / 93.50 are near support/resistance. Demand volume increased with the successful test of support at 87.50. A break of 93.50 has little recent supply to 99.50 should demand volume continue to improve. 
     
    http://www.charthub.com/images/2012/10/14/Crude_Composite_2

  11. 11
    Zorgnak Says:

    Nat Gas….Overbought to this degree about 5% of the time…. Traded around the same volume point of control (3.58) for three consecutive days now. Well defined  levels of interest below. 
    http://www.charthub.com/images/2012/10/14/NG_Composite.png
    http://www.charthub.com/images/2012/10/14/NG_Composite_2.png

  12. 12
    brodway Says:

    re: 4
    Zorg.
    several industries, particularly Tech already are seeing levels close to 52 week lows and i've been seeing a few issues down below that in the last two weeks. would not surprise me if we got down to the 1385-1400 level sometime this month. over the next few months, however, i have to believe that the rally we've seen since this summer has legs and will ultimately continue its uptrend towards year end.
    the one important factor to consider is that many funds are up 10-20% on the year and they just don't want to stay in equities right now and risk their gains. its been some time that funds have shown these kind of returns. i see this as one reason the trading has been soggy of late.

  13. 13
    Zorgnak Says:

    #4 certainly could be and I'd make more money if it were true…..Knowing what the market will be doing three months out is beyond my puny powers though.  I'm just looking for areas where the market is stretched and may reverse within a trend or range.
    When I'm doing well my mantra is "Watch your risk!" I'm mumbling that to myself more and more these past two weeks. 

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