zman’s Energy Brain

oil, gas, stocks, etc…

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Wednesday Morning

Posted by zmann on October 11, 2006

Oil: The International Energy Agency said Wednesday in its monthly oil market report that output from OPEC fell 155,000 barrels a day in September to 29.8 million barrels a day. Meanwhile, world oil supplies fell 180,000 barrels a day to 85.4 million barrels. Comments: Holy smokes Opec is still producing nealry 30 mm bopd. That means without the impact of BP in Alaska, we’d be looking at a gain September for non-opec production!

— The IEA also made slight downward revisions to the US leaving global oil demand at 84.6 mb/d (+1.2% y/y) in 2006 and 86.0 mb/d in 2007 (+1.7%).
— Opec says cuts of 1 mm bopd are agreed upon, will start at end of month, specificis as to who will cut are still being worked out. Will it be from quota (28 mm bopd) or from the 29.8 mm bopd you guys are overproducing from above. Bet its the later so now you’re only going to cheat a little bit.

– Lastest Nigerian hostage standoff set to end at noon. Rebels asked that water and electricity be supplied to a nearby village plus help with erosion control in exhcange for the hostages and control of the pumping station. Oh, and they want a pile of cash. Sounds like a job for the UN.

— November crude is trading up $0.14 pre market, not exactly charing out of the gate.

Analysts continue to drag their feet as earnings season approaches

— Fortis Bank cut drillers UDRL, PDC, and BRNC from buy to hold. Interesting list, all are small (less than 100 rigs) onshore drillers with activity in TX and OK. Hmm, could we be seeing a slowdow in gas drilling. These little guys will see it first. Only PDC has options.

— UBS analyst Ronald Barone lowered his fourth-quarter natural-gas composite spot estimates, on the belief that it would take lower prices in the near term “to further erode the surplus and bring it closer to normal levels.”

— While many analyst teams are quitely lower estimates for 3Q and 4Q, it looks like many are waiting for further clarity from this week’s inventory numbers, while preying for cold weather and a decision from Opec. We may see further downgrades early next week which is the last availalbe slot before energy earnings gear up.

From Chesapeake CEO McClendon: “we think producers will be a little more cautious in their capital expenditure in the first half of 2007 than maybe they were in the seond half of 2006. If operators don’t get a good feeling that wellhead prices will get back to about $5, there are projects both planned and now under way that will be shut down.”

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