zman’s Energy Brain

oil, gas, stocks, etc…

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Thursday Wrap – Lashed by the Storm

Posted by zmann on October 12, 2006

That hurt. Everything went up…. XOI UP 1.94%, XNG UP 1.66%, OIH UP 2.5%. The fix was in early as most stocks erased the prior day’s losses with their opening trades, then drifted higher all day long. The energy indexes were caught up in a rubber band rally with DOW which ended UP 0.8% on its quest to break 12,000, and all of them closed at their HOD. Can we just get the Dow up another 53 points tomorrow so we can then sell off the headline DOW 12,000?

After waffling all day and being down just prior to the NYMEX close, even crude managed a last 5 minute rally to end the day up $0.80, to $58.39.

…Everything but natural gas prices. As predicted, natural gas fell through $6/mcf to land at $5.77 (down $0.38) when we got our 62 bcf injection which was in line with expectations. In comments this morning I had wanted a test of $6 before inventory (got that) and then a test of $5.76 (got that as well with a low of $5.74). The selloff made no difference as all gas stocks closed up at least 1%, many of the larger ones up 2+% (and BBG up a whopping 6%).
Position Wrap: No, I won’t even bother to run through positions given the willy-nilly carnage this rally has wrought. My October puts aren’t worth selling at this point but I remain confident in my November positions. ECA underperformed, if you can call it that, by only going up a dime which is little consolatiion on a day in which most of my picks rallied a minimum of 2%, despite a 6% drop in November gas and a 3.5% drop in the 12 month strip.

Commenting on oil today : “The IEA just cut their 2007 forecasted demand for crude by 200,000 barrels per day and Saudi Arabia doesn’t seem to want to participate in a production cut with OPEC,” said First Enercast’s Smith. Added to that, Smith said he believes “the downturn in crude prices may result in an exaggerated move due to the significant increase in fund participation in the energy markets,” he said, noting that “major funds are attempting to hedge or exit their enormous long positions in crude.” — no kidding.

Odds & Ends:

— Norway shut in about 200,000 bopd (Norway produces about 2.7 ish mm bopd), possibly until mid to late November over safety concerns at several platforms. Apparently, the auto-drop emergency boats have weak roofs that need strengthening so the crews have been ordered off 2 key platforms. At least in Norway, no one comes aboard the rig, holds you at gunpoint, and demands cash.

— The Gas Storage tab will be updated tonight. No change in my 3.6 Tcf season end storage projection.

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