zman’s Energy Brain

oil, gas, stocks, etc…

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Tuesday Morning

Posted by zmann on November 21, 2006

Oil Inventory Forecast Boosts Oil. January crude is trading up $0.60 this morning to $59.40 but remains well withing its recently steepened downtrend. I’ll get more concerned if it can break $61. Bloomberg’s inventory survey is looking for crude supplies to build by 700,000 but for distillates to fall 1.1 million and for gasoline to fall 750,000 barrels.

—Analysts are pointing out that this would be the 7th straight week of declines in distillate inventories. I point out that inventories remain 6% above average and that the declines are a function of refiner maintenance cycles (which are dragging on and on this year but should end soon or refner’s are going to have a hard time making volume numbers) and higher than normal secondary and tertiary demand.

—CNBC should start hyping AAA reports that this Thanksgiving will see more people on the road than ever before. They say this just about every year and the increase is a last hurra of the year for gasoline and may cause a brief spike in prices. I’ve noticed prices around the pump in my corner of the world are up a nickel retail despite the recent plunge in crude and marketers get one last chance to offload pricey inventories.

Oil’s also rebounding due to:

—OPEC statements saying most members now favor additional production cuts in December.

—The Trans Alaska Pipeline System (TAPS) is operating at 75% of capacity due to bad weather. For the last 7 days NO offloading has taken place. Tankers are queued up for oil but no time frame for full capacity has been released. TAPS loaded 739,000 bopd on average in October so there’s 5.2 mm bls of crude (and growing) that hasn’t reached the market yet. BP, TAPS’ operator, should join Opec; they’d be at least as effective as those rebels in Nigeria.

— A Canadian high pressure system is expected to plunge into the nation’s mid tier early next week break cooler temperatures (however the east coast is expected to remain balmy)

Analyst Watch: Shhh. Don’t wake them. They’re dreaming of higher crude and a world without need for ratings changes.

Holdings Watch:  Took on small opening put positions in EOG and VLO yesterday and attempted to in REP. EOG being the least hedged, super independent with the largest exposure to natural gas and REP being simply overvalued and due for a comeuppance.

11 Responses to “Tuesday Morning”

  1. zmann said

    Energy stocks up pretty much across the board on the rebound in crude. Getting close to adds on EOG ($69.20) and VLO ($53) positions. Still can’t get REP at a decent premium although the spread is narrowing.

  2. zmann said

    Exxon coming under increasing pressure to develop the point thmpson field in Alaska. Alaska is talking about stripping the leases of the long delayed project and it could put psychological pressure on long term gas pricing if it is awarded to someone willing to plop an LNG terminal in or build a pipeline. This won’t have any impact on volumes for a minimum of 6 years, probably 10.

  3. zmann said

    LNG (the company) director blasts out of 10% of his holdings in the last two days. He is a 10% holder of the company.

  4. zmann said

    Jan crude up a buck, USO up $0.80, stocks not really buying into this low volume oil rally. Most have treaded water for the last 2 hours and are off their highs.

  5. zmann said

    AM – Nice call on the SU calls yesterday. Best rebound in the energy group off the lows yesterday. I still like the CRR which looks to be breaking out to make a two month high today, albeit on light volume.

  6. zmann said

    Everything up on next to nothing volume:
    LNG popped $1 late, XOM up $1 on half normal volume, EOG and VLO each up $1.30-1.40. Horrible day but light volume can inspire profit taking when traders return next week. At least that’s what I keep telling myself. Glad those recent positions are just openers.

  7. Soccer_F1 said

    Z, could you please update your crack spread chart? Thanks.

  8. zmann said


    Done. The crack spread has been advancing slowly but popped over $10/barrel today on a 6.5 cent turkey day bump.

  9. walter said

    Which one would be better short candidate here, MRO or TSO?


  10. zmann said


    That’s a bit like granny smith’s vs golden delicious but I’ll look into and get back to you on the morrow. Thanks for reading. Cheers.

  11. walter said

    Thank you Zmann, there is plenty of good tradeable info in your blog, your background in refining makes it even more valuable!

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