zman’s Energy Brain

oil, gas, stocks, etc…

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Archive for December 8th, 2006

Friday Wrap – Fun With Numbers Plus A Bonus

Posted by zmann on December 8, 2006

To be completely honest I’m still fence sitting before the Opec meeting aside from a few legacy puts. All in all, commodities faired poorly but the stocks disavowed them again, gutting my legacy puts like characters in a Mel Gibson movie.

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By Popular Demand: The Rebel T. Submit Bids Now For The Holidays!

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Caption on back: “Rebel Forecast For Oil: UP! We Don’t Take Hostages For Free Ya Know!”

Thanks for stopping by and have a great weekend!

Posted in Uncategorized | 3 Comments »

Friday – TGIF

Posted by zmann on December 8, 2006

“I’d much rather be happy than right” – Douglas Adams. And my thought on overestimating yesterday’s natural gas draw.

Natural Gas – Whimpy Withdrawal But Traders Look To Next Week

  • We pulled 11 bcf from storage, far below the 10 year average of 41 for this week.
  • We are now 232 bcf (7%) above last year and 282 bcf (9%) above the 5 year average.
  • Gas couldn’t have cared less closing down only a nickel. At $7.66 per mmbtu, gas is 33% above its five year average of $5.76 for this week, excluding 2005 which was at $13.70 having jumped in the aftermath of KatRit (the one thing more annoying than TomKat).
  • the 12 month strip closed down $0.065 to just under $8 – not really breaking the up trend here…maybe after next week’s number.

Traders are focused on next week’s number, the first subject to cold weather.

  • The 5 yr average withdrawal is 104 bcf, again excluding last year.
  • Last year we withdrew 206 Bcf from strorage. It was considerably colder than the comparable week this year and most of the Gulf of Mexico was shut in.
  • Degree days of 202 show us to be well above the 5 yr average of 181.
  • In short, I offer my sincerest apologies to Gunga who I brushed off in comments yesterday when he threw out a 100+ number for next week. After having reviewed all the data, my back of the envelope modeling indicates a withdrawal range of 100 to 150 – probably over the mid point. Anything less and something is wrong with the industrials or they just don’t like these prices.

Just So You Rest At Ease About Natural Gas Production Levels. This is a snapshot using governent data of U.S. natural gas gross withdrawals. To make it painfully sinple I took a look at one summer month (July) and one winter month (December) for the last 6 years. The data reveals that the annualized decline in winter is less than a percent (and that includes Katrina) and is almost negligible in summer. True, we’ve had to run a lot of rigs to get there but the difference comes from how we’re doing it and at what cost. In a nutshell, unconventional, low cost, onshore gas. So don’t believe the hype, decline rates aren’t forcing gas prices higher, people talking about the decline rates are.

US Gross Natural Gas Withdrawals (Bcfgpd) – Not That Bad

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CapEx Watch: It’s that time of year and I’ll keep a rough tally of the big boys spending plans. Please send me notices if you see one I don’t mention.

  • COP cuts back – $13 billion for 2007, down from $18 this year. Estimates were for $15 to $16. Company warning that this could impact growth. well duh.
  • CVX pushed forward – $19.6 billion vs 16 this year. Company sited lots of big ticket projects in the closing (expensive) stretch.

Analyst Watch: nada

Odd and Ends:

VLCC rates hover below $50K per day. With every day that passes this is bad for the tankers and a clear indication that Opec will officially cut production levels late next week (even if they don’t actually reduce production a drop).

CHK is doing a 30 million share secondary. Sure sign of a top. Great company and will not short/buy puts but if these guys are selling stock, even after doing their Euro debt deal alst week, I call that a top.

“OPEC needs to restrict output further because a plunging dollar has cut the value of oil,” said OPEC president Edmund Daukoru. Back when CNBC had Melissa Francis as their resident energy expert, they would have flown her over there to take this guy to task. Today all they’ll do is comment how much oil is up. No indepth analysis, no hard hitting questions.

Shell Says January North Sea Brent Shipments To Drop 41%. daily shipments of North Sea Brent crude oil, which forms part of the Brent benchmark, will drop 41 percent next month from this month. Tankers will load 158,065 barrels a day of Brent in January, down from 267,742 in December, according to the loading program of Royal Dutch Shell Plc. – Bloomberg. Good reporting, just the facts with no explanation.

Nigerian Rebel’s Call On The Price of Oil:

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“Up. We don’t take hostages for free you know” – unidentified rebel spokeman of the Nigerian Rebel Navy.

From the “the buck doesn’t stop here” File: former CIA director Woolsy said, “You can pick your horror story about the Middle East, it’s a disaster waiting to happen.” He then called for the US to rely more heavily on alternative energy.

From the “Perma Bull” File: “The market is assuming that OPEC will cut more production but if they surprise us with a larger than expected cut, the market may jump,” said Phil Flynn, a senior analyst at Alaron Trading. And “if oil imports to the U.S. drop for any reason prices may jump.” Comment: Flynn was “expecting” a build in gas yesterday. Does that mean that if they don’t surprise us with a bigger cut, oil is heading lower? hmmmm.

Posted in Uncategorized | 29 Comments »