Monday Morning –
Posted by zmann on December 11, 2006
Oil prices mixed this morning. Rumors continue to swirl about whether or not Opec will cut and if so by how much when they meet at the end of this week. It’ll be nice to get this event out of the way so prices can get back to trading on data (or at least closer to it). I expect a cut of 700,000 bopd. I don’t see them holding pat or going with the much rumored half million and prices not tumbling back below $60. Unless the number is larger than 750,000 I expect buy the rumor, sell the news action this week (with the most of the buying done 2 weeks ago). Remember that within days of the last Opec cut crude was trading at fresh 2006 lows.
Natural Gas – the beating continues. January gas is touching $7.30 this morning on a return of warmer weather. And who can blame traders for selling into this:
Feelin’ Hot, Hot, Hot
Having the whole country warmer than normal is pretty rare and traders know it. Everyone expects this week’s withdrawal to be the first 100+ Bcf number of the season but looking forward to mid and late December things look more Tropicana than Carmex along the eastern seaboard and that’s not good for gas.
Analyst Watch: Merrill ups ECA to buy
The House passed expanded drilling in the eastern Gulf on Friday. Still has to get by the Senate in the new year but this deal was pre-negotiated to succeed there. Potentially a boon for some of the majors who hold leases from before the drilling ban.
Sentiment: Bearish. Bearish on gas; neutral this week and then bearish on oil. The virtual gas trades are officially shelved over lack of winter. Any new positions considered this week are assumed to be for January or futher out unless otherwise specified as a trade. Sorry for the light note this am but I’ve got meetings this morning. Back after the open.