Wednesday Is Oil Inventory Day
By:
Zman Wednesday, May 21, 2008 9:59 AM
Yesterday was a good day. And not
just because of a T Boone Pickens inspired mini-spike in oil prices.
Catalytic news out of (CLR) drove the shares 23% higher on the day and
I took a majority of my position off the table when it was up a mere
16%. Anyone with a parcel of moose pasture in the vicinity
of the Bakken play of North Dakota saw their share price move higher,
in some cases, drastically so. Buying of those names led to buying in
their peers. Meanwhile, over in oil service land, Lehman Brothers
targeted the oil service group for a seemingly sector-wide price target
upgrade. So while the broad market burned, energy soared. Word to the wise, unfortunately, it will not always be this easy, although
to be fair, I would quibble with the word easy as I feel that myself
and others on the site have worked diligently to uncover the right
names in the right plays and it has paid off. So a big thanks goes out
to my readers/contributors.
In Today's Post:
- Holdings Watch - another busy day
- Commodity Watch with oil inventory preview
- Stocks We Care About Today
- Odds & Ends
Holdings Watch: Wiki Holdings and New & Improved ZEB Performance Tab updated.
- (CLR) - Sold the June $50 calls for $10.70, up 511%. This was house
money that turned into more of my money as I had sold the first half
position early last week for a 200% gain.
- (CLR) - Sold three-quarters of my June $55 call position taken last
Friday for $7.30, up 192%. I plan to hold the remaining calls through
CLR's comments on Thursday.
Analyst Watch: (CLR) cut to neutral by JP
Morgan this morning. I had this possibility in mind when I sold down
the positions yesterday, not by that particular analyst who has a
problem abiding by SEC rules for calculating reserves despite the best
efforts of schooling by Chesapeake, but by some member of the analyst
community who couldn't justify a buy rating after the 23% run in the
shares…if it dips I am likely to buy some of my sold position back.
- (NFX) - Added the July $70 calls (NFXGN) for $2.90. See (NFX) UBS presentation notes below.
- (NFX) - Sold the June $60 calls for $8.40, 105% since entry at the end of April.
- (WLL) - Entered the September $105 calls (WLLIA) for $6.20. Despite
the recent massive run, this is one of the least expensive "Bakken"
plays out there trading at 5.6x 2009 consensus CFPS vs a Bakken group
average '09 multiple of 8.7x. Furthermore, they are in the known sweet
spots of the eastern side of the Neeson Anticline.
- (PBR) - Sold the June $67.50 calls for $8.40 (not a typo from NFX
above), up 155%. This has had a good run and I plan on buying it back
long dated and lower on an eventual pull back in oil.
Commodity Watch
- Crude Oil. The July crude contract (CL/N8) takes over as
the front month contract today. Yesterday it closed at its all time
high at $128.98, up $2.26 on the day. Saudi Arabia and other
OPEC members discounted rumors of a supply increase before the Cartel's
meeting in September and T. Boone Pickens appearing on CNBC and saying
that oil was going "higher" contributed to the rally. Congress voting
to give the Judiciary the power to sue OPEC for oil prices (the
so-called NOpec bill) only added to the laugh factor of the day. This
morning oil is trading up slightly and has traded over the $130 mark in
the overnight session.
- OPEC Watch: Oil hits new high and OPEC head
Abdalla Salem el-Badri meeting with Hugo in Venezuela reiterates his
stance that the globe is well supplied with oil saying "there's no
scarcity of oil in the market" because international oil supples are
very high.
EIA Inventory Preview (expectations are from the Dow Jones Survey)
ZComment: Utilization is expected
to continue the beginnings of its seasonal (albeit anemic) rebound
climbing to 87.1%.
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