In Today’s Post:

1. Holdings Watch
2. Commodity Watch
3. Oil Inventory Preview
4. Stuff We Care About Today - deepwater update, BEXP, GDP
5. Odds & Ends

Holdings Watch:

• $10KP:
  
  • $14,500
  • 61% Cash
  • The Wiki Tab is updated.

Yesterday’s Trades:

• EOG - Sold the EOG July $55 Call for $9.40, up 57%. Will reposition prior to earnings.
• HAL - Added (10) HAL August $22 Calls (HALHV) for $0.41. Earnings next Monday.
• HK - Added (5) HK August $22 Calls (HKHS) to start building an August position for $0.95 with the stock at $20.30.

Why I Went Long HAL:

• I don’t think the stocks are necessarily cheap
• nor are their forward earnings estimates necessarily going to stop sliding following the quarter
• but comments from E&Ps show costs have not fallen as far as they could have
• the service companies will be able to point to the N American rig count and say that it has at least decelerated in its downward path.
• the service names will point to ongoing cost cutting efforts
• 3Q estimates are in many cases below 2Q levels already which is a bit out of seasonal alignment for many of the names obviating the need to slash near quarter estimates so much.
• the bigger names will be able to talk about stealing share from the smaller ones during this time as a way of explaining weaker than expected margins
• I will go with large names and only tentatively into the group
• This is an earnings related trade and little more, I don’t plan to stick around them for long.

Commodity Watch:

Crude oil eased down $0.17 to close at $59.52 yesterday, giving back an early rally as sentiment faded in the broad market and fear about today’s EIA announcement mounted. This morning crude is trading up about a buck on bullish looking numbers out of API last night (see below).

• Henry Okah Watch: 1 day after accepting amnesty for his release from prosecution and jail, suspected MEND leader had the following to say:
  
  • "violence will continue until government begins talks with militants"
  • he does not believe other militants will join amnesty program
  • "oil companies are criminals and must re-negotiate their contracts with Niger Delta residents"
  • he added that he only took the deal so that he could get treatment for his kidney and ulcer problems.
• How shocking, that a shark, returned to the ocean, will turn and bite the hand of those who once held it captive.

• Nigeria Watch: 60 day Cease Fire Declared by MEND. Yeah sure.

Natural gas moved up $0.17 to close at $3.43 yesterday, it’s first notable rally since early June. This morning gas is trading up a nickel.