Overnight Shanghai posted nearly a 5% bounce giving futures in the U.S. a head start this morning. Jobless claims came in at 570K vs 565K expected but the big number of the week comes tomorrow with non farm payrolls. Retail sales are coming in across the board negative for August this morning but that was expected in most cases. Meanwhile, the OECD said the recovery from the global recession is likely to arrive more quickly than previously thought and that they do not see a double dip in the cards and the ECB has increased its forecast for 2009 and 2010 GDP.

In Today’s Post:

1. Holdings Watch
2. Commodity Watch
3. Natural Gas Preview
4. EIA Oil Inventory Review
5. Stuff We Care About Today - ROSE
6. Odds & Ends

Holdings Watch:

• $10KP II:
  • $4,600
  • 29% Cash

Yesterday’s Trades:

• HAL - Sold the HAL puts taken yesterday, for $1.19, up 15%. After seeing the oil numbers my sense is that oil is going to bounce and I will reposition these puts if that occurs.

• WLL - Added (5) more of the WLL $50 September Calls for $1.05.

• ZLT TRADE - Added BEXP at $7.69 to the longer term names. Starter position, so about 1/3 of what I’m willing to own here. Probably won’t add more until we see more well results in a month or so.

Commodity Watch:

Crude oil closed unchanged at $68.05, recovering from morning lows after the EIA reported a mixed bag but mostly bullish set of inventory data (see detail section below). This morning crude is trading up over slightly after exceeding $69 earlier this morning.

• Russia Watch: Russia sets monthly production record in August of 9.97 mm bpd with the start up of the Vankor field.  No wonder OPEC is once again talking to Russia about getting on board with the Cartel concept as they feel Moscow has gotten a free ride on prices off of OPEC’s cuts. Funny how that sounds a lot like what Aubrey at CHK said regarding his own curtailments in the face of his peer’s willingness to accelerate production growth. 

Natural gas tumbled another 4% or $0.11 to close at $2.72 after forecasts for Tropical Storm Erika started to look increasingly benign.  The front month contract is now down 37% in the last 20 sessions and has had 3 barely positive closes during that time.  The 12 month strip has now sunk to $4.83, and is off 13% over the same time frame. We are due a bounce. This morning gas is trading off another 5+ cents.

Natural Gas Preview

• My number: 60 to 65 Bcf. My sense is that it will take a number under consensus, maybe as much as 10% under it to spark any kind of a rally in gas. 
  • History:
    • Last Week: 54 Bcf Injection
    • Last Year: 92 Bcf
    • 5 Year Average: 64 Bcf
  • Weather: 61 CDDs were in line with year ago levels and slightly warmer than normal
  • Imports: were in line with year ago levels and last week’s volumes.
• Street Consensus: 66 Bcf (from the Reuters survey)

EIA Oil Inventory Review

CRUDE OIL - Smaller than expected number due to a resurgence in imports. This increase was mostly offset by a surprising increase in utilization. I don’t expect inputs or imports to maintain these levels for very long.

Crude Imports - Continued the bounce from the swoon we saw two weeks ago; expect imports to flatten in the near term.