[MicroHydro]

$this->bbcode_second_pass_quote('GoIllini', 'W')hat do you guys think of the COP-BR merger?

COP's stock sure has gotten punished for it, but I'm not sure if natural gas is going to sink back enough from the $15.50 record high it hit today to cause serious harm to the company.

Anyone want to estimate the long-term natural gas price for which the $36 Billion deal is worth it for COP?

[MrBill]

COP picked up 10% of Lukoil earlier this year. I think the question is why natural gas and why now? They are paying a hefty premium, but I think the logic is that it is cheaper these days to drill on Wall Street than look for oil & gas in the wilds. What is Shell committing to CAPEX now? $19 bio a year for the next foreseeable future?

Major oil cos. are in a bind. They are finding it hard to replenish their existing reserves and looking for new reserves is becoming increasingly hard and expensive even when they do get lucky. Norway and Lukoil just found a 100.000 bpd field in Iran. Now they have to re-negotiate with Iran what they can earn 'if' Iran lets them extract the oil they have found. It is a tough operatiing environment out there. Much of the known reserves are off limits to the majors due to national oil company monopolies and even when they do make finds they find nationalist governments eager to tear up contracts once the sunk costs are in the ground and the majors have no choice but to stay.

In this environment, COP is pursuing growth and reserve replenishment through acquistions, but of course they are paying a premium for it now that oil & gas prices are so high. Despite what you say about inflation and the price of silver, they will have to repay debt using the profits from operations. If not, they will become a take over target from someone else. If oil & gas prices decline 25% they will struggle. Why weren't these far-sighted companies expanding capacity back in 1999-2001? Hmm?

$this->bbcode_second_pass_quote('', ' ') News:
The December IEA Report Highlights

World Oil supply was increased 1.3 mbd in November to 85 mbd. US related hurricane oil production losses are expected to last into 2006 (just in time for the 2006 hurricane season)

OPEC oil supply rose 120K bpd to 29.6 mbd with OPEC-10 producing close to the target of 28 mbd. Output is close to 4th quarter call on OPEC crude. The IEA said that warm weather and hurricane related disruptions led to a 20K bpd decrease in 2005 demand growth to 1.18 mbd, however demand growth is expected to recover in 2006 to 1.79 mbd (+130K bpd from previous data). Demand is expected to increase between 1.8 and 2 mbd annually through 2010.

· Shipping brokers said that Saudi Arabia has booked 2 VLCCs to the US in early January.

· Saudi Arabia’s oil Minister Ali Naimi reiterated OPEC’s Monday decision to keep production levels steady.

· MMS update reports 441,394-bpd or 29.43% of US Gulf oil output still shut-in with cumulative lost production since 8/26 of 101.693 million barrels or 18.574% of annual Gulf output. There were also 126 platforms evacuated, or 15.38% of 819 manned platforms currently operating in the Gulf.

Refinery news:

· Alon announced that it would start maintenance on its Big Spring, Texas refinery on December 22. The maintenance is due to a potential leak in a fuel gas treater. No date was given on the restart of the 70K bpd facility.

· Marathon Oil Corp’s St. Paul Park, Minnesota refinery had a crude unit catch fire early on Tuesday (fire has been extinguished). The fire affected a 30K bpd refinery, and has led to reduced runs elsewhere at the 70K bpd plant.

[MrBill]

Which debt is 300% of GDP?

As far as I know the US national debt is $8,131,974,072,322.63 as of 12/12/2005, which is about 73% of GDP. Admittedly high, but not 300% or are you counting all debts by all governments state, local and federal?

The Debt To the Penny

[cube]

You got a good point there MrBill. When I first heard the 300% figure my first thought was the total summation of ALL American debt: government, business, consumers. There's no way the federal debt alone could equal that much.

Most nations would collapse into oblivion long before their government debt ever reached that high of a level.

[MrBill]

Compliments of Refco Overseas London who have recently been purchased by Marathon Group

$this->bbcode_second_pass_quote('', 'N')ews:

· China’s National Development and Reform Commission said it will limit exports of oil products next year via quotas to meet domestic demand. Exceptions will be made for long-term contracts that must be fulfilled.
· US treasury secretary John Snow says oil prices are too high but expects them to moderate gradually.

· Venezuelan oil minister Rafael Ramirez and Iranian oil minister Kazem Vaziri Hamaneh foresee OPEC cutting output at January’s meeting so as to avert a price decline in Q2.

· MMS update reports 441,394-bpd or 29.43% of US Gulf oil output still shut-in with cumulative lost production since 8/26 of 101.693 million barrels or 18.574% of annual Gulf output.

PERSPECTIVE: The oil rally was interrupted by the DOE report showing crude oil and gasoline stock builds last week along with a very slight distillate draw. We look for crude to trade in the low-$60.00s and remain firm until the weather outlook relents. Heating oil will remain the firmest market over time given seasonal demand factors and comparatively tighter inventory levels. Jan crude is supported at $59.70; resistance is at $61.90. Jan heating oil is supported at $1.8200; resistance is at $1.8600. Jan gasoline is supported at $1.6300; resistance is at $1.7000.

[MrBill]

$this->bbcode_second_pass_quote('', 'N')ews:

· Oil tanker delays in the Bosphorus Turkish Straits jumped to 21 days for a round trip voyage Thursday with more than 60 in a queue. Delays have tripled since early November and are more than double those of a year ago.

· Oil Movements reports OPEC oil shipments fell 120,000-bpd to 24.76-mbpd in the four weeks ending Dec 31 due to an expected decline in year-end demand. Shipments to Asia have stopped growing, driving down freight rates.

· Iraqi crude oil production was steady at 2.08-mbpd for the week ended Dec 4 vs. the prior week and up from 1.96-mbpd in the week to Nov 20. The December export average to-date is 1.61-mbpd, up from November’s 1.168-mbpd.

· MMS says there were nine deepwater oil and gas discoveries announced by operators and lessees in the Gulf of Mexico this year, as of November 30, down from 15 in 2004. In the week ending Dec 2, there were nine rigs drilling in 5,000-feet of water or greater (ultra-deepwater) vs. seven a year ago. Deepwater is considered greater than 1,000-feet.

· Venezuelan oil production fell 92,000-bpd to 2.61-mbpd in November due to a decline in syncrude output.

· MMS update reports 426,282-bpd or 28.42% of US Gulf oil output still shut-in with cumulative lost production since 8/26 of 102.973 million barrels or 18.808% of annual Gulf output.

Refinery news:

· PDVSA restarted a 50,000-bpd catcracker at its 200,000-bpd Isla refinery Wednesday and plans to have it at full rates by the weekend. It had shut Dec 4 after a nearby pipe caught fire.

· Shell shut down an alkylation unit and 67,100-bpd catcracker at its 165,000-bpd Martinez, CA refinery last Friday ahead of a planned turnaround in January. They are seen down for at least three weeks.

· Valero cut production at its 210,000-bpd Texas City, TX refinery following a Wednesday storm in which lightning struck a steam boiler.

PERSPECTIVE: We look for crude to trade around $60.00, reacting primarily to changes in the weather but also responding to geopolitical risk. Heating oil will likely retreat some more given the impending weather pattern shift. Jan crude is supported at $59.70; resistance is at $61.20. Jan heating oil is supported at $1.7850; resistance is at $1.8550. Jan gasoline is supported at $1.6075; resistance is at $1.6700.

[MrBill]

The sun also rises

$this->bbcode_second_pass_quote('', 'A')NALYSIS: Energies fell sharply on Friday, continuing Thursday’s declines. Crude futures ended nearly $2 lower with heating oil and gasoline slipping about 5 cents apiece. The prospect of some milder weather showing up in the forecasts has helped to put pressure on the heating oil market and subsequently the energy complex. In addition, end of the year activity and profit taking after crude’s recent foray above $60/bbl has led to declines. A news item regarding OPEC’s monthly report, which showed that the average 2006 call on crude was expected to be 28.7 mbd or 100K bpd less than 2005’s, added some pressure to the market.

News:
· Russian Oil output between January and October 2005 was up 2.2% on year to 389.6 million metric tons. Exports decreased 2% to 208.4 million tonnes over the same period.

· OPEC raised 2006 world demand growth 70K bpd to 1.6 mbd. In a monthly report OPEC also noted that the average OPEC crude call next year will be about 28.7 mbd, down 100K bpd over 2005’s numbers. OPEC said that the decrease in the call on crude in 2006 suggested another potential stock build provided OPEC continues output at its current pace.

· MMS update reports 426,282-bpd or 28.42% of US Gulf oil output still shut-in with cumulative lost production since 8/26 of 102.973 million barrels or 18.808% of annual Gulf output.

Refinery news:
· Giant’s Yorktown, Va. Refinery, which caught fire Nov. 24 is expected to restart January 15. The FCC at the facility is expected to restart March 30. The refinery is expected to run at 40K bpd (max is 62K bpd) between January 15 and March 30.

PERSPECTIVE: We look for crude to trade around $60.00, reacting primarily to changes in the weather but also responding to geopolitical risk. Heating oil will likely retreat some more given the impending weather pattern shift. Jan crude is supported at $58.00; resistance is at $59.75. Jan heating oil is supported at $1.7290; resistance is at $1.7650. Jan gasoline is supported at $1.5460; resistance is at $1.6000.

[MrBill]

Can anyone tell me how to post an excel spreadsheet? Thanks.

[MrBill]

$this->bbcode_second_pass_quote('', 'T')OKYO (Reuters) - Honda Motor Co. <7267.T>, Japan's third-biggest auto maker, plans to build a 10 billion yen ($86 million) factory to produce solar batteries, the Japanese business daily Nihon Keizai Shimbun (Nikkei) reported on Sunday.

Nikkei said Honda planned to build a plant in Kumamoto prefecture, on the southwestern island of Kyushu, to start mass-producing solar cells in 2007.

The Kumamoto plant would initially have a capacity to produce about 30 megawatts worth of solar cells annually, enough for 10,000 households a year, it said.

Honda officials were not immediately available for comment.

($1=116.35 Yen)

[MrBill]

compliments of Refco Overseas London analysis

$this->bbcode_second_pass_quote('', 'N')ews:
· Saudi Arabia booked 2 VLCC’s on Tuesday, destination US in January. This brings spot shipments for the month to 8 million bbls.
· Kazakhstan crude oil and condensate production year-to-date through November was 56.336 million tonnes, up 4.3% (y/y).
· Shell Nigeria has shut in 170,000 bpd after a blast at a pipeline in Nigeria’s Delta region.

PERSPECTIVE: Energy markets are poised for further downside due to much milder weather forecasts in the high-consumption areas of the US. NYMEX will have normal hours regardless of the transit strike in NYC. Feb crude is supported at $57.75; resistance is at $59.30. Jan heating oil is supported at $1.6960; resistance is at $1.7380.

PRICE OUTLOOK: We expect fairly volatile trade between now and New Year’s with the current bearish tone continuing as long as the weather outlook maintains above average temperatures in the high energy-consumption regions of the Northeast and Midwest. Failure to see the expected declines of 1.0 million bbls in crude and 500K in distillate could quickly reverse Tuesday’s gains. The expectation is for a 1.0 million bbl build in gasoline inventories.

For at least the first two months of the new year, supplies should be reasonably steady after OPEC agreed to leave output quotas unchanged until their next meeting January 31. Of course it is in their best interest to run at or near full capacity in order to maximize revenues while they can.

[Typhoon]

$this->bbcode_second_pass_quote('MrBill', 'O')h those nice $55 MAR puts in the Brent? They are up 68% since I bought them less than a week ago. Still feel we are in a down move ahead of year end so may hold them until after tomorrow's nat gas storage nos. and then decide whether to sell them on Friday or not? My futures trading has sucked, so at least that is a positive. The model is doing great. Just not me.

[MrBill]

I am not sure on the puts? Yesterday the models started to turn upwards. Some were showing neutral, while others were more bullish. Basically, we are in a downtrend on the weekly and daily charts with a lot of resistance to close the year higher. On the otherhand, we are in an upwards correction on the hourly charts. Complicating matters is that crude and unleaded made new lows yesterday, albeit with a stronger close which left the daily charts bullish, while heating oil and gasoil have already given us a two day reversal signal indicating they might also like to test higher first. Natural gas has been bullish for some days now, but ironically just as the other contracts are turning up, it appears to be quite offered today. However, with inventory stocks released today, it might quickly turn around.

The theory is with the puts is that it is a passive investment and you wait for your models to turn before taking profit. In the meantime, you trade the futures to take advantage on short term movements. That way you should make up for any lost premium with gains in the futures. In reality, it is hard to be long futures like yesterday when then traded first up, triggering a speculative long position, spiked higher on yesterdays bigger than expected distillate draw, then made new lows, before closing up on the day. No model is going to optimize that kind of interday price movement except maybe a 10-minute chart. Today the model is looking quite well bid on the hourlies, but yesterday it was a fight around the key pivot points.

I try to divide my position into a long-term weekly position, a medium term daily position, a short term hourly position and keep a quarter of my position back for intraday moves where the market just feels overbought or oversold but the models have not had a time to react yet. The idea is that I try to have long term positions which make money overtime while using the shorter duration models to catch these intraday and interday moves. I feel very good about my models. Even in these thin and illiquid markets at contract maturity and year end they are sending me pretty clear signals. I hope under normal trading conditions that they will be even more successful.

Of course, it still takes discipline to take the positions and follow the model. Twice this week I was shaken out of my technical model based on market news. Once my broker told me that a large player was a scale down buyer and the second time this week another told me about the pipeline sabotage in Nigeria. If you're going to follow a model you have to learn to block out such noise.

I am test driving a platform at the moment which would allow me to trade CME/CBOT futures as well. It worked well for the US treasury future, but they have not set it up for me for the ICE, yet, so I can trade crude and gasoil futures. As it stands I will not be able to use it for NYMEX futures until sometime next year? I think it might be interesting to trade some other products as well. Maybe FX futures on the CME or S&P futures. But only using moving averages. I cannot keep a close eye on too many markets at the sametime. Better to concentrate on a few and do them well.

On the personal side, of course, I invest in stocks and bonds and balance my foreign exchange position from time to time. I have not undertaken to trade commodities or energy from home as it is a slight conflict of interest. Plus, I do not have the accounts set-up for easy access to these various markets all from the same platform. I will try to set this up soon as think I would also like to get some exposure to energy and commodities in my private account if only on a passive basis. I don't like mutual funds. Would sooner do my own trading. If I can perfect my buy side options trading that might also be something interesting to do privately. However, it is nice to turn off once in a while and if you're running too many positions privately and for your job then this becomes bery hard to do.

My tummy tells me these are good levels to sell here. Brent $57, WTI $58.75 and heating oil $1.7580, but will have to wait here to see whether the 13 & 21 day moving averages hold to the topside or whether the hourlies slip below support first. Discipline.

[MrBill]

news compliments of REfco Overseas London

$this->bbcode_second_pass_quote('', 'N')ews:
· A Shell Nigeria pipeline was attacked by gunmen, forcing closure of two fields and lost production of 180,000-bpd.

· The US Senate failed to pass a measure allowing drilling in ANWR after Democrats successfully mounted a filibuster.

· Iraqi Kirkuk crude exports were on hold Wednesday as they have been since sabotage attacks in October. Reports had indicated that flows had resumed.

· OPEC president Sheik Ahmad Fahad al-Sabah said OPEC would allow commercial oil inventories in consuming countries to reach 54-55 days of forward cover in the next three months, as opposed to the 56 days he had referred to on December 12.

· Petrologistics see Saudi Dec oil output falling 200,000-bpd to 9.2-mbpd with overall OPEC output unchanged at 30.21-mbpd.

· MMS estimates up to 5% of Gulf crude and Nat gas output may be permanently lost due to hurricane damage to platforms that won’t be repaired. Most of the remaining shut-in production will return by the middle of 2006.

PERSPECTIVE: The energies are firming up a bit after distillate stock declined by a greater-than-expected magnitude. However crude stocks are plentiful and prices will struggle to tope $60 again. Feb crude is supported at $57.55; resistance is at $59.30. Jan heating oil is supported at $1.7150; resistance is at $1.7640. Jan gasoline is supported at $1.5050; resistance is at $1.5650.

[MrBill]

$this->bbcode_second_pass_quote('', 'A')NALYSIS: The petroleum markets made several attempts to rally but the crude and products fell by the close. Warmer weather was the prime driver in lower prices. Problems in Nigeria causing a force majeure and difficulties with loading in Iraq failed to support prices. Russian exports are falling on the imposition of an export tax but that did not phase the market either. Light fund and trade selling edged prices down throughout the day.

News:
· Shell declared force majeure (affects Bonny Light cargos) in the Niger Delta due to the Nigerian pipeline blast. January shipments were expected to be delayed for up to 6 days.

· Iraq has repaired a crude oil export pipeline that runs to the Turkish port of Ceyhan. Crude flows remain offline however as storage levels build in Kirkuk.

· Iraq’s average exports for the first three weeks of December were 1.3 mbd according to an Iraqi official.

· Oil Movements reported that OPEC oil exports due in 4 weeks to January 7th fell 150K bpd.

· Thursday’s MMS update showed that shut-in oil production was 412,687 bpd or 27.51% of daily totals. Since 8/26, 105.889 mbd have been shut in or 19.341% of annual Gulf production. MMS said that 103 manned platforms remained evacuated, representing 12.58% of manned platforms in the Gulf.

PERSPECTIVE: The energies will do little before the holidays unless we see a surprise refinery or other supply problem. The onus looks slightly lower for the near term.

PRICE OUTLOOK: Crude oil stocks remain high and there is no problems with supply apart from port congestion and some pipeline issues. Without colder weather, which does not appear likely prices, will fall further. Crude could drift closer to $57 and heat back to $1.70. Gasoline will be quiet but firmer as stocks are not as abundant and the refiners are concentrating on heating oil.

[Chuck]

XPRESSTRADE SUCKS

Hi, thanks to PO.com I have become a trader. As far as I know commodities trading is almost non-existent in Holland. So after about 6 months of studying and after we sold the family home (I am renting now), I became a trader.
And although it is a very tough job, I love it. I am in the game for 7 months now and it feels like an achievement considering I trade almost every day.
My main focus is on silver and besides that copper, gold, crude, DJI, DX (and watching sugar). My first 6 weeks I lost some 6K, but after that I made some 8K in 4 weeks. The latter almost became fatal, because it gave me the illusion that I was doing things right. Big mistake! But since September I am not losing anymore and December is going to be profitable.
And now my broker. Xpresstrade that is and they really suck! In my 7 months of trading I have sent them 4 complaints. I will share the last one with you if there is any interest. You have to understand that writing in English is quite demanding for me, but I guess it’s the same for many foreigners.
My question to you is; do you know a better online broker or is Xpress considered one of the best? I really hope the latter is not true, because there are really some stupid people working over there.
I really like this trader corner and I appreciate the input of other traders/market followers.
Happy holidays,
Charles

[MrBill]

$this->bbcode_second_pass_quote('Chuck', 'X')PRESSTRADE SUCKS

Hi, thanks to PO.com I have become a trader. As far as I know commodities trading is almost non-existent in Holland. So after about 6 months of studying and after we sold the family home (I am renting now), I became a trader.
And although it is a very tough job, I love it. I am in the game for 7 months now and it feels like an achievement considering I trade almost every day.
My main focus is on silver and besides that copper, gold, crude, DJI, DX (and watching sugar). My first 6 weeks I lost some 6K, but after that I made some 8K in 4 weeks. The latter almost became fatal, because it gave me the illusion that I was doing things right. Big mistake! But since September I am not losing anymore and December is going to be profitable.
And now my broker. Xpresstrade that is and they really suck! In my 7 months of trading I have sent them 4 complaints. I will share the last one with you if there is any interest. You have to understand that writing in English is quite demanding for me, but I guess it’s the same for many foreigners.
My question to you is; do you know a better online broker or is Xpress considered one of the best? I really hope the latter is not true, because there are really some stupid people working over there.
I really like this trader corner and I appreciate the input of other traders/market followers.
Happy holidays,
Charles

[MrBill]

No market makers were interested in making me a price for those $55 MAR Brent PUTS, so Friday I was forced to do a delta hedge. I chose to do it in the FEB futures, thinking that when I get a chance to close the options position, that I would then sell the FEB futures hedge. I am slightly underhaedged reflecting the downward bias we are in, but did not feel comfortable going in to year end unhedged. I am not sure anyone will make markets tomorrow either? Just as well, the FEB seems better supported than the MAR futures as the contango narrows to just 10 bps. at Friday's close.

Heating oil, nat gas and gasoil all look well offered and posted down days to close on Friday. No support coming from the heat complex, but unleaded managed to post its 3rd successive positive close on the daily charts. Albeit there has been no strong rally, but it has been enough to drag the WTI into positive territory on Friday's close. Brent feel somewhere in the middle. It rarely leads. It ended at $5640 below its opening level and high around $5700, but above the lows between $5580-5600 made over the previous 5-consecutive sessions. Whatever support is there under $5600 it appears to be considerable, hence why I felt the need to delta hedge my long put. In such thin conditions a 100-150 pts. is the blink of an eye and as we consolidate near the lows that would be enough to swing some short term indicators into positive territory. Say on the back of unleaded grinding higher and a whiff of cold air which sparks profit taking in the heat.

Dunno, tomorrow is my last trading day and then I am off until mid-January. Discretion is the better part of valour. I doubt these markets close higher ahead of year end, but sub-$5500 (Brent) $57.00 (WTi) also looks fanciful at this point?

Season's Greetings!

[Chuck]

Thanks Mr Bill,

I will tell you about my latest complaint. I bought 2 CL-mini’s on December 19, just one day before the FND. But in case of mini contracts there is no FND and the expiration date was set @ January 31. I was wondering so I tried the chat function. Once bitten, twice shy; so I saved the chat.
Drexel at XPRESSTRADE: Hello, how may I assist you?
Charles: question about crude oil
Drexel at XPRESSTRADE: Ok
Charles: what is it with those mini contracts? The qmf06 has bigger OI but no movement. The qmg06 has movement
Drexel at XPRESSTRADE: Jan is the front month it is more liquid than feb. So it does not move around as much. Less liquidity like feb is easier to move.
Charles: but will there still be any trading in F this month? Or should I switch asap?
Drexel at XPRESSTRADE: That is up to you, but you may move into an illiquid market with low open interest. Might be difficult to get in and out at your price.
Charles: but will there still be any trading in F this month?
Drexel at XPRESSTRADE: I can not say.
Charles: So there could be an OI around 8000 and no trading at all?
Drexel at XPRESSTRADE: No there should be some trading.
Drexel at XPRESSTRADE: Let me check.
Drexel at XPRESSTRADE: Our desk is checking, there simply may not be interest at this time. The last trading day is 1/31/2006. Please hold.
Drexel at XPRESSTRADE: I am told there is not a bid offer in Jan at this time
Charles: But through the day there should be some trading?
Drexel at XPRESSTRADE: Yes
Charles: OK, Is it a good idea to watch the OI of the 2 available mini-contracts and switch to the 1 with the biggest number?
Drexel at XPRESSTRADE: I can not recommend one or the other, but normally the bigger the oi the better.
Charles: Ok, thank you.
Drexel at XPRESSTRADE: You're very welcome. Have a great day!

Just 2 hours later I received the following e-mail;

Sent: Tuesday, December 20, 2005 4:08 PM
Subject: XPRESSTRADE Cash Settlement Notification


> This automatic e-mail message has been sent to notify you that the
> following Cash Settlement in your XPRESSTRADE account has been added on
> your behalf:
>
> Trade(s) Detail:
> Sold 2 QMF06 Futures @57.340

I was lucky that I was at my desk so I switched within a few minutes to 1 Brent long. Can you imagine that after 4 such bloopers, I am looking for another broker?
About the job offer; I am so happy working this way. As you said, instant feedback and I have no explaining to do other than to myself. Working for a boss feels like a step back.
And do you know why you can only place limit orders when trading crude electronic? Or is it just Xpress? Not very relaxing if you can not place stop orders.

[MicroHydro]

I am happy with Man Futures.

[Chuck]

$this->bbcode_second_pass_quote('MicroHydro', 'I') am happy with Man Futures.