Up For The Week, Somehow

198 views

The market may be down, but somehow I ended up a small sum. My account is up 3% today, erasing the nasty tumble I had play out over the past 48 hours.

I’m constructive in oil and energy names, but that applies more to energy services and complement plays than it does to pure oil bets. I’m also very adverse to deep sea drilling, because it’s expensive and easily priced out of competitiveness.

I’m getting excited about uranium for the first time in years. I’ve been enthusiastic up until now, but there was something missing. The fuel run is exactly what the doctor ordered.

Enjoy your weekend, my good man or lady. The 9th floor is closed for business, until Monday.

You Won’t Believe What Happened To Basic Energy Services’ Operation Data Last Month

240 views

Nah, I’m just screwing with you. It was unchanged.

FORT WORTH, Texas, Nov. 11, 2014 /PRNewswire/ — Basic Energy Services, Inc. (BAS) (“Basic”) today reported selected operating data for the month of October 2014. Basic’s well servicing rig count remained unchanged at 421. Well servicing rig hours for the month were 77,800 producing a rig utilization rate of 73%, compared to 71% in both September 2014 and October 2013.

Fluid service truck utilization was up substantially. There was a tick down in drilling rig days, but those remain well above where they were the last time BAS was trading at $11.

Roe Patterson had this to say:

“October activity was strong across all of our business segments rebounding from the Labor Day and weather impacts during September. Our stimulation horsepower operated at near full utilization in October and we maintained price increases to offset higher operating costs.”

Sounds like doom and gloom there. Black smoke everywhere…

“We saw a significant increase in truck utilization in October, particularly in our Permian Basin and Rocky Mountain operating areas, as we continue to benefit from our longstanding strategy of centering our fluid service assets around our advanced disposal well network. Utilization levels in our well servicing and contract drilling segments were steady and remained in line with our expectations.

“While we are pleased with our customers’ current levels of activity, we are closely monitoring them as well as their expected 2015 spending plans. We have positioned ourselves to quickly make appropriate changes to our operating strategy as may be required.”

So far, there remains no proof that the sector is even slowing down. I’m sure there are some high speculation bets out there which will be destroyed. So stop buying husk.

Rumors of the demise of the energy and gas sector are way ahead of themselves.

Huge Move In Uranium Prices

165 views

Uranium spot price is now back above $40. Price for uranium fuel has not been this high in years.

No joke, the recovery is now.

Long CCJ.

Bracing For The Second Impact

372 views

The oil market is in the middle of another sharp leg lower. This is going to jolt the players and be painful. Today will not be fun for me. I’m going to have to grin and bear it and distract myself with a bag of popcorn and the spectacle of fifty million hardcore Democrats breaking down live on public access television tonight.

The impetus for the announcement might be, allegedly, a December price cut by Saudi Arabia to US markets.

This is the key takeaway here:

Top global exporter Saudi Arabia increased its December official selling prices (OSPs), relative to benchmarks, to Asia and Europe on Monday, but lowered prices to the United States, a smaller export market.

Which is to say that Saudi Arabia actually raised prices in December.

Guys, come on. Saudi Arabia’s oil market is Europe and Asia, almost entirely. They don’t sell diddly in the United States. Our oil comes from South America and Canada. You can easily check this via public records – the EIA, I believe it was, keeps detailed records about global oil sales, including by country of origin and destination.

If Saudi Arabia is lowering prices on little to no volume sold, then Saudi Arabia is not lowering prices.

In practice, this leg lower probably has less to do with Saudi Arabia and more to do with what is to be expected in a correction like this. This is not the first time I’ve been in a position that bleeds out, to see a moment of stability followed by more sharp bleeding.

APC comes to mind back when that oil well blew in the Gulf. Uranium prices did the same thing. And shares of gun manufacturers after Sandy Hook.

You get a big blowup, some tepid stability, then another collapse.

The second collapse is usually the best buying point. Usually…

Oil Soap Opera

259 views

The market intelligentsia on Twitter is in quite the state of excitement, narrating this late day move lower in WTI to death.

Yes, it is true that WTI is down today. But Brent is holding up fairly well. The most consequential relationship here with the most force behind it is the WTI-Brent spread, not the price per barrel of WTI or Brent exactly.

The WTI-Brent spread exists for stronger logical reasons, whereas the price per barrel of either has historically been prone to large 20% swings played out every few years.

The WTI-Brent spread was over $10 just this past 12 months. What we are seeing, following this major blowout of oil, is constructive so long as the WTI-Brent spread reestablishes itself. So long as the spread is being repaired that is indication of a healing market. I view the EURUSD and European economics as being instrumental in this blowout in the first place.

The confluence of events of European growth disappointments, EURUSD weakness, and Saudi Arabia oil announcements being construed as evidence of consumer weakness (read EU) all led us to where we are. Much of the fear about the oversupplied oil market rested on EU failure to grow and absorb excess. The IMF report set off the panic.

In a sense, it was Brent that dragged down WTI in the first place, as the spot difference between the two evaporated completely.

The WTI-Brent spread reestablishing itself is therefore wholly healthy. This is the first step to a recovery in the price of oil. The spread reestablishing marks a bottom and begins the process of rebidding oil back to the $100 mark. The temporary lull in pricing will also do wonders to ease off global consumers.

For the moment, we cannot say that WTI is selling off further do to economics, rather than traders making bets that the WTI-Brent spread will reestablish itself. From the point of view of a trader, betting on the spread reestablishing is a much safer, much surer bet than outright gambles in commodity price direction.

This is accomplished by buying Brent and selling WTI. Expect fluctuations in both prices in the immediate term. But so long as the spread widens, consider it a blessing and sign of bottoming.

The current state of oil and energy names is a rare opportunity. I am a buyer, with two hands.

Made Purchases of BAS, HCLP and VOC

178 views

I deployed 2.5% of my account to buy BAS at $12.61.

I put another 2% of my account into HCLP for $47.18.

I put another 3% of my account into VOC for $9.83.

Small margin balance. I am not just commenting when I say I am betting on oil. What we are experience in the oil market is not at all unusual. What is unusual is the sheer lengths that people have taken to sell oil stocks, with almost no evidence, other than a little correction in oil prices, that they are right.

Up For The Week, Somehow

198 views

The market may be down, but somehow I ended up a small sum. My account is up 3% today, erasing the nasty tumble I had play out over the past 48 hours.

I’m constructive in oil and energy names, but that applies more to energy services and complement plays than it does to pure oil bets. I’m also very adverse to deep sea drilling, because it’s expensive and easily priced out of competitiveness.

I’m getting excited about uranium for the first time in years. I’ve been enthusiastic up until now, but there was something missing. The fuel run is exactly what the doctor ordered.

Enjoy your weekend, my good man or lady. The 9th floor is closed for business, until Monday.

You Won’t Believe What Happened To Basic Energy Services’ Operation Data Last Month

240 views

Nah, I’m just screwing with you. It was unchanged.

FORT WORTH, Texas, Nov. 11, 2014 /PRNewswire/ — Basic Energy Services, Inc. (BAS) (“Basic”) today reported selected operating data for the month of October 2014. Basic’s well servicing rig count remained unchanged at 421. Well servicing rig hours for the month were 77,800 producing a rig utilization rate of 73%, compared to 71% in both September 2014 and October 2013.

Fluid service truck utilization was up substantially. There was a tick down in drilling rig days, but those remain well above where they were the last time BAS was trading at $11.

Roe Patterson had this to say:

“October activity was strong across all of our business segments rebounding from the Labor Day and weather impacts during September. Our stimulation horsepower operated at near full utilization in October and we maintained price increases to offset higher operating costs.”

Sounds like doom and gloom there. Black smoke everywhere…

“We saw a significant increase in truck utilization in October, particularly in our Permian Basin and Rocky Mountain operating areas, as we continue to benefit from our longstanding strategy of centering our fluid service assets around our advanced disposal well network. Utilization levels in our well servicing and contract drilling segments were steady and remained in line with our expectations.

“While we are pleased with our customers’ current levels of activity, we are closely monitoring them as well as their expected 2015 spending plans. We have positioned ourselves to quickly make appropriate changes to our operating strategy as may be required.”

So far, there remains no proof that the sector is even slowing down. I’m sure there are some high speculation bets out there which will be destroyed. So stop buying husk.

Rumors of the demise of the energy and gas sector are way ahead of themselves.

Huge Move In Uranium Prices

165 views

Uranium spot price is now back above $40. Price for uranium fuel has not been this high in years.

No joke, the recovery is now.

Long CCJ.

Bracing For The Second Impact

372 views

The oil market is in the middle of another sharp leg lower. This is going to jolt the players and be painful. Today will not be fun for me. I’m going to have to grin and bear it and distract myself with a bag of popcorn and the spectacle of fifty million hardcore Democrats breaking down live on public access television tonight.

The impetus for the announcement might be, allegedly, a December price cut by Saudi Arabia to US markets.

This is the key takeaway here:

Top global exporter Saudi Arabia increased its December official selling prices (OSPs), relative to benchmarks, to Asia and Europe on Monday, but lowered prices to the United States, a smaller export market.

Which is to say that Saudi Arabia actually raised prices in December.

Guys, come on. Saudi Arabia’s oil market is Europe and Asia, almost entirely. They don’t sell diddly in the United States. Our oil comes from South America and Canada. You can easily check this via public records – the EIA, I believe it was, keeps detailed records about global oil sales, including by country of origin and destination.

If Saudi Arabia is lowering prices on little to no volume sold, then Saudi Arabia is not lowering prices.

In practice, this leg lower probably has less to do with Saudi Arabia and more to do with what is to be expected in a correction like this. This is not the first time I’ve been in a position that bleeds out, to see a moment of stability followed by more sharp bleeding.

APC comes to mind back when that oil well blew in the Gulf. Uranium prices did the same thing. And shares of gun manufacturers after Sandy Hook.

You get a big blowup, some tepid stability, then another collapse.

The second collapse is usually the best buying point. Usually…

Oil Soap Opera

259 views

The market intelligentsia on Twitter is in quite the state of excitement, narrating this late day move lower in WTI to death.

Yes, it is true that WTI is down today. But Brent is holding up fairly well. The most consequential relationship here with the most force behind it is the WTI-Brent spread, not the price per barrel of WTI or Brent exactly.

The WTI-Brent spread exists for stronger logical reasons, whereas the price per barrel of either has historically been prone to large 20% swings played out every few years.

The WTI-Brent spread was over $10 just this past 12 months. What we are seeing, following this major blowout of oil, is constructive so long as the WTI-Brent spread reestablishes itself. So long as the spread is being repaired that is indication of a healing market. I view the EURUSD and European economics as being instrumental in this blowout in the first place.

The confluence of events of European growth disappointments, EURUSD weakness, and Saudi Arabia oil announcements being construed as evidence of consumer weakness (read EU) all led us to where we are. Much of the fear about the oversupplied oil market rested on EU failure to grow and absorb excess. The IMF report set off the panic.

In a sense, it was Brent that dragged down WTI in the first place, as the spot difference between the two evaporated completely.

The WTI-Brent spread reestablishing itself is therefore wholly healthy. This is the first step to a recovery in the price of oil. The spread reestablishing marks a bottom and begins the process of rebidding oil back to the $100 mark. The temporary lull in pricing will also do wonders to ease off global consumers.

For the moment, we cannot say that WTI is selling off further do to economics, rather than traders making bets that the WTI-Brent spread will reestablish itself. From the point of view of a trader, betting on the spread reestablishing is a much safer, much surer bet than outright gambles in commodity price direction.

This is accomplished by buying Brent and selling WTI. Expect fluctuations in both prices in the immediate term. But so long as the spread widens, consider it a blessing and sign of bottoming.

The current state of oil and energy names is a rare opportunity. I am a buyer, with two hands.

Made Purchases of BAS, HCLP and VOC

178 views

I deployed 2.5% of my account to buy BAS at $12.61.

I put another 2% of my account into HCLP for $47.18.

I put another 3% of my account into VOC for $9.83.

Small margin balance. I am not just commenting when I say I am betting on oil. What we are experience in the oil market is not at all unusual. What is unusual is the sheer lengths that people have taken to sell oil stocks, with almost no evidence, other than a little correction in oil prices, that they are right.

Previous Posts by Mr. Cain Thaler