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Oil Inventories: Previous 1.745M , Market Expects 1.500M, Actual Build of 2.131M

Dept of Energy reports that:

  • Crude oil inventories had a build of 2131K (consensus is a build of 1500K)
  • Distillate inventories had a build of 7K (consensus is a draw of 1500K)
  • Gasoline inventories had a draw of 5320K (consensus is a draw of 2000K)
  • The change in refinery utilization was 0.70% (consensus is 0.40%)

Production: U.S. crude oil refinery inputs averaged 14.3 mln bpd during the week ending March 18, 167 thousand bpd above the previous week’s average. Refineries operated at 84.1 percent of their operable capacity last week. Gasoline production increased last week, averaging 9.0 mln bpd. Distillate fuel production increased last week, averaging 4.3 mln bpd.

Imports: U.S. crude oil imports averaged nearly 9.0 mln bpd last week, up by 306 thousand bpd from the previous week. Over the last four weeks, crude oil imports have averaged nearly 8.5 mln bpd, 393 thousand bpd below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 695 thousand bpd. Distillate fuel imports averaged 192 thousand bpd last week.

Inventory: U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 2.1 mln barrels from the previous week. At 352.8 mln barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year. Total motor gasoline inventories decreased by 5.3 mln barrels last week and are in the upper limit of the average range. Both finished gasoline inventories and blending components inventories decreased last week. Distillate fuel inventories remained unchanged and are above the upper limit of the average range for this time of year. Propane/propylene inventories decreased by 0.4 mln barrels last week and are in the lower limit of the average range. Total commercial petroleum inventories decreased by 0.9 mln barrels last week.

Demand: Over the last four weeks, motor gasoline product supplied has averaged about 9.1 mln bpd, up by 1.2 percent from the same period last year. Distillate fuel product supplied has averaged nearly 3.9 mln bpd over the last four weeks, up by 3.6 percent from the same period last year.

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This Morning’s Option Activity

Taking an early look at the options market, we found the following names that may be worth watching throughout the day for further indication of investor expectations given their options volume and implied volatility movement.

Stocks seeing volatility buying (bullish call buying/bearish put buying):

Calls:

  • MU Apr 11 calls are seeing interest with 6170 contracts trading vs. open int of 110.8K, pushing implied vol up around 3 points to ~55% — co is expected to report earnings late March.
  • DLTR May 57.5 calls are seeing interest with 2270 contracts trading vs. open int of 60, pushing implied vol up around 1 points to ~31% — co is expected to report earnings mid May, possibly falling within the expirations cycle.

Puts:

  • TOL Apr 20 puts are seeing interest with 2000 contracts trading vs. open int of 3540, pushing implied vol up around 3 points to ~35%

Stocks seeing volatility selling:

  • ADBE, GIS, DGW, DFS and JBL implied vol is lower following earnings/guidance

Sentiment: The CBOE Put/Call ratio is currently: 0.95.. VIX: (20.95, +0.74, +3.7%).
*Please use the Talk to Us link at the top of the page to provide feedback on this comment as well as the OPTNX comments.

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Huge Explosion in Jerusalem

Early reports indicate some sort of bus bombing in Jerusalem with dozens dead and/ or injured.

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TEPCO May Receive Cash Infusion

Major Japanese institutions are considering injecting almost $25 billion in Tokyo Electric by the end of the month. Even before this crisis, TEPCO had the worst balance sheet, out of all the major electricity providers, in the world.

With a potential $300 billion price tag to rebuild Japan, TEPCO is in dire need of financing, not only to rebuild infrastructure, but to fend off litigation.

Essentially, this is a bailout.

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Colgate to Buy Sanex

Former Sara Lee subsidiary, Sanex, will be bought by Colgate from Unilever for $940 million.

Sanex is a personal care company, specializing in shower gel.

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Gapping Up and Down This morning

Gapping down

In reaction to disappointing earnings/guidance: CREE -7.8%, DGW -4% (also included third party review update), GIS -1.7%, ADBE -0.8%.

M&A news: BKS -2.7% (ticking modestly lower following reports that the co may not find buyer).

Select financial related names showing weakness: LYG -2.3%, DB -1.6%, HBC -1.1%.

A few CREE peers are under under pressure: RBCN -5.9%, LEDS -4.8%, VECO -3.9%, AIXG -3.6%

Other news:  XOMA -38.2% (announced that its Phase 2b trial of XOMA 052 in Type 2 diabetes patients did not achieve the primary endpoint of reduction in glycosylated hemoglobin), PRAN -20.1% (to sell securities to institutional investors in a private placement for aggregate gross proceeds of ~$6,190,992), NCT -5.4% (plans to make a public offering of 15 mln shares of its common stock), BAC -1.7% (discloses comprehensive capital plan sent to the Federal Reserve; Fed objected to proposed increase in capital distributions for the 2H11), TM -1.3% (under pressure following reports co will delay the Japan launch of the Prius wagon and minivan), BIN -1.2% (announces commencement of public secondary offering of common shares by TC Carting III, L.L.C.), YPF -1.1% (weakness attributed to pricing of offering), GNW -0.9% (prices $400 mln debt offering).

Analyst comments: CAG -1.3% (downgraded to Neutral from Buy at Davenport)

Gapping up

In reaction to strong earnings/guidance:  TIV +10.7%, JBL +9.6% (also reports update related to Japan operations; may have an impact on the supply of components), CTAS +5.7% (also upgraded to Gradually Accumulate from Hold at Soleil), GIII +4.4%, MILL +2.5%, DFS +2.7%, GRS +2.6%.

Select metals/mining stocks trading higher:  BBL +2%, SLW +1.9%, BHP +1.8%, RIO +1.6%, SLV +0.6%, GLD +0.5%, .

A few oil/gas related names showing strength:  ROYL +4%, ATPG +1.7%, MPET +1.6%, HERO +1.2%.

Other news:  MOTR +6.2% (Cramer makes positive comments on MadMoney), CDII +5.8% (China Vesting upgrades China Direct Industries to the China Dragon Undervalued Index), MOBI +5.5% (Sky-mobi entered into an advertising contract with Sohu),  POZN +5.4% (announces licensing deal with Cilag GmbH, a division of Johnson & Johnson (JNJ), for MT 400, migraine treatment), FSCI +3.9% (retains financial advisor to explore alternatives for maximizing the value of Fisher Plaza), AOL +2.7% (reports out overnight that the co is planning to consolidate websites), ARMH +1.8% (reports out overnight that the co is working with Microsoft on processor architectures), ASML +1% (still checking), SPWRA +0.9% (ticking higher, Sunpower and Hawaiian Electric sign solar power agreement).

Analyst comments: PHM +4.1% (upgraded to Buy from Neutral at Goldman), CSX +1.1% (upgraded to Buy at Goldman), BG +1.0% (upgraded to Buy from Hold at Deutsche Bank), ALV +0.9% (initiated with a Buy at Citigroup)

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Commodities Strong in Pre-Market

Futures are down about 4 on the S&P, but commodities are up.

Oil is up 0.5%, gold 0.3%, silver 0.9%, copper 2% and even natural gas is up 0.8%.

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