Monday -> The stocks ripped as crude bounces a $1.50 late against a strong broad market tape. A nuclear outage reversed natty but I am still a net seller. I have a pretty heavy hedge against natural gas here.

Energy stocks (OSX $264, E&P $495, XOI $1410, XNG $506) – Call it commodity rally going into a holiday week (oil +1.6%; nat gas +2.9%) or call it end of quarter window dressing (OSX +0.7%; XOI +1.0%; XNG +0.6%, E&P +0.8%; SPX -0.2%)…either way energy stocks were up Friday. July 4th likely creates quiet trading week, unless Q2 preannouncements happen. Still worthy of staying on toes.

Energy stocks (OSX $266, E&P $496, XOI $1389) – Inventory data turned oil price and energy stocks yesterday, but oil service was only energy outperformer (S&P 500 +1.3%, E&P +1.3%, majors +0.4%, OSX +1.9%). Fickle market. With green screen yesterday, maybe group set to rally as month/quarter close out and people window dress? Easiest call is fundamentals matter more than several weeks/months ago, so keep close eye on them (and Q2 earnings).

Pickering comments: Energy stocks (OSX $265, E&P $504, XOI $1406) – Not pleasant yesterday. Energy stocks were 1-3% lower, even when Dow was +120 points as gas prices took another hit (closing down 2.7% to under $7/mcf). First time in recent trading that bulls willing to relinquish reins to softish datapoint(s). Watching this closely as rally-to-date has shrugged off what we consider to be meaningful gas market overhang.

Broad market rolled in the afternoon on a delayed reaction to a Bear Sterns hedge fund liquidation. Energy started off weaker than the broad market on crude inventory build and strong gasoline yields (presumably) and then extended its losses another 100 bps in the last hour and a half of trading in sympathy with the broader market selloff.

Energy stocks (OSX $262, E&P $515, XOI$1398) – Had to have one of those type days at some point. Notably, first time in many weeks that energy stocks reacted to poor fundamental datapoint (oil inventory / oil price). Group sold off hard before broad market then took it lower (closing on lows, energy down 2.5-3%, S&P 500 -1.4%). Says perhaps market trading sentiment shifts more toward neutral from full speed ahead. Still plenty of dip buyers out there though.

Group mixed to sideways... Crude oil stronger than the stock, ex. refiners. Nat gas and nat gas levered names were weak. Gasoline holding at a pretty high level.

Strong as an ox today on double wammy -> crude followed through from the surprise non-build in gasoline today strongly...and the broad market followed through as well. Like it was all a bad dream. Stay tuned.

Weak market in the AM to a midday recovery to a closing flop on Greenspan comments from left field. Commodities uneventful. RBOB down a couple of pennies to 2.13, refiners actually act ok under the circumstances. But as always, they will act ok until they dont act ok any more.

Commodities smoked across the board, especially gasoline down 3% and curde down 3.2%. Stocks caught a late bounce with comments on US Steel potentially being acquired. Weirdness...

Broad market down 8/10th of a %, levered subsectors worst right down the line. TK getting smoked 3.5%. Refiners weak -2 to -4%. E&P down 2%. Ah the humanity. Brutal. Gasoline showed a huge build in blendstocks, but demand looked ok and inventory cover is still low low.

Another strong day... XTO was the primary driver, buying D's assets and talking about an MLP. Strange development is a cyclone in the Middle East driving crude oil. Comments below from GS trader sickeningly bullish ->

The energy sector stole the spotlight once again yesterday as several E&P deals created a strong bid to nat gas and therefore a nice rally in Services and Drillers. Mega cap XOM was a lone underperformer yesterday, closing unched on the day, which we view as a positive seeing it generally points to the generalist community focusing on higher beta energy rather than "safe" energy exposure. We were active throughout the day for both vanilla and hedge customers mostly in red hot E&P and Pipeline names. Overall GS traders like the group and see another leg up in both the OSX & XOI, especially if sell side analysts continue to raise there 2007 avg crude prices before the end of Q2.

Muted day in services +0.35%, stronger in E&P +1.1% and refining 1.5%. NFX was the rumor of the day ripping 10%. We'll see on Monday. Tenaris and Vallourec gave a little back in the AM but TS ADR closed in the green in the US.

DOE revised gasoline demand down monthly basis. Weekly demand comps were weakish. EIA 914 production data showed 2 bcf yoy growth... Stocks did not care, still finished down only about 1/2 a percent. HC very strong again up 3%. Tenaris got the antidumping ruling rescinded, Ole is probably going to bull the thing tomorrow or Monday. It was strong - up 3.7% which was cool.

Group started decently and only got stronger as the broad market closed 1% higher than its 2pm low to set an all time S&P record. Stable crude and gasoline didnt interfere with the stocks and July nat gas in its first day as the front month was up 3% to $7.96. Nat gas continues to deny explanation given invenories and weak-ish injection trends.

Crude was down almost 3% and the group acted decent (down 0.5%-1.0%) against that backdrop. It feels for lack of a better term that generalists want to buy the dip on these things as long as they don't imagine that the commodities are going to plummet unabated. 15-day moving averages still tenuously hold across most of the energy patch. Gasoline down a dime and June expires this week placing a strong driving season July in the front seat.

Market as a whole got clobbered. S&P down 0.9%. OIH down 2.45%. XLE down 1.83%. Crude down 2.4% as a VLO outage backed up WTI supplies while gasoline was strong on the same news with RBOB up 2.0%.

OIH diverged from E&P -> Up 0.8% vs XOP which was down 0.4%. Refiners reversed off morning highs to close on their lows. Real battle of opinion going on over refiners here.

Stocks are insane. Gasoline ripped on an outage or two, driving crude and then the stocks up 1-3% on a flat to down broad market day. Crude was up 4%. HC was a dog, so was TK with a downgrade at BofA.

Quiet sideways day after the Friday love fest. Adding a little TK, VLO, HC.

Ugly action today as most energy stocks close near or under their 15-day averages. In this market driven energy rally, they ignored super strong gasoline, modest weakness in nat gas and modest strength in crude. The emerging markets were awful. Is this the beginning of a real correction or just another short dip. One difference today was that the close was awful - at or near daily lows.

Stocks keep bouncing off their 15-days HARD. HAL is coming as an interesting stock from all sides -> chartists and fundamental guys alike. Adding to Tenaris and Hanover Compressor here. Getting away from paired book.

SUN whiffed on Philly downtime, we'll see how it acts. Bid down $4 to $73 or so. TSO also missed small. VLO still king! Made more than each in Q2, lowest stock price.

Medley noting that arch-hawk Netanyahu may move back into power in Israel.

Gorilla strength in the upside surpisers (RIG, UPL)..... Gasoline bounced off 2.20 support and broad market ripped taking most of the energy space ex. the earnings dippointers with it.

Stocks are bouncing hard off their 15-day moving averages. If this buy the dip mentality is going to end, it doesnt feel like its today.

Comments from IEA economist at OTC

HOUSTON (Dow Jones)--Citing a variety of factors that mitigate high prices inenergy-consuming nations, the chief economist for the International EnergyAgency said Tuesday that high prices are having a diminishing impact on energyconsumption. "We are going through a major structural change in which the role of pricewill be less and less," said Fatih Birol, chief economist for the IEA, aParis-based watchdog for energy-consuming nations.

From Jay S.

I'm in the camp of upside vs expectations to production but admit that it's a hard one. Evidence for stronger production = company growth targets/results, basis diffs in the Rockies, production/well may be flattening (can't get any worse), Independence Hub, increased drilling efficiencies as/if land fleet highgrades. Struggling with 914 results.

Story that gasoline prices hitting consumer spending. Little nervousness creeping in. Stocks not acting as great as expected on beat and getting creamed on small misses.

Refining utilization still stubbornly low. People think gasoline inventories will fall again tomorrow. Crisis mentality creeping into the media. People wondering what the net impact of refinery restarts is on gasoline vs. WTI. Refiners fundamentals still strong, but in a more fearful market how much can they hold?

Attack on vessel off coast of Nigeria this AM. Crude down small. Gasoline rolled down, spot still strong 2.40 vs near month 2.46.

Monday April 30th, 2007
EIA 914 data mixed - Jan revised up but still 0.6bcf/day lower than December. February = January. Big time reversal in the broad market around 1pm dragged energy down hard. Emerging markets in the red all day, much worse once the broad market started rolling over. Sellside commentary already calling for dip buyers. Remains to be seen (or not).