Message-ID: <26612545.1075841100029.JavaMail.evans@thyme>
Date: Thu, 17 Jan 2002 06:59:08 -0800 (PST)
From: edward.kevelson@americas.bnpparibas.com
To: ekevelson@aol.com
Subject: BNP Paribas NYMEX Floor AM Update
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Yesterday's run up doesn't, at least at first glance, resemble a major bottom.
Yes, we did make a new low and settle higher, setting the stage for a possible
reversal. To confirm, we need to see a settle above the $19.40 high from
Tuesday. The reason it didn't resemble a major bottom was the lack of solid
spread action. Crude spreads barely budged, even at the highs. If people were
really seeing yesterday as a potential bottom, it should have been reflected in
more nervousness in short crude spreads. The only market that did react
spread-wise was heating oil. Turnarounds and a mildly improving overseas market
have had some effect. Mar/Apr, in particular, has moved in from -50 to flat.
Replacing barrels during turnaround at close to carry makes sense, anything in
premium only makes sense if a squeeze opportunity arises. Given the huge stock
overhang in PADD One and lack of extended cold weather, I don't see this as
viable. Paper players are clearly very short, however, and that has some
bearing. Back on the short spread angle, you could make the case for a lack of
covering until a strong settle was seen. If the majority sees yesterday's settle
as important, we should see a definite crude spread reaction today. A decent
number of out of the money $19 calls were exercised last night, we haven't seen
that play in some time.  Gas demand fell of the table and gas/heat continues to
look soft.






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