Interview: PFC Energy---Qureshi, Jamal--Analyst
>> “after the bell” news on micron technology, the chipmaker reporting first quarter shares―per share of nine cents, versus 11 cents a share estimate. sales ahead of estimates, the couple of headlines with micron’s earnings announcement today. they could enter into a pact with intel to form i.n. instant memory flash. apple computer as depreed to prepay $250 million each to micron and intel. more on crude oil, which closed above the $58.5 mark today. distillette supplies, including heat oil, dropped more than expected last week. croid oil prices are 27% higher than a year ago. jamal joins us now for a look at where oil prices are headed. welcome, jamal.
>> hello.
>> so the headline seems to be today’s inventory report, that decline in distillettes, category including heating oil, diesel. should we be concerned about heating oil?
>> not yet. the stocks are fairly ample, concerning where we are in the winter. it very much depends how cold it is for the rest of the winter at this stage. i’m a little worried looking at the gasoline numbers where we see inventory was measured in days of supply are getting very verks tight. it is still the off-season but demant is growing and rebounding because of the hurricane.
>> could that translate back into $3 retail price for gasoline?
>> come spring when you get the real up-tick fleisses that typically happens, that’s certainly possible. especially after we have tighter specifications for gasoline dees. there could be worries come spring.
>> jamal, i want to talk mere about the heating oil situation. so much is weather dependent. let’s say just to throw out a scenario this is the most frigid winter that we convenient so in five, 10 years. where would―where could prices go in that event?
>> in a worse case scenario, i hate to paint because it is very warm―we should be prepared. the first part of the wiptert was quite warm. but you could see major price aspikes. you would see crude follow as well. with we would have to get a situation where stocks go to record low levels and on top of that ultra low sulfur levels that will make it tougher to produce distillettes.
>> so rising 33.1 million barrels and last week imports fell, a decline expected. how would you classify crude supply when you look at it versus distillette?
>> product is getting tired and crude, we are swimming in a sea of crude. availability is high. inventories are very, very high. the question is are we in the situation where the market is simply requiring higher levels of crude inventory. i think as time goes on and inventories stay high the market will take that as an increasingly barrish sign.
>> how will that translate into crude prices ?
>> what i think we will be seeing is that at some point during the first half 20606, this multiyear bull run we had and prices still in the upward price channel, will finally come tonand. we will break the bottom into the channel, and break 2090-day moving average. in a base case scenario for demand. scrold winter would throw that out. in the base case i think we are going to have a situation where next year prices will average more like the 50’s, continuing to increase.
>> what are you thinking in terms of oil demand? i know it is weather dependent but it seems like demand has been holding steady in recent weeks. do you see that extending?
>> well, on key products, on the gas oil and gasoline, we are certainly see going saw port of numbers. it looks like, hard to tell for the weekly data, which does not give us that good of a breakout, but looks like diesel demand has not been quite as strong in rebounding as gasoline has been doing. so that’s something we have to keep an eye on. but the demand overall has been pretty good and cold weather is supportive on the gas i’ll side as well.
>> on the import side, you know, we bring in so much crude oil. you think we have been importing too much, overreacting perhaps from the hurricane?
>> certainly we needed a massive influx of products. we got that. what’s interesting to see is how a lot of it kept up. the gasoline imports had gone from a situation you were talking, 600 k.b.d. spiking into the high 100 million barrels a day and we are still hovering 100 million barrels a day. on the crude side again, it’s really contributed to very high stock levels but refiners are individually making decision to do that designeding it’s worthwhile for them.
>> i would like to ask you a quick political question before you go. you probably know the senate voted against an war drilling. do you think at some point we will have to start new drilling in alaska?
>> it’s the question of the tradeoff. ult ultimately the american people have got to ask themselves, do we want this? there’s environmental good and energy good. which do people really want the most and which will win out politically? it comes down to a choice.
>> if you could give us a quick preview what to expect the next owe opec meeting in january.
>> think that’s interesting january 31. it’s an early meeting compared to what they might have otherwise done, meeting later in february. and it indicates they are willing to take preemptive action if they see prices heading down, if they see the market taking high crude stocks bearish, they will be willing to reduce supplies.
>> leave it there, jamal. thank you very much for joining us.
>> thank you.
>> research in motion faced a patent lawsuit and growing competition. we will analyze earning numbers next.
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Listen Market briefing --- Lori (slow)
NYSE --- Deb (fast)
the retailers coming in at 45 cent as shea share, which matches analyst estimates at 45 cents a share. revenue a little light, $1.45 billion. financial analysts wering looking for $1.47 billion in revenue. up 3.1%, as far as guidance in the fourth quarter, all bed, bath & beyond at this point is saying theg do plan to open 17 new stores in the fourth quarter. ahead of the company earnings, bank of america said they do continue to be impressed by bed, & beyond’s merchandising, that the rollout of fine china gifts are strong. and speculative reports that they may be interested in buying linen and things but do not view that plan as likely. bank of america is maintaining its neutral rating on the stock and a split decision of 28 analysts with 14 calling bed, bath & beyond a buy and 14 saying hold. on the second day of the transit strikes here in new york, volume affected once again with the new york stock exchange. for more let’s go to debra kostroun.
>> one of the things we are seeing is volume. this year 1.55 billion closing shares. close to the end of trading, volume close to that. just about 6% below average. of course, light of traders in new york finding creative ways getting to work. however, stocks advancing to the first day and one of the things that helped with the better-than-expected forecast, transport closing at a record. technology deal as announced today. quite a few of them, ibm miking micromuse for $865 million. you also saw crude oil up 1% after the inventory report falling more than expected last week and leaders in today’s session, transport at a record but materials in real estate also performing well. other deals to tell you about. texas instrument will be buying chipcon, a closely held nor region company, for about $200 million to gain new raid yoge technology. texas instruments a little higher in today’s session on naws. remember, texas instrument, biggest maker of mobile phone chips. look at jabele circuit, biggest gainer in the s&p 500 on the day. maker for cell phones for nokia and consumer electronics. they said they are profits coming in a little better than expected, helping out that stock. nigh kia, a―nokia, a little lower. climbed 2.5%, less than forecast. back to you in the studio, lori.
>> deborah, thank you very much. fedex is a widely watching the barometer of the holiday season and economy. this business is brisk. fedex stock was up after raising its forecast from reported earnings that beat analyst estimates. on monday of this week, it handled a record 8.9 million packages. far later in the holiday season than fedex expected. it was predicting its heaviest day would have been a week earlier. the growth in shipments plus fedex prediction that the world economy will keep growing, are behind the tire forecast. for the full year the company’s new earnings range is $5.60 to $5.85 per share, excluding a charge. the mid-point, $5.73, well ahead of analyst estimates of $5.55. looking to the last quarter, fedex set its fiscal second quarter profit rose 33% on a bump up in both u.s. and international deliveries. growth in asia, especially china, led the way. the value of goods traded between asia and the u.s. increased by 25% this year. overall fedex, second quarter net income, rose to $1.53 a share. analysts were looking for $1.40 a share. part of the profit growth came from a surcharge on rising fuel. a seed they kept even as fuel costs dropped.
>> if the rate goes up by $1 because of fuel, you’re willing to pay that extra dollar. if you can continue to have the service. could be fedex from the service, not because it’s the cheapest way to move things. they have been very effective at passing on the additional cost of fuel.
>> fedex shares are surging 33% in the last three months. anist john barnes of capital market said they can keep rising. his target, $115 to $120 a share.
>> we have seen a material improvement in the margins of the country, in the precash flow generation of the company that had been growing ground aggressively, made a couple acquisitions. the smart one was american freight ways which got them into the l.t.l. business. all helping improve profitability over time.
>> fedex shares close, they were up $103.70 a share. richard lacquer said the u.s. economy will probably grow at a healthy 3 ½% rate next year.
>> economic outlook is fairly encouraging. growth is on a solid footing. despite the run up in energy prices this year and the disruption to the devastated hurricane season. after a brief pause this fall, employment is expanding again at a healthy pace. consumer spending continues to grow briskly and business investment spending is robust.
>> lacquer goes on to say the central bank remains poised to rebound vigorously. lacker outlined the forecast in his speech in north carolina. his remarks came after he got word the u.s. economy grew at an annual rate of 4.1% last quarter. that is the final verdict from the commerce department. following a previous estimate of 4.3%. oil prices edged higher on concerns about demands for products like heating oil.
