In today’s briefing:
- US Rig Count Rises After Falling for Three Consecutive Weeks
- [US Nat Gas Options Weekly 2024/41] Henry Hub Extends Decline as Hurricane Milton Destroys Demand
- Sweet Sweet Liquidity
- [US Crude Oil Options Weekly 2024/41] China’s Weakness Poses Risk to WTI’s Recent Two-Week Gains
- Crypto Crisp: Seller. Coinbase Seller
- Hurricane Milton and Orange Juice Prices // CTA Update
- DNOW, Inc. – Positioned for an Evolving Energy Market
- Dogwood Therapeutics, Inc. – DWTX: Virios Therapeutics Becomes Dogwood Therapeutics
- LSB Industries, Inc. – WTR Small-Cap Spotlight Recap
- Bassett Furniture Industries, Inc. – New Revenue and EPS Estimates
US Rig Count Rises After Falling for Three Consecutive Weeks
- The US oil and gas rig count rose by one to 586 for the week ending 11/Oct, marking an increase after falling for three consecutive weeks.
- The US oil rig count increased by two to 481. Meanwhile, gas rigs decreased by one to 101, after gaining six rigs over the last two weeks.
- For the week ending 11/Oct, US energy producers added six rigs in Texas and one in Oklahoma but cut two each in Pennsylvania, Louisiana, and New Mexico.
[US Nat Gas Options Weekly 2024/41] Henry Hub Extends Decline as Hurricane Milton Destroys Demand
- US natural gas prices fell 7.8% for the week ending 11/Oct, marking a second straight weekly decline as Hurricane Milton reduced electricity demand, driving down Henry Hub prices.
- Henry Hub Put/Call volume ratio fell to 0.69 (11/Oct) from 0.98 the previous week as put volumes fell by 27.3% WoW, while call volumes rose by 2.8%.
- Put OI increased for contracts expiring in November and April while call OI rose for expiries in December, January, February, and March.
Sweet Sweet Liquidity
- September showed positive returns, bucking the seasonal negative returns we have seen in previous years.
- BTCUSD (6.79%), ETHUSD (2.99%), SOLUSD (10.51%) and OTHERS index (15.86%) were green across the board.
- The odds of an explosive expansionary phase significantly increased in September.
[US Crude Oil Options Weekly 2024/41] China’s Weakness Poses Risk to WTI’s Recent Two-Week Gains
- WTI futures rose by 1.6% for the week ending 11/Oct, as the simmering tensions in the Middle East outweighed persistent demand concerns.
- WTI options Put/Call volume ratio fell to 0.52 from 0.64 (04/Oct) as put volume dropped by 50.9% WoW while call volume fell by 39.8%.
- WTI OI PCR was unchanged at 0.76 compared to last week. Call OI rose by 5.7% WoW, while put OI grew by 5.8%.
Crypto Crisp: Seller. Coinbase Seller
- The crypto market showed some encouraging signs over the weekend, despite Coinbase showing a significant discount on its Bitcoin and Ethereum prices.
- This suggests that Coinbase users are net sellers, possibly due to concerns about the 69,330 bitcoins seized by the U.S. government in connection with the Silk Road case.
- However, we believe it is very unlikely that the government will liquidate these bitcoins anytime soon.
Hurricane Milton and Orange Juice Prices // CTA Update
- CTA Update Last week, the research division of UBS shared an update on the positioning of CTAs.
- Contrarian’ trades: bullish Energy, Cattle Feeder, Lme Lead and Lme Nickel, bearish Coffee, Cocoa, Platinum and Palladium
- Go with momentum’ trades: bullish Lme Tin, Copper, Gold and Lean Hogs, bearish Soybean, Soybean Meal, Wheat and Corn Hurricane Milton and Orange Juice Prices Orange juice futures rose as Hurricane Milton approached Florida throughout the week.
DNOW, Inc. – Positioned for an Evolving Energy Market
- DNOW’s existing fulfillment model is contributing to increased earnings and free cash flow capacity through industry cycles.
- 1H24 revenue totaled $1,196 million compared with $1,178 million in 1H23, despite a 5% decline in the average global rig count. US revenue totaled $947 million in 1H24 compared with $883 million in 1H23 despite a 24% decline in the average US rig count.
- US gains reflect increased market share and a partial contribution from the $185 million Whitco acquisition, which closed March 12, 2024. Free cash flow totaled $98 million in 1H24.
Dogwood Therapeutics, Inc. – DWTX: Virios Therapeutics Becomes Dogwood Therapeutics
- On October 7, 2024, Virios Therapeutics, Inc. (VIRI) announced a business combination with privately-held Wex Pharmaceuticals, Inc. to form Dogwood Therapeutics, Inc. (DWTX).
- The name and ticker change, along with a 1:25 reverse split, took effect October 9, 2024.
- The new company will be focused on the advancement of three assets: Halneuron , which is currently in a Phase 2b trial for the treatment of chemotherapy-induced neuropathic pain (CINP) IMC-1, which is a Phase 3-ready asset for the treatment of fibromyalgia and IMC-2, which is currently in development to treat Long COVID.
LSB Industries, Inc. – WTR Small-Cap Spotlight Recap
- LSB currently operates three downstream integrated ammonia production facilities.
- Behrman said key competitive advantages include a cost structure underpinned by access to low-cost US natural gas feedstock, strategic proximity with plants located in three states (OK, AK, and AL), and good logistics with access to waterways, truck, and rail.
- About half of LSB’s output is geared toward agricultural applications (fertilizers), while the remaining is geared toward various industrial applications.
Bassett Furniture Industries, Inc. – New Revenue and EPS Estimates
- We are updating our 4QFY24 and revenue and adjusted EPS estimates for BSET following the company’s earnings release and investor call (see 1 for our summary of the quarter).
- As noted, industry conditions for residential furniture remain challenging, with the housing market (still) stuck and consumer spending on furniture and furnishings subdued after the COVID pull-through, when many people renovated their homes.
- Near term, we expect demand to remain subdued, even as easier comps and some return to normal demand dynamics gain traction over the next several quarters.
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