WTI $98.96 +1.74 ; Brent $108.95 +1.32 ; Natural Gas $3.17 +4c
The oil market cares not for Christmas and the weeks strength continues, supply disruptions as documented here remain, Shell has shut in Bonga, Kazakh riots continue and we can now add to that a huge inventory draw last night. The IEA reported a crude draw of 10.6m barrels which was nearly five times the consensus of Wall Street analysts, yet again they are not even in the same postal district as the right number. The reason touted for last night’s huge weekly drop, the largest for over ten years, is a lot about tax for refiners, which is based on the fair-market value of inventories as at 1st January. Actually stock levels are quite low everywhere as we go into 2012 and that is probably the greatest risk to low end oil price expectations for early next year.
Equity markets are better this morning as news from the EU was more positive as the ECB loans yesterday were more than expected at €489bn over three years at 1%.
In company news Brazilian police have recommended that a number of Chevron and Transocean officials who were involved in the November oil spill should be indicted for environmental crimes and withholding information. When the civil suit was announced and fines of $11bn issued, the oil market, us included, took the view that it was a bargaining point and if anything not that important as Brazil would not want to frighten off potential investors in their resources industry. These latest acts should be monitored a little more carefully and as such we are as guilty as others, watch this space.
Not much company news today as one might expect but yesterday BP staff got an e-mail from their esteemed CEO congratulating them on their performance in 2011. Apparently they ‘played a part in a demanding but extraordinary year of rebuilding and change for our company’. So that’s what it was as he also announced selling $45bn of assets as part of the ‘rebuilding’ process, a better word might have been ‘downsizing’? More on BP tomorrow in my round up of the year…..
Fortune Oil has announced that Dart Energy has exercised its option to acquire a further 5% interest in the Liulin CBM project from Fortune for $4m, this values the project at $80m which is significantly in excess of our recent valuation of $15m for their 50% stake. We are confident that our BUY recommendation on Fortune, with a target price of 13.8p with an asset value of 22.5p is easily achievable and it may well appear in my letter to Father Christmas tomorrow….
In other company news Providence Resources has issued a year end statement but adds little new information except that Barryroe is drilling on after finding shallow gas zones and that at Singleton all is going well as we wrote a few days ago.
San Leon has taken 100% of the Durresi block following Beech Energy’s withdrawal from international activity.
Gasol has announced its interim results with its focus unsurprisingly still on gas monetisation in Nigeria and West Africa, we foresee an interesting year for this company with a new start and funds to be raised in an area we consider to be highly promising.
Finally in company news we are pleased to report that VSA Capital has been appointed nominated broker to Alkane Energy plc. with immediate effect.
As promised we are revisiting one or two stories that have provided the most reaction from readers during the year in the and finally…….section of the blog.
So, and really finally a word on English rugby supremo Rob Andrew who clings to his job despite the rugby world and indeed the whole country demanding his head. Talking of clinging, apparently a leading manufacturer of ‘bathroom paper’ had planned the launch of a new range to be called Andrew but nothing would stick to it so it’s now called Andrex……