image009‹ Australia Day

WTI $99.40 +45c ; Brent $109.79 +8c ; Natural Gas $2.73 +18c

Good morning

Another fairly quiet day at the ranch, oil prices rose a touch on the Fed announcement but apart from that are staying very close in the recent narrow trading range. The natural gas price has interestingly bounced quite sharply this week although one feels it is not just the shutting in of production accounting for it.

The IMF followed yesterday’s GDP forecasts with some oil price warnings, firstly that should sanctions on Iran grip then they see oil prices rising by some 20-30%, secondly that this hike could be exacerbated by lower than average stock levels across the industry. Now regular readers of the blog will know that a good deal of this is down to the IEA spoofing its own customers out of their ‘strategic reserves’ when they tried to play King Canute last June. Apart from acting like a loser at a roulette wheel they not only sold reserves for the wrong purpose but also neglected to buy them back, something we have been urging them to do ever since, particularly as at some stage they will need those reserves for the ‘strategic’ reason they were bought for.

The EIA inventory stats again showed up the inability of the analysts to forecast with crude stocks rising by 3.6m bbls against consensus of 800,000, higher imports and lower refinery utilisation were the main factors behind that. Distillates saw a draw of 2.5mb and gasoline was a draw of 0.4mb.

In international company news it was the turn of ConocoPhillips to report results and to point out the move from gas to oil in drilling and production. Given that the company stormed ahead of the consensus and reported $2.02 a share the share price was a bit muted ahead of the spin-off of Phillips 66 in the second quarter. The move away from gas continues at Conoco as after last year’s 9% fall in gas production a similar fall is likely this year. It is worth noting that of the 35-40 rigs that Conoco operated in the lower 48 only 5 were drilling for gas. Shutting in gas, as with Chesapeake yesterday continues but associated gas sales will continue from oil wells.

Rumours abound about what might happen to the Coryton refinery after Petroplus went under earlier in the week, stories are that one of the big international oil trading houses may buy it as a storage and trading facility although hopes are not yet dashed for its future as a refinery.

BP has won the latest round in the tortuous (ouch) court case in Siberia as the minority shareholders attempt to sue the company for $2.8bn following the Rosneft debacle last year. The end is not nigh however as there are still two appeals outstanding and more in the pipeline. Today is results day -12 as we wait for the finals and the opportunity to tell the world about its restructuring, its asset sales and its plans for the future……………………………watch this space.

IGas Energy has announced an operational update following the acquisition of Star Energy and the long awaited CBM drilling campaign. With a lot of testing still to be done there appear to be higher levels of gas than expected at Doe Green and potentially positive shale at Ince Marshes. Production of oil and gas is ahead of the Senergy forecasts although a lot of the oil is hedged at 93.40 which I can’t understand. The Star acquisition is integrating smoothly although I get the impression it is taking longer than expected and we hope to get more information on the analysts trip tomorrow.

Magnolia Petroleum has announced that it is participating in an additional well at the Dunn County drilling in the Bakken in North Dakota.

IGas 1 Year chart

IGas 1 Year chart

And finally another bad night for the noisy neighbours as they lost a chance to revisit Wembley being soundly beaten by Liverpool in the Clueless Cup, they are now ‘concentrating on the league!! A better day in the cricket as England took the last three wickets straight away this morning and have set about trying to score a few runs, 132-1 at the moment and Federer and Nadal are neck and neck in the tennis!