WTI $98.90 -66c ; Brent $110.55 -17c ; Natural Gas $2.66 -2c

Good morning

The oil price faltered a little yesterday as the Saudis reiterated that there would be no shortage of oil in the market although the Opec speaker on the same platform did warn that there were some risks associated with the political stances being taken at the moment. With a surplus of 600,000 above the Opec cap and the ability to call upon the Kingdom to increase production the market looks remarkably stable at the moment given the circumstances.

We understand that Sudan, as part of the negotiating process has released four South Sudan tankers to Vitol and Sinopec although they still hold one tanker and there are seven waiting for the December and January liftings.

Retail gasoline and diesel prices this week show a 5 cents a gallon rise in gasoline prices at $3.44 which is 34 cents up on this time last year, diesel is unchanged on the week but up 41 cents on the year.

In international company news, Cheniere Energy has followed up its deal with BG Group by announcing an agreement with Kogas, the world’s biggest LNG importer worth around $11bn over 20 years from the Sabine Pass facility. With almost all the tonnage from Sabine pass sold, the remaining product will be sold on the spot market, thoughts turn to Cheniere constructing another plant in nearby Texas.

Essar Oil has received a tax bill for 63bn rupees ($1.27bn ) after failing to get the demand deferred last week, the chart below shows that tax is not the only problem facing the management.

Essar Oil 1 Year chart

Essar Oil 1 Year chart

In other company news, Gulfsands Petroleum has delivered an inconclusive drilling report from Syria in its appraisal well Khurbet East-102 although the well did encounter hydrocarbons. After successfully retrieving core sections which showed the presence of oil and gas in the formation it ran a flow-test which flowed oil and gas, regrettably the test was terminated after down-hole kit failed. What is not inconclusive is that this is in Syria and there is nil chance of getting any oil, gas or anything else out for the foreseeable future. Gulfsands has actually performed quite well under difficult circumstances and will be worth looking at once the current, how you say, political instability has passed over, in the meantime it remains a black list stock.

Frontera Resources has announced an operational update of considerable length, detailing its success at the Mtsare Khevi Field in Georgia, (the country not the state) and its hopes for gas sales in the next quarter. Currently the company is producing approximately 220 b/d with 300 b/d shut-in awaiting infrastructure and in addition the company is seeking a strategic partner for its shale gas and Basin Edge play units. At the same time the company has signed up with Yorkville for a $3.1m SEDA which can be drawn down in two tranches this year subject to certain milestones being achieved in oil and gas production.

Frontera Resources 1 Year chart

Frontera Resources 1 Year chart

And finally, advertisements appeared today in the UK press for people wanting to become a spy, MI6 (sis.gov.uk/careers) are looking for people to travel abroad and ‘seamlessly integrate’ into the day-to-day society of a different country, well the oil industry does it every day!