image007WTI $97.72 +7c; Brent $105.65 +5c, Natural Gas $3.74 -7c

Good morning

With the Fed meeting dominating events this week the focus turns to tapering and the beginning of the end of QE, although it seems as if the start of tapering will only be followed by more tapering if the economy really is picking up, if you know what I mean.

The G8 Discussions yesterday included the ‘biggest trade deal of all time’ according to DavCam, I wasn’t sure whether US LNG might be included in this?

Oil Price

The physical market is very quiet at the moment, yesterday it traded higher on Syrian worries and then back on the Fed and Iranian situation. Our strong view that the Iranian election result is bearish for oil prices remains although we are not expecting immediate results to validate our position.

In his first press conference as President-elect, Hassan Rohani made some interesting comments yesterday, none of which would make me sleep at night with a long position in crude. He said that he pledged to give the world ‘greater transparency’ into the Islamic Republic’s nuclear programme and said he would ‘work to win back the trust of world powers and ease international sanctions’. He went on to say that his first step was to ‘prevent the imposition of new restrictions’ and then to try and have existing restrictions lifted “step by step”. He also said he favoured “very good relations” with Saudi Arabia.


Plenty of follow up in the press today, none of which makes me change my mind that this is no recovery stock, more basket case and that Eni needs to get its act together and fix it before it causes even more grief than it has done already.


Two more developments in Kurdistan overnight as both Chevron and Total increase their commitment to the region.

Chevron have signed a deal whereby they agree to explore the Qara Dagh field in the south of the region as operator and it makes a third in Iraqi Kurdistan. Chevron is barred from working in non-Kurdish areas of Iraq since last year when it acquired acreage in July 2012.

Total has taken an 80% stake in the Baranan block which it too will operate, the company said that it always had the plan to increase its activity in the area after moving in last summer. Total has also been warned that its actions may lead to action from the Iraqi authorities who have threatened them with selling their stake in the Halfaya oilfield if they did not cancel their deals with Kurdistan, it doesn’t look like it’s too bothered though.


Two small things on Amec this morning, firstly they have won a contract from OMV Petrom in Romania which is bread and butter deal but another win for the company. Secondly there was a big article in the FT today in which the CEO of the Nuclear Decommissioning Authority suggested that he was ‘disappointed’ by the lack of progress and that some things had gone wrong. Amec is part of the US led consortium which have the contract to clean-up Sellafield and the NDA CEO has indicated that it could cancel the contract or just not to roll over the five-year contract.

Whilst we believe that progress has been slower than hoped for I would be surprised if the contract was changed at this stage. My recollection is that this was a 17 year contract with an initial 5 years followed by two more 5 year extensions and a 2 year end extension, changing things at this stage might cause more problems than it solved and I have a feeling that the consortiums relationship with the NDA isn’t too bad.

Amec 1 Year chart

Amec 1 Year chart

And finally…

Australia duly succumbed to Sri Lanka yesterday (look for the doziest run out of the captain) leaving the semi-finalists as India, South Africa, England and Sri Lanka, first semi tomorrow between England and South Africa at the Oval.

The Welsh Lions are taking on the ACT Brumbies today in the last warm-up match before the first test on Saturday, the Lions team is most definitely a midweek team with some players just off the plane………….

I am reminded that amongst this cornucopia of sport the Stanley Cup Final is also taking place between the Bruins and the Blackhawks. Last night in game 3 the Bruins triumphed to take a 2-1 lead in the series.

And Royal Ascot starts today with a minutes silence in honour of Sir Henry Cecil and continues with the Queen Anne stakes in which Frankel won with flying colours last year. This year it will be up to the American super horse, Animal Kingdom to blaze the trail and he is a warm favourite. South Africa has the favourite in the Kings Stand Stakes with Shea Shea and the St James’s Palace Stakes includes the Derby disappointment Dawn Approach taking on a fantastic field.

Kind regards