Natural Gas, Cuadrilla, Suncor Energy, Shell/Exxon – Hess/Newfield, BP, and North River Resources

WTI $107.57 +58c , Brent $109.80 -24c , B/WTI Diff – $2.23 -82c , Natural Gas $3.43 +8c

Good morning

It gets worse, a quiet day in the middle of the holiday season and a Friday into the bargain.

Markets spooked by better than expected US data which has worried investors about the likelihood of the Fed slowing down QE, shouldn’t have come as a surprise it’s all been in the blog after all.

Oil Price

A new Brent contract and after the run-up this week the new October contract has started quietly, as we said yesterday so far there a fewer buyers for longer dated crude at the moment although shorter physical is still a bit tight for all the usual reasons.

It’s worth noting also that in addition to other reasons for the recent price strength, particularly for Brent and Arab light crudes, the heat wave in Japan has led to an increase in demand for oil and LNG by the domestic power generation industry there.

A snippet on natural gas, where the weakness since the beginning of the month has been linked by some pundits in the US to the coming on-stream of EnCana’s Deep Panuke gas field offshore Nova Scotia. The field, which will reach peak production of around 300 million cubic feet of gas a day before long, has led to some price weakness in the local market.

Cuadrilla

Cuadrilla has slowed down its programme on advice from the police as a few more demonstrators have given Sussex as their weekend destination of choice but it’s only a slowdown. The only way to be able to get this debate straight is if the companies involved in the process come out with a few facts about drilling in general and fraccing in particular. Yesterday’s leader in the Times by Matt Ridley should be required reading as it dispels a lot of the falsehoods being peddled about the whole process.

Suncor Energy

Spotted yesterday that Warren Buffet has increased again his stake in Suncor, Canada’s biggest oil and gas producer. Having seen the recent performance (see chart) I fancy this stock to go up some more, watch this space.

Shell/Exxon- Hess/Newfield

Shell and Exxon are among potential bidders mentioned for the Asian assets of Hess and Newfield exploration. Interestingly my spies have been saying lately that there seems to be something big going down at Shell, it could be this but I am guessing it’s something bigger as usual channels of information are very tight-lipped, they could be considering an uber bid could they, BG or BP…………………………….?

BP

Whilst on the subject of our very own litigation play, they have come under big time pressure from Joe Rice, the negotiator of last years settlement on behalf of the 100,000 compensation claimants. Rice comments ” They’re attacking our entire judicial system. They’re attacking the judge. They’re attacking the claims administrator they helped appoint. They’re attacking the lawyers for representing people”. He told Reuters that ” In our view, BP views us as a colony that they own and can exploit. It’s outrageous”. In reply BP said that Rice’s claims were xenophobic. “We are defending our rights, shining alight on abuses, and keeping people informed” it said.

North River Resources

I don’t normally comment on mining stocks but after I was on the road with North River I got quite attracted to this very, very cheap stock. Below are the comments from our morning miner yesterday so if you do look at the mining sector look at North River and the 2 year chart below is very interesting.

The lead spot price is threatening US$1.00/lb for the third time this year, having briefly been at that level back in early June. LME inventories are falling as warrants are cancelled and physical stocks are drawn out, perhaps in preparation for manufacturing of lead-acid batteries prior to the winter driving season on top of a strong world auto sales environment over the past half year. Unlike some other metals, lead stocks haven’t built into large surplus inventories over the past few years. Mine closures have been implemented at several sites with the end of their economic reserve lives accelerated by the decline in price of other metals in the deposits which accompany the lead, like silver and copper.

The buoyancy in the lead price now should be constructive to junior base metal equities looking to bring mines back into development. AIM listed North River Resources comes to mind as one stock which should benefit. North River is bringing the historic Namib mine back into production with a mining licence expected in H1 2014 and production from tailings forecast to commence in Q4 2014.

And finally…

As the Premiership gets under way this weekend it doesn’t seem like the last season has finished yet. With many managerial changes and the top three players in the league all potentially up for grabs things will be unclear until 2nd September when the transfer window closes.

Harry Redknapp appears to have signed Scott Parker.

Mo Farah runs in the 5,000 metres final this afternoon, going for a unique double double after the Olympic success.

Pierce Bresnan has been ruled out for the rest of the season with a stress fracture of the lower back. His absence gives an opportunity for Chris Tremlett to play at his home ground, England will miss his batting but it should encourage the other batters to ‘get the lead out’ as my North American colleagues would say.

Nice to see that Conrad, formerly Lord Black, taking a $4.1m fine and a ban from acting as a director in a settlement with the US securities regulator according to Interactive Investor.