WTI $108.15 +2.73 ; Brent $111.35 +2.68 ; B/WTI Diff – $3.20 n/c ; Natural Gas $3.73 n/c
Good afternoon, with apologies, been on the road most of the day.
Don’t fight the Fed was the cry from our guys this morning as Bernanke bottled it on tapering and delighted markets and commodity followers. Markets are not reading the bearish thoughts, more they think that the Fed is being too downbeat about the US economy and that their forecasts might be wide of the mark. Last night was further confirmation that market guidance is not Bernanke’s strong point.
Oil Price
The oil price unsurprisingly went better on the news, fuelled by a very positive inventory figure. Crude oil stocks fell by 4.4m barrels against consensus analysts’ expectations of 1.2m, another great effort there then…
However oil has moved sharply downwards during the day after a speech by Iranian President Hassan Rohani in which he vowed his Government would ‘never develop nuclear weapons’. He added that his country is not seeking war with any country which has had the effect of reducing tension in the region, and as a side-effect taken almost all the two dollars or so off the oil price that was gained last night……………………..
Chevron
Chevron has won the latest chapter of its environmental case in Ecuador as an International Arbitration Tribunal determined that the company was not liable in the Lago Agrio pollution claim.
Genel
Announced yesterday afternoon, the market almost missed the fact that Genel said that it had signed a Gas Sales and Purchase Agreement, along with DNO, with the Kurdistan Regional Government. This is the first commercial gas sales agreement signed in Kurdistan and is as Tony Hayward says “a significant milestone in the development of the gas industry in the country”.
The deal is to supply gas from the Summail field on its Dohuk licence, starting at around 100 mcf/d up to 1 TCF on the PSC.
Gulf Keystone Petroleum
In what was meant to be a dull set of results, GKP managed to deliver everything as expected, however one or two things have left the market feeling that for the very short term at least, pressures are likely to be downwards.
A temporary shut-in of production was an initial worry although the company did go to some lengths to say that flow would resume ‘very shortly’. Another worry from some maybe shorter-sighted analysts is how the CPR is going to look when it is published alongside the documentation for the full listing. With the geology of Shaikan as it is there is a feeling from those more bearish that there will be more possible than probable or even proven in the report.
Finally the CFO was not going to be drawn on a 2014 capex budget, merely saying that expenditure would not exceed revenues and that although he might raise debt, equity is not an option.
Taking a look at the chart, the fall today is probably also reflecting the extent of the bull-run that the shares have been in since May and including the court case victory recently. I can’t see that this set of figures is going to shake out any devout followers and whilst traders may desert the ship short-term my feel is that they will return. With a target price of 480p our long term buy recommendation remains intact despite interim concerns and with production picking up and the full listing on the horizon the future is still very much intact.
And finally…
Durham won the cricket County Championship today with a win over Nottinghamshire.
The Champions League threw up its first surprise last night as Chelski were beaten 2-1 at home by Basel, but I suppose you can’t make an omelette without breaking eggs……………………
And European football chiefs agreed that the 2022 World Cup will have to be played in the winter, Greg Dyke, FA Chairman is on record as agreeing but then since he didn’t even turn-up at the last England qualifying game quite how he should have a view is anyone’s guess……………..
In the Boropa Cup tonight, Tottenham are joined by Swansea and Wigan, Spurs play Tromso, the Swans have a hard tie in Valencia and Wigan play Zulte-Waregem who I don’t know but gets you a lot of points in scrabble…………….
And for the older generation of fight fans it was sad to see the death of Ken Norton who was made famous by beating Muhammad Ali back in 1973.
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