WTI $94.87 +1.50, Brent $104.74 -43c, B/WTI Diff – $9.87 -1.71, Natural Gas $3.51 +4c
Good morning
The Iran +6 meetings restart in Geneva today with a renewed optimism especially post the comments by Foreign Minister and Chief Nuclear Negotiator Zarif who said yesterday that “I think it is possible to reach an accord this week, but I can only speak for my country, not for the others”.
Now although we are probably more optimistic than most, having made this call almost a year ago, I do see enough positive signs to encourage me that negotiations are at least partially ready for action. Having said that I believe that this will happen step by step and as milestones are passed and boxes ticked, sanctions may be eased bit by bit.
Just to give an idea, I think that there is a potential 1.4m b/d headroom in Iranian production although realistically I only expect 1m b/d to be able to come on at the moment and that could be brought on in stages. If this were the case, as I suspect sanctions are unlikely to be lifted in one go, it would give Opec, but more realistically Saudi Arabia, a chance to think about quotas at their next meeting on the 4th December.
Oil Price
Brent remains under pressure and has broken down through the $106 resistance level as the chart shows. My trader on the floor tells me that Brent was offered all day yesterday with only one trading house buying on the other side. Longer out there are buyers in the dated contracts which are in contango but in the meantime Brent is flaky.
WTI actually firmed as the inventory figures showed some slightly odd splits, the analysts actually were very close on crude which rose by 1.6m barrels against a forecast of 1.7 but horribly out on gasoline which drew 3.8m b against expected 300,000 and distillates which drew 4.9m b against forecasts of 1.3m. Normally such a product drawdown indicates a pickup in demand but for me it could be to do with seasonal refinery turnarounds.
Halliburton
My confidence in Halliburton (and other major US service companies) has been rewarded by the announcement yesterday that the board has approved a 20% increase in the quarterly dividend. This comes on top of dividend increases of 39% so far this year and significant share repurchases which reflect the ‘growing confidence in the strength of the business outlook and a commitment to shareholder distributions…..’. The company also committed to the dividend pay-out ratio to be at least 15-20% of net income in the future. Still a major league bull of HAL.
Tullow Oil
Tullow has announced that it has restarted its operations in Kenya following recent protests which forced it to cease operations recently. Tullow has signed a memorandum of understanding with the Kenyan Minister of Energy whereby the company reaffirmed its commitment to local employment and its use of local contractors.
Lekoil
A small panic as agencies reported this morning that Lekoil had failed to meet the deadline to make a final payment on its proposed acquisition of a stake in the Aje field in Nigeria. The vendor, Panoro Energy are now technically entitled to walk away from the deal but I am reliably informed that this non-payment is on a technicality, probably to do with the recent Lekoil fundraising being in two stages to comply with UK company law. Expect the balance to be paid off shortly, maybe with a small charge for inconvenience added on.
Shell
It seems that Shell are to push ahead with drilling in the Arctic if a well-informed article in today’s FT is to be believed. Although this decision which is Shell’s “largest single exploration prospect” according to CFO Simon Henry was thought to be potentially under threat from the new CEO’s knife but the investment so far has been huge and although drilling has only been modest preparations are thought to be well underway for next summer.
Oyster Petroleum or should I say New Valiant……………………….
Oyster Petroleum, a new boy on the North Sea patch and funded by HitecVision, has appointed Rob Arnott as Chairman. The rest of the management is all ex Valiant etc and the only non-executive is the Senior Partner of HitecVision.
One to watch…………………………
And finally…
AP McCoy watch continues as he got his 3999th win yesterday and heads to Towcester today with two rides to make the magic 4,000 milestone
Another great performance by the Gooners as they beat Borussia Dortmund away from home last night, worrying that they played well and will be in fantastic form going to the Theatre of Dreams on Sunday. Elsewhere Chelsea won easy enough and Celtic lost to Ajax leaving them a veritable mountain to climb
England’s coach has made four changes for Saturdays game against the Pumas with an all new front row and Ben Foden replaces Marland Yarde who had a good game last week I thought. More on the rugby tomorrow………………
The cricket in Hobart was washed out so game will be shorter and less chance for other players to shine maybe giving Carberry some clear water…..
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