Italy, BP and Egdon Resources

WTI $93.57 -1.05, Brent $105.15 -28c, B/WTI Diff – $11.58 +52c, Natural Gas $3.49 +4c

Good morning

It’s a another quiet day in paradise, when the most exciting thing to look forward to is the EIA inventory figure you know its boring……………

Oil Price

The oil price was lower yesterday, ending up at its lows on the Street, as crude tried to sustain a rally but couldn’t hold it. The Brent market has seen short covering which then leads to a bearish window as sellers come in and hit the bids. Physical problems like Libya are generally being shrugged off and the traders can’t wait for this contract to roll over but are a little unsure of the prospects of the new go.

The API inventory stats were actually a bit better than expected with crude coming in at a build of 871,000 barrels a bit more than half what the Wall Street combined brains predicted at 1.8m but they got the gasoline stock number completely wrong, stocks fell 4.3m barrels against consensus of 338,000. Tonight sees the EIA numbers so maybe there will be better news for WTI, certainly today has seen a rally of between 50c and a dollar so far.

Italy

Whatever happens in life or the markets that confuses you or makes you question ones reasoning you know that it is always possible to look at Italian politics to cheer you up and to know that there is someone out there prepared to commit energy hara-kiri…………..

After comments yesterday from Economic minister Flavio Zanonato that indicated Italy was about to change its ban on shale and shale gas extraction, the ministry then confounded the rumours by saying that Italy were ‘considering importing shale gas not producing it themselves’. Readers know my views that Italy is a difficult place to explore at the best of times and that companies operating there are driven mad by the interminable delays and hold-ups which make it almost impossible to deliver projects in the country.

Italy is dependent on imports for 84% of its overall energy needs and 90% of its natural gas requirements and sits on enough hydrocarbons to make it one of the richest countries in Europe, oh well, never mind……………………………

BP

– Follow the people who know……….

Have a look at the first chart and try to see if you think this is a break-out, it is certainly in most interesting territory and a decent stretch above this level of 483p would make you feel better about things. Interestingly I have been monitoring the buy back in the last few days and the BP treasury appear to be upping the ante and buying nearer 6m shares a day, about 50% higher than before the last announcement in which the board decided to increase distributions.

Even more interesting is that the BP Chairman’s wife sold 154,821 shares at 484p last Friday, almost at the recent top and the stock was probably sold back to the company who bought 5.7m shares that day……………………..

Then take a look at the 5 Year chart, if it really does break out then who knows where it might end up……………..?

Egdon Resources

Final results today from Egdon Resources, the onshore UK and France focused onshore E&P company. Revenues were up 28% to £3.34m and the loss for the period was cut from £2.89m to only £0.72m after an impairment charge of £0.56m. Egdon has a programme of wells to drill this year, mainly in the UK, which should increase production to a guided 200,000 b/d.

The story above and beyond these conventional wells is whether the unconventional acreage Egdon has can be unlocked and monetised and become a significant driver for the business. Whilst the various reports have indicated very large gas-in-place numbers we all know that only the drill bit will bring for sure numbers, Egdon intend to upgrade their unconventional resource assessment but for the moment the market, quite correctly is not including any value for such acreage.

Whilst there are not many plays out there the scarcity value has some credence but at the moment it is probably right to watch Egdon and see how they play the shale gas potential their modest portfolio represents.

And finally…

Its national Stress awareness day so please keep off my back………………..

Great news from down under as England tore into Australia A’s bowling ending the day on 318-0 with Alastair Cook the ‘boring out of form’ captain on 154no and Michael Carberry on 153no. It’s not known whether this knock can seal an opening spot for Carberry but Root may have to bat down the order as leaving out a player in form may be tricky…

The blue side of Manchester did better than the reds as the noisy neighbours progressed against Moscow, the reds managed to hit the beans twice, once from a penalty they should never have been awarded and once from open play, both by Van Persie, the bloke with the silly hair got sent off which is great as he can’t be picked for the next game.

Tonight Chelski have another easy game as their bye to the next round continues and the Gooners have a tricky game away at Borussia Dortmund, Celtic go to Ajax hoping to clean up…………….

AP McCoy can’t get to 4,000 winners today unless he gets a spare ride, he needs two winners and one of his two rides today has been withdrawn but I’m not going to stop watching……………………..

Will do the tennis when/if it gets exciting…………………

And I’m hearing fantastic things about David Yarrow’s latest book, Encounter, no wonder I haven’t been able to get hold of him lately…………………