Ofgem, Tullow/Africa Oil, and round-up Plexus, Soco and Devon

WTI $95.25 +1.92; Brent $110.59 +2.27 ; B/WTI Diff – $15.34 +41c ; Natural Gas $3.70 +3c

Good morning

The oil price rose sharply last night as it looked like the P5+1 talks were breaking up, the sticking point is the key, sensitive point, regarding enriching uranium and Iran’s view that they have a right to make and store it for peaceful purposes. Also in Washington our old friend Harry Reid, Senate majority leader, has decided that rather than possible peace in the Middle East he would like more sanctions on Iran……

Janet Yellen won the vote on her appointment at the Senate Banking Committee 14-8 with one democrat and seven republicans spoiling the party but clear passage through the Senate is now expected.

Oil Price

As already mentioned above the Geneva talks spurred the oil price last night but this morning has seen selling in the market, one big trader decided that the recent rise was all gong and no dinner and filled in the bids first thing this morning. Also remember the Chinese buying I talked about earlier in the week, well they came in, taking their $2 a barrel profit this morning as well.

Finally, with Thanksgiving next week watch out for a very quiet market with the pressure from here on the downside.

Gas price

It is worth noting that the inventory stats showed a stock draw this week, the first of the winter, of 45 BCF, this follows the first cold snap and from now on gas inventories will be watched carefully.

Ofgem/Electricity distribution companies

Proving that it has teeth and prepared to use them, Ofgem has failed five out of six companies for their plans to cut costs for consumers. The only company to pass was Western Power Distribution whose customers are facing a cut in their electricity bills in 2015. These are the companies that own and operate Britain’s electricity network and have been submitting plans for price control in the 2015-2023 period.

Tullow/Africa Oil

It’s a good day for the above as the Agete-1 exploration well has discovered and sampled moveable oil with an estimated 100m of net oil pay in good quality sandstone reservoirs. The discovery is the first of a chain of multiple rift basins in the region and interestingly, de-risks a number of the follow-on prospects located to the north. Also the discovery is on trend with the Twiga South, Ekales and Ngamia oil discoveries which can only help add to the existing resource base.

For both these companies this is good news, Africa oil are particularly well placed, they have recently raised $450m (book size $900m+) and have at least six rigs full time across Kenya and Ethiopia for the foreseeable future whilst Tullow will be targeting an entire chain of rift basins.

Regarding recommendations, these are both stocks I like although my long term bull stance on Tullow has been severely tested in the last year or two but I am hanging in there for the time being. For Africa Oil it is much easier, ever since I met Keith Hill I have been of the view that the company is a cracking investment and despite the recent run up I remain a very solid supporter.

Round up

Having been away from my desk a fair bit this week a few things slipped by, such as, Plexus who announced an extended contract with Centrica in the North Sea, Soco who announced an upbeat IMS, Devon Energy who spent $6bn on Eagle Ford Assets from Geosouthern and seemed to be getting a pretty good deal finally, Xcite Energy found out that Statoil withdrew from Bressay, Bentleys twin field to the north. Dougie Youngson, a true Xcite expert said that “this removes Statoil’s interest in Xcite and will probably put off other parties, no need to own this stock any time soon”.

And finally…

After a feeble display with the bat England are poised to hand over the first test to the Aussies, you know what they say, pride comes before a fall, maybe if they hadn’t got so up themselves like sending 350 page menu requests to every venue they attended…………..

A really interesting return to the Premier League this weekend with some cracking fixtures. The Merseyside derby kicks off on BT Sport tomorrow as the Hubcap Stealers go to Goodison, a top of the table clash as Southampton play the Gooners and a real cracker could be at Upton Park as the Irons welcome Chelski. Sunday sees the noisy neighbours host Spurs and Man Utd go to Cardiff, both on Sky.

The Brazilian Grand Prix finishes the F1 season and next year should be better. Hopefully the brat will realise that when the bigger boys in the class have cars as fast as his it won’t be such a procession……………..

Rugby matches this weekend continue to be good but may not be quite as exceptional as last week’s epic battle between England and the All Blacks. Wales take on Tonga tonight, Italy v Argentina, Scotland v Australia and France v South Africa are all tomorrow the last of those might be quite brutal, as may the second one if Scotland play like last week. Ireland take on the All Blacks on Sunday and at the risk of upsetting my friend John Mennis I’m afraid that much work needs to be done by the Irish after their last display……………………..

Finally a cracking card at Haydock tomorrow is headed by the Betfair Chase which includes a number of fantastic horses that are likely to be challenging for the biggest chases later in the Season. Bobsworth takes on Silviniaco Conti, Cue Card, Dynaste and Tidal Bay and will be a great contest.