WTI $97.44 -1.07, Brent $109.7 +32c, Differential $12.26 +$1.39, NG $4.34 +10c


Oil price

Fairly quiet around the oil markets, a feeling that Washington is going to come up with an agreement is a small dampener for the commodity. The EIA inventory stats managed to fox Wall Streets finest again with a crude draw of 10.6m barrels against consensus of 3m.

The IEA monthly report provided a little comfort for the bulls as it raised its demand numbers for this year and next and said it saw ‘surging’ demand especially in the US. Now whilst the numbers do not lie, and November demand there was a recent record of over 20m b/d one swallow does not a summer make and I suspect that number is boosted a bit by refinery buying to export product as I mentioned the other day. It would be wise to remember that the domestic production figures are also rapidly increasing at the moment so I think ‘surging’ demand is a bit like irrational exuberance.



Chevron has announced its capex numbers for 2014 with the intention of spending a short $40bn next year, this exceeds its planned capex for this year which started at $38bn but after various unexpected costs will probably end up being $42bn.

Of the number,  $27.9bn is to be spent internationally and $7.9bn in the US, obviously there are huge development projects such as Gorgon and Wheatstone in Australia where 2014 will see peak spend. I thought one for the notebook, as they say, was to look at Chevrons international exploration budget of $3.2bn and see where the spend will be. Interestingly they say that apart from Australia the big areas are Kurdistan, Morocco and West Africa which is worth bearing in mind.


Wood Group

You will know that I have been getting increasingly nervous ahead of todays statement and the fact that it turned into a profit warning should have come as no surprise. Indeed the market, all of us that is, might have learned a bit from Petrofac as it is engineering which has caused the concern and the phrase ‘project delays, especially big projects’ from Wood today could and were said by Ayman Asfari last week. Indeed Wood said that having wound down two big contracts recently ‘new awards are smaller’.

So, engineering has put the spanner in the Wood works, so to speak with 2013 on target for 10-15% ebita growth as per previous guidance but hefty guiding down of 2014 expectations. With Western Canada weak we are told to expect this division to be 10-15% down next year.

In PSN things are much better and indeed the board are swift to point out that growth here will offset the disappointing engineering news. Here it is all about US shale which truly is a bonanza for service companies (nb Kentz acquisition) and the Elkhorn acquisition is already paying dividends, literally. talking about Kentz, when I saw the Valerus deal on Monday the first thing that came to mind is that Wood would have wanted it. Elsewhere in PSN the North Sea still exhibits good growth with another good book of contracts but the big negative is still Oman which the company still have not got to grips with.

GTS  is still a right royal pain although from late 1h 2014 it will be a shared pain with Siemens, after that any despatch to the Germans couldn’t come quick enough.

Overall not a brilliant statement from Wood which has lost its premium rating in the sector for good reasons. Todays conference call, not attended by the CEO interestingly, was downbeat and with, I assume, low single digit growth next year at best, there is little scope for optimism on the rating front. The strategic review under way at the moment has just changed a bit.

I have been expecting corporate activity in this sector over the next few months, who’s to say that having been the predator itself for a long time that Wood might just have turned into the prey?


And finally…

Last nights football was a mixed bag, Chelski won and their group, Galatasaray might be an opponent with Drogba back to haunt them. The Gooners could have won their group with a draw in Napoli but ended up nearly going out altogether losing 0-2, 3 would have been curtains. As for Celtic, they were,as the headline once said, atrocious.

Spurs play in the Boropa Cup tonight against Anzhi Makhachkala, not sure about the team but its a great score in scrabble.

The third Ashes test starts tomorrow at 2am, both Captains play in their 100th test, who will have happier memories?