WTI $93.96 -1.48, Brent $106.89 -89c, Differential $12.93 +59c, NG $4.30 -2c
I was up early this morning to head to CNBC for the oil commodities chat on the European Squawk Box, apart from George Soros who appears to be a bear of China I think that most of us are seeing GDP growth in most markets around the world. Although I am in print as saying that there might be $10 downside ( half of which has happened in the last week!) I am confident that good demand will take up most of the extra supply that is lurking but by no means guaranteed. Unlike Soros, I believe that China will provide solid growth even if not at the levels of some over-optimistic levels and that growth of around 7.5% will be more than enough to consume plenty of hydrocarbons. Take a look at the automobile sales figures just announced, this is yet more evidence that whilst China may take some time to reach American driving levels demand aint going away anytime soon. The services sector data recently out did indeed show growth slowing in December but all is relative and these numbers themselves somewhat immaterial.
The other downward pressure, particularly on Brent, has been the eventual arrival of Libyan crude as the El Sharara field came back on-stream at the weekend. Whilst this is good for Libya it is early days and consistent production from here is far from guaranteed. The field, which has been producing as little as 60/- b/d has a short-term capacity of 340/- b/d although it will take a few days to get up to that level.
The USA has been in the throes of a very cold snap in the last few days and whilst it is sometimes easy to think that the natural gas price will rocket that is not always the case. Firstly, last weeks inventory figures showed a withdrawal of 97 BCF against economists forecasts of 116 BCF ( maybe the oil forecasters took over during the holidays) meaning that stocks were high enough, also whilst it is this cold ironically in some cases especially at holiday times, gas demand actually falls.
A good contract this morning from Amec, a press release rather than a market announcement which normally means that it is not ‘meaningful’ but a 6 year deal with CNOOC/Nexen in the North Sea is not to be sneezed at. It is a reimbursable contract with two 2 year extension options and covers EPC services for all their North Sea assets which is good for Amec
The market has been watching Circle with some interest in the last few months to see what Prof Green would do and who would become the new Chairman. Today it is announced that Steve Jenkins, formerly of Nautical Petroleum has agreed to take on the job. This is extremely good news for Circle who have a very busy year coming up in Morocco, Tunisia, Oman and Egypt and Steve has the ability and experience to ensure that focus on the knitting is well and truly stuck to. Good work from the non-execs here which include more than a usual smattering of, in this case, silver scribblers!!
I don’t normally write about specific wells being spudded but I have noticed that AE, carried by YPF has started drilling on Las Varillas x-1 which is to evaluate the unconventional potential of the possibly huge Vaca Muerta shale prospect in Argentina. I have seen the company lately and as readers know I have been pushing one or two companies such as President operating in that country ( and Paraguay for President) and feel opportunities are realistically high. It wont be easy as the political situation in the country while improving rapidly, suffers from regular bouts of what can only be described as Falklands-itis which will stifle inward investment into the country but Andes is worth keeping an eye on.
A slightly confusing announcement from Hawk this morning which has knocked around 7% off the share price, although it has had a pretty good run, doubling last year. The production figures just drifted a bit in the last quarter and the big sky 12-11 and John Craig 1-2 wells commenced production in December although, mysteriously they were not separated out. Cynics might say that rather like for a while it is the non Jolly Ranch prospects that are again carrying the flag but who am I to comment? Production last year at 1/- b/d is ten times the year before and there are three wells in progress so the market will be keenly awaiting them, meantime the stock is probably correctly taking a breather awaiting further news.
With the FA Cup providing the excitement at the weekend the big clubs all went through with Spurs, Man Who and the Hammers deciding to concentrate on the league.. The next rounds draw has kept all the remaining big clubs apart as well which is very boring.
In the cricket, England were yet again totally awful and if you lead from the top you have to set an example, not so in this team. The big plusses have been Stokes and Broad but not much else and no confidence and no mental toughness has been exhibited, never has Geoffrey Boycott been so vindicated, “they’re gone, they’re gone”, at least Paul ‘Nobby’ Downton is on the case…
The first weekend of playoff fixtures saw the 49ers win against the Packers at Lambeau Field in temperatures that reached -15 degrees. Phil Dawson kicked a 33 yard field goal as time expired to snatch victory 23-20. They will go to Carolina next week.
Philip Rivers led the San Diego Chargers as they defeated the Bengals 27-10 although they face a tough task next week as they face Peyton Manning and the Broncos in Denver.
Saturday evening saw an incredible game as Colts quarterback Andrew Luck dragged his team back from a 28 point deficit in the 3rd quarter to edge out the Kansas City Chiefs 44-45. It was the second biggest comeback in playoff history. They will travel to New England next week.
In the late game on Saturday, the Saints beat the Eagles in Philadelphia thanks to a late Shayne Graham field goal. They will travel to NFC West Champions the Seahawks on Saturday.
And last but by no means least, by popular demand…. The Oklahoma Sooners defeated Alabama in the 80th Sugar Bowl. Sooners quarterback Trevor Knight threw for 348 yards and four touchdowns.
And farewell to Eusebio who was for someone of my age a proper footballer of the old school and lit up the 66 World Cup and nearly spoiled the party at Wembley in 1968 as Man as you used to know them U, won the European Cup as it used to be called…