WTI $97.49 -74c, Brent $106.40 -$1.55, Differential $8.91 -76c, NG $4.94 -7c
The oil price is under a bit of pressure at the moment admittedly on quite low volumes, indeed WTI is faring better than Brent which has fallen below $106 this morning. Support for Brent lies just over $106 so if it doesn’t hold here the charts say $103.04 is the next stop. For WTI the chart looks much better and unless it falls through $95.72 it should be ok, if it does $91.60 is its next level. Accordingly and as expected, the differential is falling away and might get back to the $5 target although it usually fails that for one reason or another.
Causing the grief were the Chinese manufacturing numbers which were as low as expected at a six month nadir. Emerging markets trauma is also not helping and prices for oil in local and falling currencies are very high.
Iraq talk a good story and one UK journo got sucked in last week with an article about them becoming the next Saudi and producing 9m b/d. For interest Iraq are struggling a bit at the moment and January production fell to 2.23m b/d not the platform for an assault on records.
The Chevron figures on Friday were not good but hey, after all the profit warnings they were hardly going to blow us all away. In fact although the market took 4% off the stock I think that the statement was pretty positive regarding production growth and with such a strong financial position has the scope to change direction better than most. Their comments about the Vaca Muerta shale were most interesting, if that works then there are a number of ways to play it. (maybe Andes Energia?) The company also pointed out that this would be the peak year in the Gorgon spend (see Kentz below) and that projects such as Kitimat in Canada and two big developments in the Gulf of Mexico were going well. The only thing that worries me about Chevron is the chart, I want it back over $113 sharpish.
Tomorrow sees results from these two but BG has rather jumped the gun with its profit warning last week. Enough has been said about it but the bounce has been less than that of a dead cat and its going to be a long haul, as I said last week, to get any shareholder value even from here, the for sale sign has to be put up. I don’t mind if it disguises itself as a strategic review as is often the case. For BP the figures are relatively meaningless as they are no longer that important, certainly as an investment that is. We can assume that things are going about as badly as other companies in the sector and whilst the shares have downside protection afforded by the multi billion dollar buy back the only other impact will come from the law. BP is fighting in the US courts on a number of levels and only a settlement is likely to cheer the marketplace in the meantime paranoia about being victimised still hangs over the company like a Shakespearian ghost.
Another day, another contract, or on this occasion two for Kentz who have announced wins for the Ma’aden Alcoa JV for work on the Aluminium Automotive sheet project at Ras Al Khair in Saudi Arabia. Whilst the $18m value is modest it is more repeat business and especially adding to the recent tally in the Middle East. Looking at the Chevron statement in some detail I notice that not only is this year the peak expenditure but it looks like there is a fair bit more in the way of orders to be handed out, watch this space for Kentz who are very good at increasing work when they are on a good contract such as this. Kentz remains my favourite stock in the services sector and as I have said, despite the rise the rating is not demanding.
Mixed news on drilling in Colombia for Amerisur today, the Ave -1 well on the Fenix block was looking for a reservoir below the Esmeraldas find in the Mugrosa formation. Unfortunately there was not a discovery there but if I read the announcement correctly then there was good news in that the Esmeraldas yielded a modest continuation discovery itself.
Defence overcame offense last night as the Seattle Seahawks won their first ever Super Bowl with a rout of the Denver Broncos. Peyton Manning threw two interceptions and never got into the game after conceding a safety 12 seconds into the game. Percy Harvin made an incredible 87 yard kick-off return to start the second half and make it 27-0. At 43-8, the final score still did not really reflect the dominance of Seattle.
At home in the footy the Gooners picked off Pulis’s Eagles which don’t soar any more as he goes about the business of removing any flair and Man Useless lost at Stoke City which just about says it all. A fine win by the happy Hammers was diluted by others in the drop zone winning as well. The big match, probably of the whole season is tonight as the noisy neighbours entertain the chosen one and the bands of hand-picked mercenaries go head to head, maybe time for a bit of 19th century football Jose?
The 6 Nations rugby got under way and England could have started with a dream win in Paris but for, having got back into a dominant position substituting unnecessarily some of the best players and losing momentum. Ireland v Wales might be the key fixture as someone will beat the French I suspect and ticket for Twickenham will be at a premium.
A fantastic stat was put to me this morning, if the England cricket team had been playing for the same points system in Australia in the winter as the women were they would have lost 44-2 and probably lucky to get two!
And Labour peers whinging about cronyism in public jobs, I didn’t hear them squealing when Tony Bliar, Gordon Brown and the coalition put them there in the first place…