WTI $103.60 +$1.04, Brent $107.98 +31c, Diff $4.38, NG $4.59 +5c
WTI is the best performer at the moment and the discount to Brent is now below 5 dollars, historically a level at which one reverses the position and although it may narrow a bit more I cant see it going to a premium. The reason for all this is the inventory situation and on this occasion it is the product, not the crude position that is most important. Whilst crude built by 4m barrels vs forecasts of 1.3m, gasoline stocks fell by 5.2m barrels hugely exceeding the consensus of a 729/- barrel drop. It is a very important day for the blog as I am going to mention the driving season for the first time, new readers will know that I can get rather over-excited about this but it is very important! This year Memorial Day, which marks the official start to the driving season, occurs on the 26th of May and with only six weeks to go until then, the market has already seen big draws in gasoline stocks which, as I mentioned yesterday, are making people think that the economy is picking up. This does not entirely concur with the Fed as the FOMC minutes yesterday were a bit more dovish than previously indicated and rate rise predictions have been put back a bit.
Elsewhere, in Europe the vexed subject of EU energy policy has arisen with Herman Van Rumpy Pumpy saying that ‘a whole new way to do energy business’ is needed but there are problems whichever way he looks. Germany for example, will not reconsider changing its mind on the closing of nuclear power for generation so they don’t deserve any sympathy and will be hostage to the Russians for ever and a day. This is because they have, apparently, decided that coal and wind power will be their saviour which is a bit like saying that they can make petrol out of water, Angela the alchemist arises…
At long last my continued faith in Faroe has started to pay dividends as two announcements this morning are good news for the company. The best one is the Pil exploration well drill stem test result which shows a flow of 6.710 b/d a day of 37risks the channel system and goes into a number of other areas and as such is good news. The bit I don’t quite get is that as it doesn’t appear to be in communication with Rodrigues it therefore becomes a separate and much smaller discovery which I’m not sure is commercial in its own right. Looking forward to a meeting with the company which I am about to get in the diary. Either way with Butch East drilling at the moment I am happy to remain positive on the company at least for the time being!
Chevron announced yesterday that its 1st quarter numbers would fall in comparison with 4q 2013 figures due to impairments and FX losses but the underlying number would be comparable with that quarter which the market seemed happy with.
Cairn has announced some board changes today which have hardly boosted confidence in the company, particularly after recent problems it has experienced. Apparently for ‘long term succession planning reasons’ the deputy CEO and the CFO are leaving almost immediately and an inexperienced former investment banker takes over as CFO. Mike Watts is highly regarded and it seems beyond belief that at this ‘delicate’ stage in the company’s current process that he and Jann should go so quickly, it leaves only two executive Directors one of whom is new to the company and as an FD and therefore effectively only Simon Thomson is running the ship. Whilst I like Simon and respect his abilities, if I was a shareholder I would consider this position the be highly inappropriate and have to question the corporate governance with immediate effect. I have misjudged this one badly, when the stock got down to 200p I thought that for a good quality, cashed up play with a well assembled portfolio the selling had been overdone but I was wrong and although it bounced off the 150p level it now hovers around 170p. Today’s announcement, unless the company can convince me otherwise, puts a huge caveat over its investment quality status and whilst it may well bounce it is in my view a far riskier play than it was before it removed two of its senior and experienced directors leaving such a large company in the hands of just one man. Ironically, Cairn’s loss is Wood Group’s gain as Jann has miraculously found a non-exec position at Wood within minutes of her leaving Cairn was announced…
Seplat has done exactly what it said it would do when it announced that it would come to the London market and raised $500m at 210p giving it a market cap of $1.9bn. This is at the bottom end of expectations but with the market in its current state it should be considered a big achievement to get the deal away at all. Seplat is a Niger Delta play in Nigeria and has a 45% interest in OML’s 04,38 and 41 and although the head of investment banking, Africa at Citigroup Miguel Azevedo, ‘does not think it was the radar screen of institutional investors’ his ignorance is not shared by others in the London market who supported such a big raise.
Although it was entirely predictable, Man Who managed to commit football Hara-Kiri by still celebrating a goal against Bayern when the German blighters nipped up the other end and scored themselves, it seems that the Moyes is bit by bit replacing the old United spirit with the losing one he generated at Everton for whom he won nothing. It means that with Athletico beating Barca, Chelski are in the last four with Bayern and the two Madrid sides which will make for a fun draw tomorrow.
Elsewhere in footie lot’s for the ‘you couldn’t make it up stakes’ as the Hull City Tigers, after the fans eventually voted on favour of the name change, have been banned from such a name by the FA and Leeds United are apparently going to be owned by the Godfather with a questionable record on paying taxes…
And Lord Myners has resigned from the board of the Co-Operative who are obviously ‘good with food’ but little else. Myners was the last link between the Co-Op and respectability and now this basket case will probably have to grovel to raise more money, talking of Hara-Kiri….