WTI $101.44 -31c, Brent $109.11 -16c, Diff $7.67 +53c, NG $4.73 -1c
Its a short sharp blog today, partly as I am out on the road this morning, I am having a wisdom tooth out this afternoon and to be honest there is not much news around!
The oil price should, technically be falling, as there is plenty of the stuff around but the Kremlin is ensuring that geo-political factors (a phrase used normally when all else fails) keep supply worries in the markets eye. The EIA inventory stats came out last night and showed a build of 3.5m barrels which was almost spot on for the analysts who had a consensus of 2.3m and were thus only 52% out. The build meant that crude stocks in the states were 397.7m barrels which is the highest since records began in 1982. Now this means that at some stage the US may have to grasp the mettle and agree to lifting the ban on exporting crude oil although it may take some doing. You see, it isn’t as easy as saying why don’t we stop importing crude and rely on our own, as many/most US refineries cant actually run on domestic crude thus creating the stockpile. Elsewhere, Reuters is carrying a story that Iraq exports have, up until yesterday, been at 2.55m b/d in April a number I think is about right and with Libya starting to crank up again the market is, as I said, well supplied.
Trap oil should get Alex Salmond on the board because if it is that easy to get people to invest in the North Sea then he would solve a number of problems for them and other companies who are trying to get investors in to the process. Trap have results this morning and report on a difficult year but not without its successes. Main asset Athena is producing a ‘strong’ revenue stream and in the year they sold assets to IGas and farmed-out the Valleys to Total leaving them carried, with possibilities for the Alfa prospect which might help unlock Romeo into the bargain. Trap has an interesting mix of assets and as I said, if only they could persuade potential investors as to the upside on a couple of them they would be looking very attractive. In my recent speech at Appex Global I said that the farm-out as a fund raising vehicle is often under praised as a good farm-out can make your equity look very cheap, this would undoubtedly be the case for Trap who have at least a couple of interesting prospects, one for the watch list although with Trap, anything could happen.
A nice bounce from Salamander yesterday as the sale by Hess of adjacent acreage to PTTE for $1bn stamps a better than expected valuation on Salamander’s own acreage. Salamander has been a poor investment in the last year, almost exactly halving in price, although in that respect it is not alone in the sector but I still find it difficult to make a big buy case for the shares. The Hess deal will help by adding to the portfolio value but until I see the company again I cant see much progress being made.
I see that Weir Group picked up a bit too as results and comments from Nabors and FMC Technologies followed those others from the US service companies suggesting that the US onshore market is very strong at the moment which is always good for Weir which I still like a lot, Finns or no Finns.
Iofina’s share price fall makes Salamanders look positively dreamy as it has come down from 220p to 20p in a year. Yesterday was another profit warning day as guidance was brought down by 50+% due to ‘a shortage of brine water’, Iofina, once the darling of the market, has nowhere to go at the moment so its still a big avoid from me.
And Tower, or should I say Repsol, has spudded the Welwitschia-1 well offshore Namibia so now the travelling has started and we wait with interest for news from this key well.
Real Madrid really did show Mourinho how to park the bus and play 19th century football as they gave Bayern 72% of the possession last night but amazingly scored and Bayern didn’t despite many chances and a decent shout for a pen at the end. Next Tuesday and less so Wednesday are going to be quite fun…
In the County Championship, Division 2, Captain Cook took another easy century on a flat Oval track so his preparation is almost complete, rather worryingly, Nick Compton also scored a ton, we can do without him getting back into selectors thoughts…
With Bernie Ecclestone starting his bribery trial in Munich today F1 holds its breath as there’s nobody else back minding the shop.
And St Antony has the Barclays AGM today where they try and explain the grotesque pay packages they award to people who’s jobs they don’t even understand!