WTI $99.74 -$1.84, Brent $105.62 -$2.14, Diff $5.88 -30c, NG $4.28 -9c
After holding relatively steady for some days the oil price got the jitters yesterday for a number of reasons. Firstly as I mentioned, the situation in Libya looks like it might finally be beginning to be resolved, at least for the time being. The rebels confirmed yesterday that they have come to an agreement with the Government and will open up the three ports that they had been blockading. If this happens straight away it means that exports can resume and should be able to add between 500/- and 600/- b/d almost immediately. Given that Libya had got down to about 100/- b/d it is a meaningful amount of quality crude onto the market.
The market also got spooked by the API inventory stats which more than spooked the analysts who surpassed themselves even by their own incompetent standards. Expecting a stock build of 2.5m barrels the number turned out to be a draw of 5.8m barrels, not only got the number way wrong but the sign was wrong too. Expect some rise after the markets digest that but may wait until the EIA numbers this afternoon for confirmation. Elsewhere, Chinese factory data disappointed a bit but Anthony Bolton’s comments on their ‘economy with the actualite’ were probably bigger news.
Made a brief comment about Weir yesterday but then it was only a rumour, actually it was a great scoop by The Times who appear to have this one dead on. The indication is that an all share deal with Metso is pretty likely especially after the Weir price didn’t tank after the news broke, interesting given that Weir is one of the most shorted stocks and any excuse for spivvy traders and all that…On the face of it the deal makes reasonable sense especially if you believe that mining is going to pick up anytime soon as this does increase that sectors share of revenues. The businesses are complementary and will add automation technology to the Weir offering but lets wait now until something concrete happens and hopefully we get called in for a full briefing by the management.
The drip, drip, drip of contract awards continues from Wood who today announce that their contract with Exxon in Australia is to be extended after something like 17 years in place. The contract is for onshore facilities activities and offshore work in the Bass Strait to continue from existing specifications.
Caza Oil & Gas
No specific news but I was just listening to a very interesting interview with Caza CEO Mike Ford on Proactive Investors following the Marathon Road well announcement last week. When I looked at the announcement last week I was astonished that the stock did its usual trick of rallying a bit before falling again and still this defeats me. The bottom line is that Caza are in a well that is flowing over 2/- b/d and still doing so a week after first oil, there are as Mike says, not many onshore wells like that around at the moment. The placement of the well sets up something like 314 viable drilling locations and that’s just in the Bone Springs. Caza will be keeping one rig busy on their own operated wells and also participating in a number of non-operated wells into the bargain. The share price is therefore a bit of a mystery although there are many share prices in the same boat I know, but how many of them are in this sort of situation? I have heard stories of major holders selling and all sorts but if Caza grows in line with drilling success and increasing cash flow then the shares really are option money. See the link below for Mike Ford interview last night.
Tullow has announced this morning that it is issuing $500m worth of senior notes to pay down debt….
So, to the Champions League where Man Who ‘enjoyed’ (compared to pre-match expectations..) their night in the floodlights free from the company of Noisy Neighbours, HubCap Stealers and Gooners with a creditable 1-1 against the current champions. The second leg promises to be a different matter I suspect even with some suspensions. An interesting game at Barca as they were held to a draw, Athletico with a wonder goal from Diego, that return may not be so predictable. Chelski go to PSG tonight where the home team record is good but with the Prem maybe slipping from them, this tie is crucial and Chelski should win over two legs…
Back to my favourite topic in football, managerial failures being given highly paid jobs five minutes after the tin tack. Stuart Pearce appears to be about to sign a lucrative contract with Forest…….
And hats off to Charlton Athletic who procured a win last night and may yet escape the drop…(Good luck Graham!)
The Tiger has withdrawn from the Masters next week which is a blow, especially if Mickelson drops out too, but the magic of Augusta remains whatever.
And watching the West Indies play T20 yesterday made me think what a bunch of chumps we are, thinking what our attitude to the game is like. Dead and buried at 82-5 after 15 over the Windies scored 166 in 20 and destroyed Pakistan to go through to the next round!