WTI $104.35 -6c, Brent $109.52 -47c, Diff $5.17 -41c, NG $4.53 -11c
Its a good thing that there are a few things going on in the oil market because the company news is very thin, I have been hoping that more announcements would come out but no luck as yet!
Firstly, the Opec summer meeting starts today in Vienna but as I have been saying I am not expecting anything but a roll-over of existing quotas. One could look at potential supply glitches such as Iran coming back post sanctions (they insist that they could add circa 700/- b/d straight away) but I think that might be later in the summer and of course Libya has capacity to increase but again, unlikely short-term. I will address the US below but overall with a bit of export shortfall from the Saudis I think there is no reason for Opec to change anything.
To the US where there are a number of news items around. Firstly as already mentioned, the hurricane season has started and the prediction from the NOAA ( National Oceanographic and Atmospheric Administration) is that with a 70% probability they expect between now and November 8-13 named storms of which 3-6 will strengthen to hurricanes and 1-2 will be ‘major’. The NOAA and the EIA have marvellous monitoring of the hurricane season with maps and so on and are worth looking at.
The EIA have also published their monthly report for May, in which they estimate US crude production of 8.4m b/d, the highest since March 1988. 2014 is expected to average that number and in 2015 they expect production to be 9.3m b/d the highest since 1972, time to lift the export ban I would say…In natural gas the cold winter has taken its toll and May inventories at 1.5 TCF are 33% below this time last year and 37% below the five year average. Price expectations for this year are $4.74 and for 2015 are $4.49.
The oil price drifted a touch yesterday but has recovered this morning, the API stats confounded the scribblers again as crude stocks built by 1.5m barrels against a forecast draw (sign wrong guys) and gasoline stocks fell by 441/- barrels against a guess of a rise of 843/- so sign wrong there too. The trend in gasoline stocks is indicating that demand year on year is quite healthy but as I always say we need a bit more data to get too excited.
American Energy Partners
Or Chesapeake 2 as some people call it, as the redoubtable Aubrey McClendon gets into his stride announcing that he is to buy shale oil and gas assets for $4.25bn. Despite the right royal mess he made of Chesapeake and his support for the private jet industry it seems that there are plenty of loyal backers out there as there are people queuing up to sell him some of their assets.
The may update from Nighthawk is out today and shows gross production of 2,141 b/d with a record in their of 2,326 b/d in the month. With monthly revenues now exceeding $5m for the first time the refinancing appears to be nearly complete and the firm expects all to be tied up by the end of the month. The stock is down this morning but so are most stocks, it is worth remembering that the old rule of thumb that over 2/- b/d of production starts to attract attention and the revenues are beginning to become material and with plenty of prospects ahead of them Nighthawk looks quite appealing.
Don’t panic, its only a rights issue! Lamprell stock is down 14% this morning but only as the nil paid rights hit the street, in the old days one would have been working out all sorts of ways to trade the rights and whether they or the fully paid were best value, today its simpler, either way the stock looks cheap. I saw the company a couple of weeks ago and I am extremely confident that they are entering a very exciting time, the addressable market just got a whole lot bigger and they are well set to participate in significant growth, now fully re-funded.
Interesting to note that Carol Law, a director, bought 1m shares yesterday at 6p, now its not news to shake the timbers but director buying is always worth watching and whilst its not huge it makes a point. Fastnet will wait a while before drilling offshore Morocco again not least due to the massive changes going on at Kosmos in the new Inglis era but I still see long term value here and would keep it on the watch list.
I did TipTV yesterday which is always interesting and I had two interrogators, Zak Mir joining the moose in the studio. All the interviews are up on the blog (www.malcysblog.com) so if you want to know my views on Chariot, Plexus, Excite or Bowleven don’t hesitate to check them out. My comments on the latter have caused quite a stir, not least as Bowleven has been a sell with me since it was 400p. (today it is 38p) My view is that the main reason for the price weakness has been the huge delay in getting things under way and the need for further funding mid-process. Now I’m not saying that is sorted in a flash but the news recently about ministerial approval might just be the light at the end of the tunnel for BLVN. Also the chart looks very interesting, its only a straw but might be worth clutching at, recent moves look to me like you could at the very least trade this back up to 44p and if it breaks that then 63p is the next level, what I used to call a get out of jail free card, watch this space…PS Zak Mir who has forgotten more than I will ever know about charts agrees!!
The world Cup is almost upon us so the mandatory injuries are being announced, last night Danny Welbeck limped out of training and may not be available for the Italy game on Saturday, some people might say that is good news, I couldn’t possibly comment…
At Queen’s Club both the Brits got ko’d and are leaving the way open for Muzza who is on second this afternoon.
Sir Ben Ainslie launched Britain’s America’s Cup mission yesterday which is fantastic but who’s going to fund it, have we got anyone rich enough or mad enough to do such a thing, now into contacts under B for Branson for you Ben..
Hibs have sacked Terry Butcher, now the only thing I would ask is what took them so long and why was he allowed to sack some of the players before he was shown the door?
The draw for the European Rugby Champions Cup was made yesterday, it only seems minutes since its predecessor finished but Sarries and the Saints have got very hard groups…
In the NBA Championship Finals… The Spurs have taken a 2-1 lead after winning in Miami. The Heat had won 11 consecutive post season games at home before last night. Kawhi Leonard made the difference for the Spurs with 29 points. They return to Miami tomorrow.