WTI $102.29 -$1.11, Brent $108.28 -66c, Diff $5.99 +45c, NG $4.17 -3c
The drift in oil prices continues as short term stability has the upper hand over uncertainty with exports from Iraq being maintained and added to by Libyan crude slowly reaching markets. The surprising thing in a way is that the drift has been just that, it could have been much worse but the technical position is looking pretty dodgy, Brent is trading below its 200 day WMA which is distinctly bearish and really must hold above $108 to stabilise. Any panic by short term traders now would be very worrying as there is a lot of retail punting money in this commodity just now. The inventory stats didn’t help much, admittedly crude stocks fell 2.4m barrels but gasoline stocks actually rose against forecasts of a fall and demand there was down 0.4%, but don’t panic too much it’s still 9.04m b/d being used! In contrast, it is worth noting that China increased imports of crude oil by 10% in the first half, if the economy is still sluggish I still contend that they are buying for inventory…
The FOMC minutes were ok, bond buying will finish in October but interest rates are expected to stay low indefinitely. In the UK we will hear what the BOE minutes looked like ahead of a likely rate hike before the end of the year.
Petrofac has won a contract worth $700m from the Kuwait Oil Company for a third gas gathering project in the country. Although a bread and butter contract from an existing loyal client they all count and I am still happy with Petrofac at these levels although the market still has a degree of scepticism following recent profit warnings, managerial changes and the upheaval in IES.
Its trading and operations update day at Premier and it must be fun to be putting out so much good news, the sentences about missing production guidance have been removed and only good news is in todays release. So, in a positive first half they achieved production targets, kept up with the disposal programme, got the OK for Catcher, had success in Indonesia and Vietnam and completed the refinancing. Tony Durrant must think its pretty easy this job! As they now progress all these and get on with Sea Lion and the installation of Solan, the full year guidance remains at 58-63/- boe/d and something will have gone horribly wrong if they don’t hit or beat that…FLW… I am getting closer to putting a date in TD’s diary and hope that there will be more good news to report after the holidays.
It seems like we get an update from Ithaca almost every week but after today’s 2Q production update there cant be much more to say, especially after a heavy period of summer maintenance shutdowns mean that the production gains will be very much 2H weighted. Meanwhile the production is within guided range of 13.5-15.5/- b/d at 14,400 b/d. Very much a happy holder here and another company I want to see after the holidays…
The company has announced a ‘strategic review of options open to the company to maximise value to shareholders’. Now while this is highly commendable, particularly when the stock has already delivered well for holders, I never quite understand what the board were doing before. Were they not trying to achieve maximum value for shareholders and what is the need for a ‘strategic review’ if that is already happening by way of hands on management? I think the phrase is probably like this ‘the shareholders have seen assets in the Eagle Ford shale going for lots of money and would like to get out while the going is good’. The shares, having spent years in the doldrums are now very nearly back to a five year high and I for one cant blame them for cashing in their chips right now.
Only two more matches in the World Cup now and if they were like last nights rubbish that would be two too many. Argentina won 4-2 on penalties but it was dire and the most interesting stat? Messi did not touch the ball in the penalty area once in the 120 minutes of open play…Also it was the first ever WC semi final to finish 0-0 after extra time and it never looked like anything else.
The 1st test against India started yesterday and the head groundsman at Trent Bridge should be taken out and shot, it was even more boring than the football and whatever happened to the idea that you prepare a pitch for your own side to play on, another shambles by the ECB.
Chris Froome is out of the Tour de France and with Sir Bradley being unceremoniously dumped by team Sky they have rather burned their bridges, the words ‘all your eggs in one basket come to mind’.