WTI $88.85 -$1.49, Brent $92.11 -68c, Diff $3.26 +81c, NG $3.96 +6c
More pressure on oil yesterday and it was mainly the demand side of the equation that took the hit. The IMF cut its global economic growth forecasts again, this time singling out Japan and Brazil but also warning that whilst China’s 7.4% might be accurate for this year, a hard landing cant be ruled out in the medium term. Adding to those woes the EIA lowered its global oil demand numbers for the rest of this year and 2015.
Having done all that, all the market needed was a bad set of inventory statistics but more bad news was around the corner as crude stocks added 5.1m barrels against a forecast of only 1.5m. Finally the ICE announced that net long positions in Brent futures and options fell by another 15%, confidence in oil going forward has rarely been so low.
Against this background it is no surprise that oil fell again this morning and as I write is almost a dollar lower at $87.93 and $91.05 respectively. Having called crude down in recent months I must admit that I have been eyeing the opportunity of a rally, even a modest one but at the moment the crude market is totally friendless and so caution must prevail at least for a little longer.
You will have noticed that I am only covering one stock today and that itself is very brief. There are no announcements in the market this morning of note which is rather good in a way as I have a number of company meetings today. Amongst others, I have NTOG part two with Matt Lofgran, I am seeing Tim Bushell at FOGL and it is the Cape Capital Markets day into the bargain.
I had a long chat with Mike Ford, CEO of Caza Oil & Gas recently and he is very excited about the recent and future drilling programme. It cannot be underestimated quite how good a call it was to concentrate on the Permian liquids and building on this will make Caza a very wise investment. Mike reminded me that the Permian Basin is now the nations most prolific crude producing province and in the last six years has gone from 850/- b/d to 1.35m b/d last year and this year is showing a big increase on that.
Caza is now producing 1,300 net boe/d which is increasing with every well they drill and as that figure increases the value of the company does too. Accordingly at 19.25p, giving the company a market cap of only £45m is an extraordinary discount to its value, just run a slide rule over the EnCana/Athlon deal which will make your eyes water.
Not much around here today either as the infernal international week continues. Watford are going for a bit of history making as they have appointed their fourth new manager…in 37 days..
The Spanish flag now flies over Old Trafford as Ashley Giles is announced as their new head coach…
And Wasps fans in the south will be very depressed to see that they are moving to Coventry to play their home games at the Ricoh stadium which has been the death knell for occupants even with the round ball…its a council house for Wasps now….