WTI $85.82 +5c, Brent $90.21 +16c, Diff $4.39 +11c, NG $3.86 +1c

Oil price

The very slight rise as indicated by the prices above were, in reality, only some modest covering of short positions established during the week and this morning prices are around a dollar off. Almost all the news is unremittingly bearish and international markets are falling, the Dow is perched right on the support level and the 200 day moving average. News from the Middle East provides further dismay, the Saudis have apparently said that markets should ‘get used to lower prices’ whilst Iran and Iraq are cutting prices to buyers for November crude. In addition the icing on the cake was provided by the Kuwaiti oil Minister saying that Opec was ‘unlikely’ to cut output. Opec itself has said that the cartel’s output in September was up 402/- b/d at 30.47m b/d not as high as recent surveys but still too much for markets at the moment.

One glimmer of hope came from China where the September and 3Q trade stats beat market expectations. September exports were +15.3% (f/c 11.8%) and imports were up 7.1% (f/c down 2.7%), in oil, imports were up 9.5% m/m leaving a trade surplus of $31bn.

As I said on Friday, although the oil price has continued to fall, at the moment I feel that the risk remains on the downside at least in the very short term. With six weeks to go until the Opec meeting most of the players are lining up but not showing any signs of the discipline that would be needed to arrest the decline, conspiracy theories abound about pricing out the US or ruining the Russian economy generally best ignored. A combination of Opec discipline and Chinese buying for strategic stocks is the best chance of getting anywhere near $100…

Columbus Day today in the US so some markets are shut and industry data will be a day behind this week.

Sound Oil

Sound has pretty much avoided the carnage in the E&P sector this year as it has continued to deliver what it has promised, onshore gas production in Italy now covers its costs and there is an exciting portfolio of exploration acreage. Today Sound has announced new gas sales contracts at Rapagnano and Casa Tiberi, both for a year and both at nearly $10 Mscf which shows why Italy is such a good market when you finally get production under way. The company has also confirmed the purchase of the land at Badile for €1.8m which is good as this prospect is going to be a major part of Sound’s medium term future.

Bahamas Petroleum

I have for some time said that there are a number of things that have to happen to make BPC an attractive investment and last week one of those occurred. The Bahamian Oil Minister announced a new Petroleum Act and a suite of regulations to guide and govern oil exploration that will be placed before the House after the recess. The Government is ‘committed to introducing’ this which will address permitting, technical, environmental and operational activities for the petroleum industry in country. The shares have appropriately risen by over 50% recently but longer term performance is dire and the need for partners to fund the drilling is paramount. If the company can tick the boxes of funding, hiring a rig and finding a suitable site for a well then the recent rally will continue, in the meantime I remain on the side-lines.

Bahamas Petroleum 5 Year chart

Capture

Sundry

Statoil has sold its stake in in the Shah Deniz project to Petronas for $2.25bn….don’t rule out further trading of this asset in the medium term…

Petrofac have won two decent contracts, one from BP in Iraq and one from Chevron in the North Sea, total value around $620m.

Lots of stories around about GDF Suez looking at Talisman or their assets in the North Sea, this is not for the first time….

And for those of you who follow Range Resources, as part of my CEO interview slot on TipTV my victim tomorrow is Rory Scott Russell…

And finally…

The infernal international break continues and last night saw England just about do enough to scrape a 0-1 win in Estonia although if shots had been converted it would have been more. Raheem Sterling apparently asked for the game off as he was ‘feeling a bit tired’, what’s he been doing? Scotland beat Georgia 1-0 and according to the Manager it was just like watching Brazil…..Tonight Wales play Cyprus and its all down to Gareth again…

I don’t ever write about Rugby League and if you saw the actions of Wigan prop Ben Flower on Saturday that probably explains it, not quite sure why he isn’t doing time…

A tame Russian Grand Prix in difficult circumstances after last week where Lewis won easily enough but Rosberg managed to conjure 52 laps out of an old set of tyres probably tells you all about the new track. Watching Putin and Bernie loving up was a real pass the sick bag moment…

This weekend in the NFL…

The Cowboys overcome the Seahawks in Seattle. They now move to 5-1. The Seahawks 3-2. The Eagles thrash the Giants 27-0 for their first shutout in 18 years. The Panthers and Bengals tie 37-37. Mike Nugent missed a 36 yard field goal to win the game late in overtime. Tom Brady threw four touchdowns as the Patriots beat the Bills.

Other results include the Packers winning in Miami, the Broncos beating the Jets and the Lions edging out the Vikings.

The most predictable of all results however, came in Tennessee, where the Titans beat the Jaguars. The Jags move to 0-6. Tonight sees the 49ers face the Rams.

In the MLB, Kolten Wong’s home run sees the Cardinals tie up the NLCS 1-1. The Royals lead the Orioles 2-0 in the ALCS.

And Oscar Pistorius is back in court for sentencing today…