WTI $45.15 -44c, Brent $48.16 -63c, Diff $3.01 -19c, NG $2.88 -11c
After falling modestly yesterday the oil price has again ‘stabilised’ at around these levels after a speech in London given by el-Badri the Opec Secretary General. He must have been reading the blog as I have been suggesting that the more cuts that happen down here the higher the price will get to when Opec do control the market again. His words were ‘the market will rebound back higher than $147 in 2008 if producers stop investing and postpone projects’.
I use the word stabilise carefully rather than suggest that we have not got further to fall, at present especially with the results season starting on Thursday there is much pain to be felt in the next week or two, it will be most interesting to see how the major companies approach the situation. The other reason that I am incredibly cautious is that punters are coming back into the market in all sorts of ways. Last week saw the biggest ever open interest on ICE Brent at 1.64m barrels, admittedly it hasn’t been going long but nevertheless its high, as are figures from other exchanges and in commodity funds.
There is some warming up on the subs bench already after the UK Parliament rejected an amendment that would have meant a moratorium in onshore drilling. The vote ended up very comfortably won by 308-52 as most opposition parties abstained, it is worth noting that I understand that both the GMB and Unite union were in support of the Bill. There was of course a bit of horse trading pre the vote but that can be expected, in the main all the appropriate technical and scientific boxes have been ticked and protection for ground water, noise and traffic have been addressed. It is worth taking a look at the leader in the FT today as they suggest the need for a ‘dispassionate and calm debate’ about fraccing, given that the country has tight existing regulations for onshore oil and gas exploration and production I couldnt agree more. The election can come and go but energy security needs will not, neither will carbon dispute and as long as fossil fuel demand stays anywhere near current levels, gas will be preferred to coal in the mix.
This has certainly made life a lot easier for the UK onshore players and slowly but surely the vista is opening up for them, along with Cuadrilla and of course Ineos in the process, there’s a long way to go but its more promising today.
Afren has announced that the liquidity available to the company is ‘significantly lower than it was at the end of 2014’ due to the falling price of oil. Accordingly they are putting in place efficiencies and ‘cost optimisation’ and will continue in discussions with Seplat. I said earlier in the process that Seplat had apparently put a ‘miserly’ all share offer on the table for the Afren board to consider, that offer just got more miserly, Seplat dont need to chase this one, it will, should they want it to, fall into their hands.
Bucket List Just in case you missed it, yesterday I published the list of oil and gas stocks that I consider to be worth looking at, here is the link.
In the Australian Open tennis Rafa got beat in straight sets by Berdych who takes his place against Andy Murray who dispatched teenage Aussie Nick Kyrgios also in straight sets.
In the FA Cup draw Middlesboro, having beaten the noisy neighbours at MiddleEastlands got the reward of a visit to the new favourites, the Gooners…Bradford who beat Chels face either Fulham or the Maccams…
That loss on Saturday in the FA Cup brings added spice to the second leg of the Clueless Cup tonight between Chelski and the HubCap Stealers, 1-1 from the first leg if you remember but a combination of factors may mean les bleus will be hard to beat tonight…