WTI $51.16 -98c, Brent $60.21 -32c, Diff $9.05 +66c, NG $2.83 n/c
Its rig count day so later on we shall see if the significant fall is continuing, no reason why not I suspect. However, looking at the API and EIA inventory stats it should be obvious that rig count falls do not a production cut make, at least not in the short term. Having been spooked by a build of 14.3m barrels by the API the EIA build of 7.72m yesterday was positively harmless despite being well above the analysts consensus.
After the initial fall last night the oil price actually rallied quite a lot and although may well end up down on the week for the first time for a while, it was not a bad performance. It is worth noting that the differential is now heading for $10 which is normally a time to take action, there is no reason why it should be this high, the question is if it does narrow which crude will move? For choice, although US production is still high, I would expect Brent to come back to WTI at some stage.
The FT reports that the talks between Iran and the west over the nuclear aspirations are ‘making some progress’ as the March 31st deadline nears. Whilst it is unlikely that a full agreement can happen soon which would result in lifting of sanctions and an according rise in Iranian crude exports it is hardly the stuff of bull market operators dreams.
Finally, Saudi Aramco is getting a taste of its own medicine as the low oil price is forcing upon them the pain inflicted on other companies in recent months. Cost cuts are high on the agenda at Aramco with a $2bn clean fuels plant being back-burnered (please the carbon averse writer in todays pink-un) and the $6bn bill run up with US service companies up for negotiation.
Chariot has announced that it is going ahead with 1,700 km of 2D seismic on the central blocks offshore Namibia. Why 2D I hear you ask and it is because they have a commitment to 3D seismic and this should reduce that bill.
I have spent a bit of time with the Sound Oil guys in the last day or so and there is much going on at the company as I mentioned yesterday. With the approval for Nervesa meaning that work has already started on site, drilling should commence before long and news wont be far away. Indeed, Sound is very busy thus ensuring good news-flow for some time to come. The major exploration prospect at Badile is going through permitting and the farm-out process continues which will offset funding and reduce the risk profile. Other prospects such as Santa Maria Goretti and Laura are also going through the process and will also provide interest in the next year or so. The Antrim approach shows that the management is always on the lookout for things that will enhance shareholder value and this proactive attitude should be warmly welcomed. The team are off to New York for a roadshow where they have seen a decent interest and I expect more institutional shareholders to become interested as the story gets out and the market cap rises.
To watch the interview I did yesterday with CEO James Parsons and MD of Italy Luca Madeddu just follow this link. http://www.tiptv.co.uk/archives/sound-oil-interview-part-ii/
Press reports today suggest that BP has lost its latest court battle in the USA where it was attempting to reduce the cap on its $4,300 per barrel fine post the Macondo disaster..
Further humiliation in the cricket as England were annihilated by New Zealand in the early hours of the morning. If you woke up after 5.30 am you missed it for which small mercies. Scoring only 123 runs was pathetic and the Kiwis knocked off the balance in 12.2 over or 74 balls. Steve Finn went for 49 runs from his two overs which only begs the question why was he given a second over? I admit that England have faced the two hardest sides first up in this competition and may still qualify but they have to play Scotland on Monday who will certainly be up for it…
The Boropa Cup was good for Merseyside, less good for Spurs and Delia Smith’s Celtic celebrated the 3-3 draw with Inter as if they had won the trophy…
In the Prem this weekend there are two London derbies as the Eagles host the Gooners and the Hammers go to Spurs, no love lost there I understand. It will be a tight battle between the Saints and the HubCap Stealers whilst there are relegation battles between the Hull City Tigers and the Super Hoops and the Toffees at home to the Foxes.
And of course Sunday night means its the Oscars and a great way to avoid watching the England v Scotland cricket, obviously lets hope for Brit success, particularly Eddie Redmayne who is an honorary member of the city fraternity…