WTI $52.14 -$1.39, Brent $60.53 -$2.00, Diff $8.39 -61c, NG $2.83 +7c

Oil price

The honeymoon for the oil price came to an abrupt end last night and again this morning after the API announced their inventory numbers. With analysts expecting a  build of around 3m barrels the stock build of 14.3m barrels shocked the market which fell as you can see above and again in sparse far eastern markets trading this morning WTI is $50.51 and Brent is $59.35. With refineries going into spring maintenance accelerated by the steelworkers strike demand has fallen sharply and in addition a fire and explosion at Exxon’s Torrance, California refinery hasn’t helped.

Wood Group

Wood Group reported on Tuesday and following on from Hunting the day before the market, at least for the time being have given the company the benefit of the doubt. This may of course be because the shares have already fallen substantially or maybe the recent rally in the oil price is leading investors to believe that the worst is over.

Wood have elected, like Hunting, not to give the market any current guidance with CEO Bob Keiller suggesting that analysts use their models to work on for the time being. As for the results they came in as expected, PSN doing very well with margins up 0.8 points, engineering less well where margins fell 1.5 points and the less said about the turbine business the better. There is little doubt that the company, like others, is facing ‘a challenging market’ and facing ‘a head wind’ but they do so with some resilience, the word robust was used a lot and costs are being taken out of the business. Wood has a number of areas of strength with its portfolio leaning towards opex, (60%) geographically spread albeit with a heavy weighting in North America ( a number of different basins) and a broad spread of contract size, maturity and customer base.

These in themselves wont protect the company if we have another wobble which I think is possible but they find themselves in this challenging market with good cash flow, a strong balance sheet and enough confidence to raise the divvi by 25%. Longer term they have the strength and scope to pay out ‘at least double digit increases’ in the payout almost until the cash cows come home. There is no doubt that this company will not ‘buy’ business at the wrong price and they consider tackling costs with the client base the best way to maintain levels of work.

Wood may not be out of the trees just yet and as the highest rated UK service company may still look a bit dear but should there be any further weakness the shares should be bought as they are indeed in a strong position in this difficult market.

Sound Oil

Sound has announced that it has received permission to go ahead with drilling on Nervesa which although expected is very good news. More on this later and with an interview on TipTV this morning but when its up and running Nervesa will have webcam on site…

Egdon/EOG/Union Jack

Testing of the second zone at Wressle-1 is finished and Egdon report that the Wingfield Flags flowed 182 b/d of oil and 456/- cubic feet of gas which is good. The company now moves on to test the 3rd zone the Penistone Flags.

Sundry- More later…

Jupiter has announced that it will shut in all its production on March 1st and is seeking emergency funding, dont say you weren’t warned…

Talking of warnings I cant help but notice that Tangiers has raised A$7m in a placement….

And finally…

Time forbids much this morning but hopefully tomorrow will allow a bigger update. Monday night saw Man Who just about see off Preston to earn a place in the tie of the quarter finals against the Gooners. Chelski got a draw against PSG but more concern about the fans…

Tonight we return to the Boropa Cup with Everton, Spurs and now the HubCap Stealers all in action around Europe.

And no surprise to see Darren Clarke appointed to manage next years Ryder Cup team.