WTI $56.38 +64c, Brent $63.45 n/c, Diff $7.07 -64c, NG $2.54 -10c

Oil price

Just how quiet it was in the market yesterday is reflected in the rare occurrence of a n/c in the Brent price. What might we see coming up in the crude market? Well its the expiry of the May WTI contract today which might show some rolling over and of course we have the API inventory stats tonight, consensus is for another build, this time around 2.4m barrels. I havent mentioned the retail gasoline price in the US lately because it hasn’t moved but signs of a pick-up ahead of the driving season are just showing, last week the price was $2.49 a gallon a rise of 7.7 cents on the week,  bear in mind this price is $1.20 less than this time last year…

To keep the market on its toes Ali al Naimi, speaking at a conference in Seoul yesterday said that April Saudi production would remain at or above 10m b/d ensuring that the Opec number would remain over 30m b/d. Also speaking yesterday was Ian Taylor, head of oil trading giant Vitol and his comments are never to be missed. Taking some issue with rival Trafigura, Taylor said that he felt that the oil market has hit its lows and ‘seen a bottom’. With a delay in the Iranian barrels, now unlikely before the last quarter, and consumption showing some signs of a pick-up there is likely to be around 1m b/d increase in demand later this year. He also sees US production starting to slow but like most of us not until the second half of this year at the earliest.

Chariot Oil & Gas – Disappointment, not a disaster,upside deferred.

Chariot has announced that Woodside has decided not to exercise its option to take operatorship and fund well costs for another 25% of the Rabat Deep offshore prospect in Morocco, it will stay a 25% participant. This is disappointing for Chariot as it means that they will now have to open the data room and try to entice another partner who will be aware that Woodside has spurned the chance to increase its stake. A good deal of work has been  done on the block however and participants in the data room will be furnished with much information by Chariot. Indeed although the option has expired it is not impossible that Woodside could still up the ante, recent data provided to them hasn’t been fully assessed yet I understand.

As I say this is more of a disappointment than a disaster for Chariot who are in the acreage for very little, with Woodside having paid the recent bills and with no remaining commitments they can play the longer game even if it’s not quite what shareholders had hoped for. Farm-outs do take a lot of time nowadays, ask Xcite shareholders, but this might be quicker due to the available data, even so it must be a minimum of 18 months to two years before any drill bit will spin on Rabat Deep. Chariot is still well funded, has a low commitment portfolio and its strategy of playing the big prospects should succeed albeit in the longer term, who knows, the oil price might just be that much more appealing then…

Egdon Resources

Interim’s from Egdon which are rarely of any excitement, all the operational information is already in the market. The big pluses at the moment are in the conventional side of the portfolio with Wressle-1 being a success finding hydrocarbons at four intervals and it should arrest the fall in the production which has fallen to 148 boe/d from 194 last year and new guidance for this year of 180 boe/d. That should rise next year as the company have two or three interesting wells to drill 2H 2015.

Whilst the unconventional part of the portfolio has had its value franked by the excellent deal done by IGas with Ineos, Egdon say in the statement that they too are looking to ‘introduce a suitable partner to fund  our high quality unconventional resource acreage’ which, given Egdon’s good history of deal making, be worth waiting for…The shares are very adjacent to the years low so that deal will be important but the company is otherwise well funded at least for conventional drilling this year.

And finally…

The second test starts in Grenada this afternoon and one suspects that Moeen Ali having joined the tour will come in for Tredwell and a brave selector would play another spinner in Adil Rashid, after all the Windies have said that they are playing a leggie on this track…Question is do we have any brave selectors…?

Champions League tonight and having sacked the team doctor what will the mentality be like at Bayern? Pep is used to getting his own way and the fans dont mind going out to Real or Barca but Porto…..? Barca v PSG is the other game which should be tasty…