WTI $60.72 +$1.74, Brent $66.54 +$1.51, Diff $5.82 -23c, NG $2.95 +3c
Due to production problems apparently not everybody received the blog on Friday, apologies and also if you received it twice!
Wednesday’s rise in crude prices continued yesterday as the market got to grips with the inventory numbers, not just in crude but in product where gasoline demand is picking up pretty much worldwide. In addition the situation in the Middle East continues to worsen with Ramada and now Palmyra under IS rule. Having said that the rise on the week will be fairly modest as currency effects also take their toll.
Monday is Memorial Day in the USA and signals the weekend when the famous driving season gets under way and make no mistake Americans genuinely do take to their automobiles. Figures from the AAA suggest that this year will be the biggest for 10 years for Memorial Day traffic and expect 37.2m people will take journeys of 80 km or more from their homes which is up 4.7% on last year and the highest since 2005. Outside of the US it is interesting to see that product demand is picking up in both India and China which should come as no surprise as automobile sales keep rising and the building of 100 new airports in China alone are hardly going to diminish the demand for fossil fuels…
Dragon Oil- Enter the ENOC
On March 19th Dragon announced that a possible approach from ENOC had been indicated and that they had set up an independent committee of the board to assess what might happen. Yesterday it emerged that the bid is worth 735p a share or £3.66bn which is a 44% increase on the pre-bid price. This is not the first time that ENOC has bid for Dragon and with 54% of the equity one wonders why, maybe the 7% held by Baillie Gifford stood in their way last time but I would be astonished if it were the case this time. Firstly because BG may actually decide to accept this time and secondly because ENOC tactics may not be so generous or so gentlemanly on this occasion. I am assuming that the bid will succeed at this price and that no one else will enter the fray which leaves the shares a touch cheap at 678p.
The primary choice for the Dragon board is to reconsider its previous strategy which was to bid for Petroceltic which they backed away from when the oil price fell, the market doesnt think that this is likely. Indeed, assuming that ENOC dont want to own Petroceltic that is bad news for PCI shareholders and maybe also for Worldview who would I suspect have the Dragon number on speed dial in case of emergencies…
The news from Exxon that they had made a discovery off Guyana yesterday put a tiger in the tank of both Tullow and Northern, today Tullow is unchanged whilst Northern is up another 20%. Right in the sense that its meaningful for Tullow but maybe game changing for Northern whose cupboard is pretty bare of other valuable items but I wouldnt chase it too far.
I heard yesterday that the wonderful Gavin Graham has decided to move on from Petrofac where he has been for the last five years. I’m sure Gav will reappear somewhere else in the autumn after a well deserved break, but in the meantime he will be missed on many levels. I remember hearing him speak at an analysts visit to Petrofac in Syria where he started with the immortal line of ‘I’ve learnt more in six months at Petrofac than 25 years at Shell’ which brought the house down. He has given many keynote speeches, particularly at the Oil Council and elsewhere and of course his entertaining at Rugby matches is legendary. (And I hope still will be..!)
Whilst on the subject of Syria, on that trip a few of the analysts, myself included spent the day at Palmyra which I mentioned above, it would indeed be a disaster if anything was to happen to this amazing site.
Not quite sure where to start but it’s the last week in the Premiership where only two fixtures mean anything. Hull City Tigers need at least something against Man Who and need the Magpies to lose at home to the Happy Hammers but funnier things have happened.
The weekend also hosts all three play off finals, in Division two it’s Southend v Wycombe whilst in D1 it’s Preston v Swindon. The other final is between the Canaries and the Smoggies, as both my brother and business partner support Norwich I have already been admonished for not getting behind the Canaries so am happy to give them a big up!
At Lord’s, England recovered well from a disastrous start and the middle order all contributed with entertaining batting, a great days cricket. With the possibility of England posting around 400 this game is very much alive and adds to the fantastic sporting weekend.
And it’s back to the F1 roadshow, this weekend at the glamourous location of Monaco where Lewis is celebrating signing his $100m contract…
Also in the boxing ring it’s good luck to James De Gale who fights Andre Dirrell, a hard task especially taking on a Sherman in the US…
Also to be seen are the rugby Premiership semi-final play offs between the Saints and the Sarries and an old fashioned Bath v Leicester fixture, both worth a look.
And if that’s not enough the golf at Wentworth will be exciting with a great field and very open.