WTI $57.51 -52c, Brent $62.06 -$1.66, Diff $4.55 -$1.14, NG $2.82 -1c

Oil price

Still under pressure the oil price fell again yesterday for a number of reasons but mainly due to the strength of the dollar. As I said in an interview with IGTV yesterday, if you are a bull of the dollar you almost have to be a bear of oil and that seems to be what the currency experts are telling us.

Other influences on the oil price remain the same as we head towards a June which will be busier than usual. Saudi sources yesterday said that output ‘won’t be cut’ at the June 5th meeting and the French are considering using their veto in the Iran talks unless ‘full access’ is given to nuclear sites, a red line the Iranians are not prepared to cross.

Also and after the close, the API inventory stats came out and as usual Wall Street’s finest got it wrong, again. Predicting another stock draw, this time of around 2m barrels, the number turned out to be 1.3m but a build which helped no one. There was a draw in gasoline of 3.6m barrels and refineries are flat out filling product demand earning juicy margins into the bargain, one for the notebook for the 2nd quarter figures for majors and refiners.

So, the short/medium term outlook for oil is hampered by stocks and a likely strong greenback but in my IGTV interview I assess the much more bullish longer term scenario.

http://www.ig.com/uk/market-insight-videos?bctid=4259259872001&bclid=3671160850001

Premier/Rockhopper/FOGL-Isobel deep oil discovery

Another successful oil discovery from the North Falklands Basin consortium although the well wasnt drilled to TD. Premier say that they drilled to 8,289 feet and into the top reservoir on prognosis, with the bottom 75 feet being oil bearing F3 sands. Due to higher than expected reservoir pressure this resulted in an influx into the well, oil was recovered to the surface and appears to be ‘of similar quality’ to Sea Lion crude. The rig has been released and will now head south to drill the Humpback prospect before coming back north in a couple of months time. At that stage I imagine that the consortium will drill Jayne East and Chatham which have had preparatory work done while the faulty BOP was repaired, before deciding whether or not any further drilling is needed before appraisal.

This is clearly another big success for the teams out in the Falklands and finding a workable hydrocarbon system, with movable oil and recovering to surface justifies the faith in the region. It is another step to developing Sea Lion and ticks a number of boxes in key areas of risk. Whist the doubters will remain, ( I think that some will need to drink the oil before they believe it) they are being proved wrong almost every time the drill bit turns, now lets see what’s down at Humpback in the south…

Falcon Oil & Gas

Yesterday I interviewed Philip O’Quigley, CEO of Falcon on TipTV, the link to which is below this article. I think all is well explained by Philip but clearly the company are approaching a very exciting time on both major fronts. In Australia it looks like drilling is imminent on Beetaloo with the first of their three well programme due to spud next month. The farm-out last year provided Falcon with $20m of cash and a carry of between $165-185m over the life of the project which is a pretty good deal and life will be exciting as they drill out the portfolio. In South Africa things are also looking up with shale exploration being treated more favourably as is fraccing, expect more good news in due course. To me Falcon looks cheap enough to consider, at least while the initial drilling season is under way.

http://www.tiptv.co.uk/archives/updated-interview-with-falcon-oil-gas/

Sundry

DNO has said that they have achieved record production from Tawke and have got up to 170/- b/d of which 30/- b/d is for local consumption, the rest for export. With upgrades complete one can expect up to 200/- b/d which bodes well for Genel which is ludicrously cheap having come over 100p off the recent high for no sensible reason.

And I see that Roman Abramovich has increased his stake in Velocys to over 20% which at these levels is very wise…

And the FT reports that Trafigura has been exporting a significant number of crude oil shipments from Russia, all above board you know…

And finally…

The great FIFA (or should it be renamed Thiefa?) scandal grows and grows with magnificent moves by the US departments, something no one else dared do, read John Gapper in the FT today..How can tomorrow’s election go ahead?

Football is now almost history for a while but for the HubCap Stealers, news that new Real manager Rafa Benitez is talking to Raheem’s agent is almost as bad as the fact that apparently Balotelli is staying…

And on the subject of bad news, apparently Richard Avocado was unimpressed by the Sunderland offer and is leaving the club, less cheers over at Ofgem…

You probably needed to watch both games between Worcester and Bristol but with a few minutes left and trailing by 14 Worcester needed a miracle. Fortunately two Bristol players got yellow cards and the rest is history, victory over two legs by 59-58..

And talking about brain short rugby players, Dylan Hartley has proved the point by getting a ban for head butting and will miss all or part of the World Cup…

And if you were lucky enough to be invited by Cantor Fitzgerald to their race night at Sandown Park tonight (some weren’t…) you have a treat in store. The weather looks set fair and a great card includes the Brigadier Gerard Stakes, always a true test and very difficult to call, be lucky…