WTI $48.79 +81c, Brent $53.38 +8c, Diff $4.59 -73c, NG $2.89 +6c
WTI rose for the first time in five trading sessions yesterday after a set of inventory stats yet again flummoxed Wall Street’s finest. The EIA numbers came in with a stock draw of 4.2m barrels with the teenage scribblers having crayoned in a small rise, better luck next time kids. Seriously though, as I mentioned before, these numbers really needed to be a draw and a draw at Cushing was also a big help. To carry through any sort of rally in the crude price the market needs to see stocks drawing probably through to Labor Day and beyond but this is at least a start.
The other slightly better piece of news came from Saudi Arabia who are seeming to flag a modest cut in production in September, this is due to lower domestic demand at the end of the summer and wont help market that much as exports are unlikely to tumble.
Shell reported Interims this morning and they certainly beat my expectations with a clean 2Q number of $3.8bn down from $6.1bn on 2014 2Q. Obviously upstream was sharply down but even that figure was offset by lower costs and depreciation charges. Downstream was a fair bit better than I had expected, beating Q1 and showing an improved financial performance and higher refining margins which we had all spotted. Gearing is a respectable 12.7%, down a touch on this time last year. On dividends, the company scotched the bogey of any idea of a cut by saying that it would be ‘at least maintained’ and as for the share buy back it stays at $25bn between 2017-2020, not something BP could afford.
As one might expect costs are coming down everywhere, this year operating costs are down by $4bn with more to come and as for capex it too is down, by $7bn or 20% to $30bn. Lots on the BG ‘combination’ which is moving ahead steadily and of course cost savings are at the forefront, bigger than previously expected with $2.5bn a year from 2018 onwards and $30bn of asset sales between 2016-18. The deal will reshape the combined company and with its mantra of ‘grow to simplify’ will downsize numbers of but increase the size of international projects as it takes on fewer,higher value projects. Shell says that it will remain prudent through the downturn with the capacity to pay ‘attractive’ dividends to shareholders over the long term. As I have said before recently, despite the sector being out of favour and recent performance by Shell to be dire, I would be adding to holdings at these levels on a long term view supported by a yield well over 6%.
Anadarko pleased the market yesterday with market beating earnings of 12c, even being in the black was a surprise to some analysts. With production up and costs down, APC is probably a reflection of what the attitude is to lower oil prices, Opec or no Opec…
Cape has announced a contract award from BP for work on the Clair Ridge project worth £9.8m, a long standing client, this is further reason why I am convinced that faith in this top quality management team will be rewarded.
I went to TipTV yesterday to update on a number of stocks where important milestones are taking place so if you are interested in Independent Oil & Gas, Pantheon, Bowleven, Victoria Oil & Gas or Amerisur just click on the link below or go to the blog website on www.malcysblog.com
The fairground ride that is the latest Ashes series continues, yesterday it was the Aussies turn to bat with sticks of rhubarb and were all out for 136. The interesting stat is that at Lords England were castigated for being bowled out in a humiliating 37 overs, the duration of the Australian innings yesterday….36.4 overs…Anderson took 6-47, not bad for a man who was being written out of the series a few days ago. Many more twists and turns in this one I suspect.
Celtic got a respectable 0-1 away last night at Qarabag and will hope to cruise leg two whilst tonight the happy Hammers continue the slog by hosting Astra Giurgiu of Romania at fortress Upton Park…
And of course we couldnt finish without paying respects to the voice of racing, Sir Peter O’Sullevan who died yesterday at the age of 97, a true great in his world over many years.