WTI $50.89 -2c, Brent $57.72 +21c, Diff $6.83 +23c, NG $2.87 +2c
The oil price drifted last week mainly as a result of the conclusion of the Iran nuclear talks. I detailed the time-frame in the blog which implies exports of crude maybe early next year but as for floating storage it is more a case of gentlemen start your engines, with tankers already heading east from the Gulf. Quite how much there is out there is debatable but lets assume something approaching 50m barrels which sounds a lot but is only half of one days worlds supply…
The Chinese 2Q GDP data was reassuringly in line with central Governments ‘ahem’ forecasts of 7% in what is a quiet week for economic data but the rig count on Friday had a minus in front of it when a number of forecasters were suggesting a bounce. Baker Hughes has overall rigs down 6 at 857 with oil units down 7 at 638. Canada rigs rose sharply again, this week it was gas rigs up 16 of the overall gain of 23.
My traditional adage of Saudi production vs exports in the summer months looks like being franked again this season with some data showing that May exports were down to 6.94m b/d down from 7.74m b/d in April. My industry spies tell me that it is only a matter of time before the production number gets to 11m b/d so we can read two things into this differential. One is my old theory that during summer months domestic demand for oil increases substantially as power generation rises to cope with mainly air conditioning, the other is that the Kingdom is refining much more of its crude to export as product thereby adding value in the chain.
Elsewhere the dollar remained strong creating more downward pressure on oil prices which fell around 3% on the week, Brent expired last week and the WTI August contract goes off the boards tomorrow.
Finally there have been a few whispers that the 14th round of UK onshore licences are about to be announced, certainly my read on the gossip is that the new team at DECC are pushing for release ‘within weeks’.
Tullow has announced that gas exports from the Jubilee Field in Ghana have been suspended since July 3rd for technical reasons and will resume in mid August. As a result of this oil production has had to be constrained to 65/- b/d until the same time. There has been no effect on the reservoir or the resources therein.
That 88 Energy has been put into a trading halt in Australia ‘in relation to a potential capital raising’ is not news at all, after all shareholders in what was Tangiers Petroleum got rather used to the company coming back to the well on a regular basis. What I find interesting is that the shares are suspended in Oz but remain quoted in London on the Aim market where the stock is down around 20% as I write, the words Leopards and spots come to mind…
I find it quite interesting that with the Exception of The Times there has been little coverage of the farce that Afren has become in recent days. With the equity and the bonds suspended and last week’s warning on production one must assume the company is past resuscitation and will soon slip away, but surely someone should mount some sort of investigation? The work that Afren Legal Action is doing is very laudable but even they cant do it single handed, something really awful smells here…
With the majors 2Q figures starting next week I will be taking a look at most of the results and seeing where they stand at the half year. One of those will be Shell who get a write up in today’s FT following a lunch with some 40 investors and analysts last week hosted by CFO Simon Henry where he said that ‘value synergies’ would be ‘a multiple’ of the $1bn pa savings already announced in the BG acquisition. I was not invited to the presentation, nor would expect to be but I do share the view that the synergies will be substantial and that the acquisition will be a success. Shell has under-performed recently even to the extent of people questioning the dividend which is ludicrous and at 1850p and yielding over 6.5% I would be tucking in big time.
Following the Schlumberger figures last week, todays numbers from Halliburton should at least match the whisper and again the statement will make interesting reading. Dont expect the US to deliver but with international margins holding up quite well it may not be the nightmare some are predicting…
Independent Oil & Gas have been waiting on a cheque from its last funder since July 17th and today they announce that it will arrive ‘in the next few days’. Now, saying that the cheque is in the post is one of the great lies of man but somehow I believe them and hope that it is indeed on the way. IOG say that with this they will be funded until 4th September by which time the bigger funding should be under way. Readers know that I rate this team very highly and assuming they do raise the money satisfactorily will be an enthusiastic supporter.
There is not much one can say about the cricket, English supporters have been here often enough we should be used to it by now. I’m sure Mr Bayliss will be on the case and that changes will be made before Edgbaston which fortunately is over a week away.
The English team should watch the performance by Andy Murray in the Davis Cup yesterday, if you watched it you will know what I mean. In the second set he looked absolutely all ends up but found something somewhere which made him Lazarus like and he came from nowhere to win the tie and put Great Britain in the semi-finals where we will play, yup, you’ve guessed it…Australia!
The Open Championship is still going on a Monday morning as strong winds and heavy rain caused a long interruption in play, funny that, bad weather in Scotland…With an amateur at the top of the leader-board and several past champions within reach it should be a very exciting finish.
Anthony Crolla was once again unable to stop a robbery from occurring, this time in the ring. His fight against Darleys Perez was ruled a draw even after Perez had two points deducted for low blows.
Scott Quigg retains his super-bantamweight title after defeating Kiko Martinez in the second round in Manchester. That should set up a fight with rival Carl Frampton who defended his IBF title in El Paso, Texas.