WTI $46.75 +50c, Brent $50.68 +18c, Diff $3.93 -32c, NG $2.72 +8c
As the weekend approaches and we see some consolidation in oil prices the markets are as uncertain as ever and looking further out there is no strong feeling of security. I suspect that market participants, as we can call them, will be happy enough with $46.50 and $50.54 respectively for WTI and Brent but not exactly doing handstands quite yet. That is because for the oil market, particularly in the USA this weekend is a meaningful one. It’s the Labor Day holiday weekend and that means only one thing, the end of the driving season with all that that entails. From now on the demand for gasoline falls off quite sharply and even at $2.51 a gallon the temptation to drive halfway across the States diminishes rapidly. Refinery runs should slow as the owners use the autumn downtime to switch to heating fuel and the risk of crude oil stocks rising is a real one.
This weekend also is preceded by the Non-farm payroll number, more eagerly awaited than usual as the Fed is trying to decide whether to raise rates at their September 17/18 meeting or to wait. I understand that with consensus at around 217/- added jobs a low figure will push the rise off maybe by a quarter, 300/- would mean September for sure. The only other stat worth watching should be the pay numbers, inflation is also a key factor in the process. Finally Baker Hughes will provide the rig count this afternoon.
News from Egdon this morning about the EWT at Wressle-1 which has had somewhat mixed fortunes. Nothing to seriously upset the apple-cart and generally quite bullish when you ask Mark Abbott to explain it as I did. In the Penistone, oil and gas have both flowed but so far it is yet to produce any formation water. It appears that the oil/water contact is deeper than previously thought and in such a reservoir with gas over oil it is important to know just where that is if only for optimisation of future well placements.
So for now the plan is to prepare for a work-over of the well to remove the existing completion, cement off Zone 3A perforations and open new ones. After that they will use radial drilling, again which I had to ask Mark Abbott about as I am not familiar with the concept but it entails drilling short, horizontal bores into the reservoir section by water jetting, after which they will perform a short flow test.
In the Ashover grit reservoir, the company was unable to re-establish the oil flow which had previously been 80 barrels a day. Analysis had revealed ‘skin issues’ and therefore the flow rates were not representative, here there will be a clean up and maybe more radial drilling.
The reprocessing of the seismic data should be completed at the back end of this month and the company is progressing the studies needed for the planning and permitting ahead of the submission of the FDP. Despite some slightly testing issued, as detailed above, the company suggest that slippage of the project is no more than a month and that they expect to be in production around the end of 1Q 2016. For Egdon this means that the stock is still very cheap, especially given its portfolio of high quality conventional and unconventional assets which give it plenty of upside albeit over quite a long time. For Europa it is also good news but although that company also has potentially huge prospects, the major part of that is still at least partly dependent on Kosmos’s plans which may still be a long way down the road.
Readers will know that I am a big fan of Hurricane and that Lancaster is going to be of significant interest not only to the company but to the OGA. Accordingly I have been trying to get CEO Dr Robert Trice into a studio so that I can interview him and let him explain about fractured basements and the amazing portfolio he has built up. Yesterday he came into the TipTV studio and gave a most interesting talk about the company, its prospects and plans for the future. The interview which lasts for just under 20 minutes can be seen at this link and is a must watch for industry participants.
or on the blog website which is: www.malcysblog.com under interviews.
Lots on the sports front this weekend even though it is the international break. Last night, Wales almost did enough to secure qualification for Euro 2016 by beating Cyprus 1-0. Tonight its Georgia v Scotland, a must win you would have thought for the sweaties, Gibraltar host the ROI and Northern Ireland head to the Faroe Islands. Tomorrow afternoon England are in San Marino who we know can be quick off the mark but shouldn’t cause too much grief. A country that does, however have grief, is Holland who lost 0-1 at home last night to Iceland and now find themselves third in their group behind them and the Czech Republic and rather staring down the barrel of a gun for qualification.
In the tennis Muzza found himself two sets down to Adrian Mannarino but despite a heavy cold managed to salvage the game rather comfortably in the last three sets. Jo Konta also won, a great achievement against this year’s Wimbledon finalist and set a new record, the match at 3 hrs and 23 minutes was the longest ever ladies match in the US Open.
Newly blonde Lewis Hamilton is in Monza trying to stretch his lead in the Italian Grand Prix on Sunday, elsewhere Williams have announced an unchanged driver line-up for next year so no space for JB.
In the cricket, England reverted to form and had a good old-fashioned middle order batting collapse, after starting well and chasing a moderate target the wheels came off in spectacular style and they showed TBay a less attractive brand of cricket…
And finally, in the ‘you couldnt make it up’ category I note that ‘Deflategate’ is back and Tom Brady, or ‘Teflon Tom’ as he is known has had his four match suspension overturned making him available for the upcoming new season. Actually the more I think about it you certainly could make it up, it is American football with all that TV money after all….
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