WTI $41.75 -$1.18, Brent $44.06 -$1.75, Diff $2.31 -57c, NG $2.26 n/c

Oil price

Another bad day at the office for oil market bulls, the prices are now well back through the longer term moving averages and looking vulnerable to more weakness. December Brent expires tonight and at a two month low doesnt look good, indeed with the Fed increasingly likely to raise rates in December crude will remain in a battle with a strong dollar for a while.

The EIA inventory report didnt help, stocks were up 4.2m barrels which was well above estimates and at Cushing up 2.2m barrels, also higher than forecast. Opec came out with an interesting comment, ‘the build in inventories is due to an increase in total supply outpacing growth in world oil demand in the first 9 months of the year’. Never…..! Their demand for Opec crude next year is 30.78m b/d against current production of 30.2m b/d apparently and  with the Saudis at 10.3m, unchanged and Iraq at 4m b/d there is little room for Iran in the new year. The IEA is out this morning and it should be noted that these three reports may carry a little more weight than usual as they are the last before the Opec meeting on December 4th.

Hunting

I had an update with Hunting earlier in the week and whilst things are pretty grim in the market place the team are hunkering down and patiently hoping to see out the stormy weather. Operationally, margins are expected to see some degradation as stocks are wound down but with exciting  kit such as the new perforating gun available the sales force will be able to offer this at old levels.

Financially, the company are concentrating on watching and reducing debt whilst aiming to build the EBITDA number through next year sufficiently to ensure no breach of covenants. I dont expect an equity issue as this would be much more expensive than existing debt and the company are being highly disciplined on Capex. Continued expenditure this year has been sanctioned by the board as it is pointless to keep customers waiting for products or worse, subcontracting and outsourcing kit. With Cape Town and Mombasa up and running, business can grow steadily there and in Singapore building the new facility has been moved to the right slightly to ensure that capex next year stays at around $50-60m.

Finally, regarding takeover stories I would be very surprised if either the family or the management team were to have any interest in selling the business anywhere near here and will tough it out for the longer term. Clearly times are tough for the oilfield services companies and trying to pick times for recovery is for the brave or even stupid. However for Hunting and others in the sector any evidence of a sustained recovery will without doubt lead to substantial reward for shareholders.

Casa Oil & Gas

Third quarter figures from Casa today and the report is very much more of the same. As one would expect revenues are down with low oil prices and capex reductions taking off production. The Apollo forbearance agreement remains in place and Casa are still in advanced discussions with a 3rd party but with no guaranty of completing and if so would result in ‘significant dilution’. Nothing here is new or has changed but the market remains concerned and it is a shame that such a good portfolio of assets is under threat, holders must hope that a deal can be hammered out.

Sundry

Round at Nighthawk Happy Jack is not so happy, the well bearing his name has just come in as a dry hole. At the same time the company has downgraded production guidance and interestingly after my recent comments, have now only one broker name at the foot of the RNS, has the night of the long knives been extended to advisors I wonder?

Enteq Upstream, as I was reminded by a smart investor this week has not been a brilliant performer. Coming to the market just at the wrong time turned into a nightmare and if Hunting are hunkering down then Enteq are battening down the hatches. Losses as expected but cost reductions are as high as any I have seen in the industry, so much so that cash is actually going up! Expect nothing for the time being but dont write this one off, quite yet…

And it was good to meet up with Simon Hawkins yesterday, back from his break and trying to put the Afren experience behind him whilst learning from the process at the same time. The experience has, unsurprisingly, left some scars but i’m glad to say that he is looking forward to rolling up his sleeves again in the oil sector.

And finally…

The RFU are working hard on the shortlist for new England coach with international experience high on the list of priorities. Having said that I have heard that a certain South African heads the bookies sheets, some would prefer Jack Whitehall to Jake White methinks…

Its Euro rugby time and the Quins started last night with a good win although my spies tell me that the referee made Craig Joubert look like a consummate professional.. This weekend fixtures include Leicester v Stade Francais, Saints v Scarlets, Ospreys v Chiefs, Leinster v Wasps, Toulon v Bath, Racing v Glasgow and the Sarries v Stade Toulousain.

It’s an international break with all that entails, England have a friendly in Spain but for the ROI they have an important trip to Bosnia Herzegovina in a play-off first leg where they hope to qualify for France 2016.

Sunday sees the start of the ATP World Tour Finals at the O2 arena and Muzza, keen not to overwork ahead of the Davis Cup Final appears to be in the marginally easier group.

After the now infamous 3.15 am crash in Monaco, Lewis is off to Brazil for the GP which regrettably now is a dead rubber, as it were but at least Red Bull have announced they are staying in the sport next year.

And a great three days down at Cheltenham where the Open meeting starts today and includes the opening of the new stand which looks fantastic.

Today also sees another One-Dayer against Pakistan, England batting managed to get through at least two overs without losing a wicket this time.