WTI $42.94 -10c, Brent $45.46 -71c, Diff $2.52 -61c, NG $2.25 +4c
A predictably quiet day on world oil markets with the US closed for Thanksgiving. Poor Chinese economic data pushed prices down somewhat and has done so again this morning but crude looks destined to have an up week, albeit modestly.
This day last year the Saudis, ahem, Opec, were announcing the new policy of going for market share, or as they said, not subsidising high cost producers around the world. Has it been a success, well the jury is still out and may be for some time yet. Remember that the oil price had already fallen by around $35 in the run-up to the meeting as fears of a confrontation grew. There is little doubt that the Gulf producers wouldnt have expected prices to fall so far but now they are in it and staying in it. Probably the biggest error was to think that US shale would blink first, it didnt due to a combination of hedging, debts being maintained and considerable efficiencies making production work at well below $50. Who did blink then? It was the majors with no scope in the balance sheets to maintain capex and pay debt and dividends out of reduced cash flow. My guess is that we now have around $300bn of projects binned by the majors, some of which will never reappear. It is all down to timing, that the US producers could maintain flow which is only just pegging back and that the majors cuts wont take effect until next year at the earliest. When all this kicks in watch out as although the world is floating on a sea of oil at the moment, it may not always be so.
Anyway, back to the here and now, we are still playing the game of taking it in turns to lobby Opec with the meeting still a week away. Yesterday it was the turn of the Russian Oil Minister, Alexander Novak who said that Russia and Saudi Arabia are to set up a ‘special joint working group’ on oil and gas cooperation. It must work if it’s a ‘special’ working group mustn’t it….
Lamprell has released a trading update ahead of an analysts trip to Dubai this weekend. Having not made any comments recently while other oilfield service companies warned, we assumed that things must still be going fairly well at Lamprell and it seems that they indeed they are. 2015 results will be in line with previous guidance albeit still heavily 2H weighted. The company say that they continue to ‘deliver strong operational performance across all facilities’ which is very encouraging in these markets. Project Evolution is progressing well with cost savings and efficiency benefits contributing to maintaining the groups competitive position and offsetting some margin pressure.
There is clearly some slowing of awards which so far isnt having a direct impact on numbers but is slowing the speed of conversion of pipeline into backlog. The company’s major client, NDC, has extended its options on two jackups and added one new, additional rig to the potential order with expiry at present scheduled for end of 1Q 2016.
The visit will be an opportunity to see what has changed since Jim Moffat took over, for those of us who saw it before it may be some transformation. Given that Lamps are using their facilities to allow clients to stack rigs, currently eight in the yard I expect the place to look pretty busy despite the challenging conditions. More on my return but I remain happy that Lamprell is delivering the goods in more ways than one.
An action packed weekend in sport, something for everybody.
Its the Davis Cup Final starting today with the UK taking on Belgium, usual pressure on Muzza to get three points then…
The final Grand Prix of the season in Abu Dhabi but its all been a bit of after the Lord Mayors Show now that Nico has started trying after it’s too late…
In the ring it’s Tyson Fury v Wladimir Klitschko for the title of best boxer on the planet, a punchers chance they say…
Yesterday saw the first T20 game between England and Pakistan in Abu Dhabi, where it’s all happening this weekend. England won with new boys Vince and Billings stating good cases to be in the squad. Game two is today so its all happening on a Friday afternoon.
There are some cracking rugby matches including the Quins at the Chiefs and Leicester v Bath which harks back to proper rugby and over the pond the Thanksgiving weekend has more NFL action.
Its the Hennessy Gold Cup on a great card at Newbury as the jumps season continues with old favourites and new stars on show.
Last night in the Boropa Cup Spurs and the HubCap Stealers went through and Celtic failed again and are out of European football again, oh well I suppose Delia will get her manager of the month award as usual…
This weekend in the Prem sees a number of properly good clashes, not least the top of the table fixture between the Foxes and the Red Devils, you wouldnt have seen that coming, well maybe Leicester being top… Tomorrow sees Villa v the Hornets, the Cherries v the Toffees should be tasty, sorry, the Eagles have another go at a North East club taking on the Magpies, the Noisy Neighbours host the Saints and the Maccams have the Potters. On Sunday the big derby is Spurs v Chelski at breakfast time while the Baggies go to Upton Park, the HubCap Stealers host the Swans and the Canaries entertain the Gooners.