WTI $44.07 -59c, Brent $45.58 -77c, Diff -$1.51 -16c, NG $2.77 n/c
Another poor week for the oil price as cynicism grows about whether the deal broached in Algiers can hold any water. The cold hard facts say no, Opec is producing nigh on 34m b/d and to get down to even 32.5m b/d stretches the imagination somewhat. Indeed gossip around on Friday suggested that the Saudis had already lost faith and were threatening to turn on the spigots. But at the ADIPEC conference, one by one Ministers continued to talk a strong book. The UAE Minister has said that ‘the glut is almost gone and we are at the bottom of the cycle’ whilst the Opec Secretary General has said that Russia is ‘committed to the Algiers accord’.
Last week WTI lost $4.63 and Brent shed $5.10 whilst the rig count rose by 12 overall to 569 rigs and oil units were up 9 at 450 which doesnt help the situation. The NFP was below expectations at 161/- but the excuses for no rate rise from the Fed are wearing a bit thin. With US elections tomorrow exhibiting two highly unsatisfactory candidates, the oil industry will reluctantly revert to form with Republicans likely to open up pipeline networks and have less favour with climate change probably edging industry preference.
An operational update this morning from SOCO who say that their 2016 drilling programme on TGT, offshore southern Vietnam has finally got under way. The first of two infill wells spudded yesterday in the central area with the possibility of two further infill wells on the southern well head platform.
Production guidance this year has been for 10-11,500 b/d and due to the lack of drilling, downtime due to pressure testing on the Ca Ngu Vang Field and stoppages for rig positioning the company now expect it to be at the lower end of that guidance which is disappointing. Whilst this piece of news is indeed slightly disappointing it is hard not to like SOCO as an annuity on the Vietnam asset, with cash operating costs of under $10 a barrel and a strong balance sheet with $81m available for drilling spend and further dividend payouts if appropriate. Hence, why although I don’t include anything outside the South East Asia primary area of interest this asset alone is worth the share price and a lot more into the bargain.
All hail World N0 1 as Muzza wins in Paris and wakes up on top of the world this morning which is nothing less than he deserves. He will go into the end of season big bash in London seeded No 1 as he will in a number of tournaments next year.
The football turned out more exciting than may have been expected, the Noisy Neighbours dropped a point against Boro as did the Gooners and Spurs in drawing the North London derby. The HubCap Stealers put on a great display, putting half a dozen on the Hornets and Chels cruised past the Toffees to put those two sides first and second in the Prem. Even the Red Devils managed to hit the back of the net…
The autumn rugby internationals started up with a win for Ireland over the All Blacks, in Chicago for some reason… With Wales being soundly beaten by the Wallabies which looks ominous, it took the Baba’s to get a 31 all draw with the Springboks.