WTI $48.85 +$1.01, Brent $51.82 +98c, Diff -$2.97 -3c, NG $3.35 -8c
The only news in town is the Saudi/Russian rapprochement and the oil price is rising, albeit slowly as it takes on board the ramifications of the deal. Should it go ahead then the oil price hasn’t risen enough although both are about 40 cents better again this morning, clearly a modicum of bear closing. Two things are emerging, both from the bearish camp, who firstly don’t see the deal working, primarily as they dont exactly see eye to eye on Middle East politics, and secondly feel that the 1.8m b/d reduction is not enough and that there should be bigger cuts on May 25th. For me a rollover of current rates until March 2018, maybe with a review at the year end meeting would be good enough, a further reduction would certainly push the price a fair bit higher.
A trading update this morning from Plexus, or as we used to call them, a profit warning. It should come as no surprise to market watchers that things remain pretty difficult for service companies like POS but it is important to differentiate the wheat from the chaff so to speak. The company says that the ‘challenging conditions continued in the second half of the financial year’ which ends in June ’17 and that opportunities are ‘taking longer to conclude’. With a number of potential new contracts I suspect in the pipeline it is wise to flag that they might now slip into the ’18 financial year. Having said that, POS has undergone a substantial cost-cutting and restructuring process and has cut back capex substantially which will eventually pay off, this is a top quality company at the forefront of oilfield safety and will come out of the downturn stronger than before.
In yesterday’s VOX Markets podcast I talked about Premier Oil, SDX Energy and Jersey Oil & Gas, here is the link.
Last night Chelski, already in possession of the title beat the Hornets 4-3 in a spirited battle at the Bridge. Tonight it’s the Gooners hosting the Maccams and the Baggies go to the Noisy Neighbours with the HubCap Stealers watching on hoping for slip-ups for the Champions League spots.VOX Markets podcast: Malcy covers Premier Oil, SDX Energy and Jersey Oil & Gas