WTI $47.23 +$1.27, Brent (November contract) $52.86 +$2.13, Diff -$5.63 +73c, NG $3.04 +10c

Oil price

It is Labor Day in the US on Monday which is the traditional last day of the driving season gives a last boost to product demand and signals the time for refineries to start thinking less about gasoline and more about heating oil. This year things are different, around 25% of all refining capacity is off the market and gasoline futures have risen by 28% week on week which as mentioned yesterday will swiftly appear in the retail price. Indeed, yesterday saw the first release of crude oil from the US strategic reserve with 1m barrels headed to a  fully operational refinery in Louisiana, first release in five years but not the last. November Brent had a particularly good day as traders were extremely reluctant to have any short positions.

Opec and Non-Opec have a chance to make the system work, although US refining demand for crude is down, and by more than the production shut in, with problems in Libya all week slightly as predicted they can keep the international market tight.

Savannah Petroleum

SAVP has announced a corporate and Niger update this morning, the Seven Energy exclusivity agreement announced back in June to potentially acquire the bulk of its Nigerian assets is still in place and discussions continue. Expect updates ‘in due course’ and the shares will remain suspended until the Admission document is published or should discussions be terminated. My expectation is that period will be a matter of weeks rather than months as I understand that discussions are progressing well.

With regard to Niger, operations are continuing to progress and equipment and the security team has been mobilised in the company’s new Jaouro base camp. The company has decided not to commence drilling until the shares are readmitted to trading in order to ensure an orderly and efficient market. In my view this is an eminently sensible move as it would send out the wrong signals if shareholders were unable to trade in the shares during the drilling process. The 3D seismic dataset is of ‘excellent quality’ and has met the company’s key objectives of enhancing the seismic imaging of the Eocene Upper Sokor and Alternances plays and provides better definition of the deeper prospective Cretaceous structures.  Accordingly all this information will be included in an updated CPR which will be published at the same time as the admission document.

Whilst one cannot say until the deal is done, the acquisition of the Seven assets would clearly be transformational to SAVP and fit alongside the exploration activity in Niger very well indeed. In fact the Niger drilling campaign was always looking very exciting and in itself a likely company changer. Given that, come the autumn with a fair wind on both fronts, patient shareholders should be rewarded by an opportunity significantly in excess of first expectations. SAVP was due to go into the bucket list at the summer break and on readmission should be able to take its place as it is clear that Andrew Knott is building an African E&P company with serious ambitions.

And finally…

Another great spectacle of the British sporting summer is now the T20 finals day at Edgbaston where fans come from far and wide, often in amazing fancy dress to watch cricket but also the mascot Derby…I’m watching out for a bunch of lads in lederhosen from down here…

It’s the Italian Grand Prix at Monza, to many, especially the Tifosi, one of the homes of F1, certainly Ferrari. After this the circus heads to Singapore in a fortnight where things change a bit.

The deadline day was a bit flat, some business was done but I wonder what happens to those who wanted to leave but were left stranded at the altar, Nobby no mates one suspects…Now it’s the dreaded international break which we all hate, this weekend England are in Malta, Northern Ireland play San Marino, Scotland are in Lithuania, Wales entertain Austria and the Republic of Ireland are in Georgia.