WTI $74.34 +1c, Brent $84.16 -42c, Diff -$9.82 -43c, NG $3.14 -2c
I was away last week and the oil price went onwards and upwards, WTI rose $1.09 and Brent $1.43 albeit with a fall on Thursday. The week saw a rally on speculation about a lack of production led by Mr Trump but which was curtailed by concerted action from Opec+ in that respect. I say Opec+ but really mean the KSA and Russia where the former is now up to 10.7m b/d, up around 250/- b/d and the latter who say that they can do another 200-300/- b/d more, thus bringing on the necessary 600/- b/d by the year end. The US inventory stats also kept a lid on things as stock builds were higher than expected and demand faltered, the tight market is working quite efficiently.
In my view the oil price is doing almost exactly what I expected it to do, sure it has overdone it a bit on the upside but that usually happens and that $70-80 is as good a range as any. Opec+ can add a bit more in extremis this quarter, which it might be called upon to do, but the President can’t complain that the spigots are not working almost flat out, caused mainly by his sanctions on Iran. There is a caveat of course and should Libya, Nigeria or Venezuela to name just three have a further fall in production this quarter it may take some drawing from stocks.
The action by Opec+ is also very encouraging, by taking this action they are, de facto, acknowledging that they are the swing producer in the world oil market and are exercising their role sensibly. I expect that next year, when things are much less tight, they will resort towards the November ’16 quotas and support the price when supply is more abundant.
i3 Energy has announced a major management shake-up whereby CEO Neil Carson has stepped down and is replaced in that role by Majid Shafiq who moves from a non-executive role, ‘with immediate effect’. The management changes are in my view certainly needed and credit should be given to the company where it is due, it has realised swiftly that things couldn’t go on in its current shape. The changes seem to be the right course of action for both inbound and outbound CEO and I expect some new momentum to be obvious from the start. Neil Carson stays with the company as an NED but whether that will be for the longer term will be interesting to see.
Recently the share price has taken a proper pounding as the potential loss of its partner in Liberator, whilst not permanent, led to a loss of confidence not helped by management saying only days before, that the company would not need any further funding. In a company with only one operational asset that is an accident waiting to happen and the market is now waiting for some sort of a deal, either being plan A or with a new plan B partner.
I know Majid Shafiq and whilst this is, I think, his first CEO role in an independent oil company it may be the right time for him to test his significant skill and experience in the oil market. He is a very impressive man and I have little doubt that this natural progression to such an executive role will, on a technical basis on Liberator and on a financial basis with partners, financiers and shareholders be rewarding for all those concerned. He is also very lucky that he has CFO Graham Heath to work with as he gets going, I can think of no one better as he settles into the CEO office.
With all to play for I suppose that the Noisy Neighbour’s trip to fortress Anfield was always likely to be a low scoring draw but Mahrez’ penalty miss with five minutes to go will haunt him for a long time…Elsewhere in the Prem Chelski won easily at the Saints and the ever improving Gooners stuck five on the Cottagers. With Spurs scraping a 1-0 against the Bluebirds it was at Old Trafford where the fun was as the Red Devils came from two nil down (and could have been more) to beat the Magpies 3-2 in added time.
Over at the newly named ‘Paris Longchamp’ it was time for the Arc, one of the most prestigious races of the year and despite being seriously under the weather the wonder filly Enable got Frankie over the line, or was it the other way around?
And in Japan the F1 Grand Prix was again won by Lewis Hamilton who yet again turned his qualifying genius into race time domination. With Sebastian Vettel and his team a laughing stock in qualifying he then fought once too may times with Max Verstappen and is now almost down and out ahead of Austin, Texas in two weeks time.
At the inaugural Thailand MotoGP Marc Marquez, despite his considerable lead in the Championship, showed no signs of relaxing when his Honda held off Dovizioso’s Ducati challenge to win by 0.115 of a second. The Yamaha’s of Vinales and Rossi were 3rd. and 4th., an improvement but not where they ought to be.