WTI $53.76 -14c, Brent $61.82 -32c, Diff -$8.06 -18c, NG $2.28 -5c
The oil price is up around $1.50 this morning after a host of factors led to the market bulls taking charge. Firstly, the inventory stats were at long last a bit more positive than the scribblers guesses, crude drew 3.1m barrels, gasoline 1.7m b’s and distillates 0.6m. Gasoline sales last week were up 2% y/y at 9.7m b/d and with refining capacity at 93.9% summer driving was certainly kicking in.
Secondly, as predicted here weeks ago, Opec+ will meet on July 1st and 2nd to discuss quotas and the market in general, it will be a rubber stamp for sure but there will be some tough sessions. Finally there have been a couple of acts of aggression in the Middle East overnight, it seems that Yemeni Houthi rebels have hit a Saudi Power station although the news has not been confirmed. The level of Saudi reactions will give an idea of how bad it was, elsewhere Iran has claimed to have shot down an unmanned US reconnaissance ‘drone’, again the level of response will indicate how hard these two bears have been poked.
With the markets perked up by the Fed opening the door to rate cuts again it looks like it’s risk-off for a while.
Chariot Oil & Gas
Yesterday I had the chance to do an extended interview with Chariot Oil & Gas CFO Julian Maurice-Williams. In a wide-ranging discussion we talked about the Lixus licence acquisition and also this week’s announcement regarding the Development Feasibility Study and also the Morocco Gas Market Assessment and a lot more.
In our discussion he talked about the much bigger addressable market for potential partners and how well that process is going, Chariot have historically been very strong in this respect and it looks like this time is no different. With a strong, fiscally attractive market within Morocco and the potential to export through the Maghreb pipeline into Europe the opportunities are plenty and the Lixus licence can be developed via a single phase or staged development.
Chariot has added a genuinely high value asset and with potentially near term cash flow possible the shares look highly promising, at less than 5p and with at least 4p of cash in the balance sheet the shares are well funded and have serious upside from these levels. The link to the interview is below.