WTI $40.46 +71c, Brent $43.08 +89c, Diff -$2.62 +18c, NG $1.66 -1c
Oil is very solid at the moment and in a good way, nothing fancy just regular gains and in the case of WTI one can hardly remember the 20th April just two months ago. That day you will remember when the May contract expired and all sorts of punters got caught with their drawers down as WTI went into negative territory.
Those on the trading desk at Trafigura that day I’m told will never forget it as they ‘came to the rescue’ to those that were long and wrong and had no storage facilities to hide their open interest exposure. Last night the expiring July contract closed at over $40 as did the August contract which is a first since that fateful day on the 9th March when the Saudis pushed the button to increase production by 20%, how things change, August WTI is $41.30 as I write.
The US retail gasoline figures are in and as demand picks up so does the price at the pumps, this week at $2.129 a gallon of gas is up 3.1 cents w/w, up 16.9c m/m but still down 52.5c y/y. Deloitte’s has published a report saying that US shale is ‘in for a period of great compression’ and suggest a figure of $300bn of write-offs…
After some press speculation Woodside has been forced into a statement in which it reiterates that first oil from the Sangomar Field Development Phase 1 remains on track for 2023 ‘in line with previous guidance’.
Another update from SDX in which the company says that it is expecting to maintain a gross production plateau of c. 50 MMscfe/d for a further 18-24 months to mid 2023 and plans to go on to mid 2026 dependent on exploration drilling. After integrating the results of the successful Sobhi well with the remapped 3D seismic over the South Disouq concession, management estimates that incremental prospective resources of c.100 bcf have been identified and de-risked across five prospects.
In the West Gharib concession the company plan a drilling programme between 2021 and 2023 costing a gross +/- $8.0-10.0m (SDX: $4.0-5.0m) with the potential to increase gross production from c.3,200 – 3,300 bbl/d to c.4,000 bbl/d by 2022.
As for Morocco, LMS-2, which apparently looks like LAM-1, is subject to testing but might contain 1.5m bcf and has the potential to de-risk a further 6.0 bcf in separate compartments within the same feature. Management also seems confident enough to estimate that a further 3.4 bcf of close by prospective resources will be de-risked if LMS-2 tests successfully, increasing the overall prospective resource potential to 10.9 bcf. Subject to COVID-19 restrictions the company hope that this will commence in late Q3 early Q4 2020.
The frenzy of footy continues, last night the Noisy Neighbours beat Burnley 5-0 and tonight it’s the Foxes hosting the Seagulls and Spurs entertain the Hammers.