WTI $68.96 +$1.30, Brent $73.45 +$1.06, Diff-$4.49 -$2.10, NG $2.82 +6c
A day of two halves on the oil bourses as initial news that Russia had produced 11.21m b/d in July, up 150/- b/d upset traders, bless their little brains they wouldn't have thought to look up and find that that was exactly what was being produced when the 11/16 accord was signed…
Better news emerged when Genscape published that there had been a fall in stocks at Cushing of 1.1m barrels which was what the market wanted to hear after the unexpected crude build reported by both the API and the EIA. I'm happy with prices in this range, the market has plenty of supply but there is very little room for error if something hit supply somewhere, later in the year the KSA can up production a bit more but all quite tight at the moment.
Finally, it is worth noting an announcement from the EIA this week where they said that US refineries were running at near record levels. In the week ending July 6th the 4 week average for US gross refinery inputs surpassed 18m b/d for the first time since the EIA published this data series in 1990. The EIA added that ‘demand is at record levels in response to robust domestic and international demand for motor gasoline and distillate fuel oil'. Fuel saving, what fuel saving………………….?
Trinty Exploration & Production
Trinity has confirmed that they have repaid all debts to the BIR and the MEEI in Trinidad bringing to a happy end the saga of when TRIN was in all sorts of bother, it is a huge credit to management to have got to this stage so quickly. The company can now move to the repayment of the convertible and leave a totally clean balance sheet ready to tackle the ‘strong inventory of growth opportunities' in Trinidad which should lead to a return to share prices at a much higher level.
AMER is getting a lot of stick in the market at the moment and although the three big wells haven't spudded yet I am sure that any success here should give the shares a decent boost. Add to that the deal announced this week with Gulfsands and the immediate future looks promising. I took the opportunity to have a chat with CEO John Wardle this week about what's going down in Colombia.
The work on the 22 well has gone satisfactorily as announced, I suspect that the well will come back at a decent rate without pulling too hard on it early days. The Gulfsands deal has a number of strategic advantages not least the adjacent block that they own and therefore making access to this block a lot easier. Seismic and drilling will be considered quite quickly as JW does have a team already configured to look into the needs of what might be a relatively simple trap, this won't be confined to the back book of prospects, that's for sure. With a financial flying start thanks to Gulfsands I would remain confident that this is potentially very profitable deal for AMER.
Unfortunately I still haven't had a chance to meet with Mitch but this deal announced this morning needs no explaining. Serica are buying Total out of 42.25% of Bruce and 25% of Keith adding to their stakes in these UKCS fields at what might be $20m but whatever it ends up being will be very cheap and as the company says, cash flow and value accretive.
It adds 11m b's of 2P reserves making 60m b's and is a low risk, reasonable reward deal which gives SQZ, at very limited cost the opportunity to kick on with the scaling up of the business which is rightly being rewarded in the market this morning. Just the sort of deal that the company should be doing and taking advantage of the M&A situation on the UK North Sea.
This week's VoxMarkets Podcast is late for a number of reasons, not all my fault, I may change podcasting a bit in the autumn.
MotoGP moves to the Czech Republic this weekend after the summer break. Although Valentino Rossi has a great record here, it's over a year since Yamaha's last win, their longest drought of wins since 2003 and Marquez on the Honda is still the one to beat as his stunning form have given him a 46 points lead in the Championship. Brit Cal Crutchlow will be looking to regain his Independent rider lead after crashing out last time in Germany.
Glorious Goodwood continues with as ever excellent cards both today and tomorrow…
In the cricket an incredible day was capped for India with a Kohli century but England's lamentable catching, mostly from batters it should be known could have changed everything, you know who you are. Also to the Chef who got out to the last ball of the day, an equally schoolboy error, time to wave him through?
In last night's Boropa Cup Burnley beat Aberdeen and Rangers, Hibs and the New Saints live to fight another day…This weekend sees that start of the Championship north and south of the border and also the Charity Shield or whatever it is called nowadays…