WTI $55.74 -97c, Brent $63.45 -53c, Diff $7.71 +44c, NG $2.63 -5c
Oil price
The oil price ended the week up, resuming the positive trend and keeping the bulls happy. Whilst I wouldn't want to rain on anyone's parade I feel that there will be some testing of the lower levels in the next few months. In the meantime the signs are quite positive, as I mentioned last week refiners have their buying boots back on post the maintenance season and ahead of the driving season which starts on the 25th of May this year. Margins are reasonable and gasoline prices have remained stable over the last few weeks and well up from the low of $2.04 per gallon at the nadir of the oil price.
Friday's rig count was pretty good, a fall of 34 rigs overall is a more meaningful weekly number on 954 rigs, for oil the fall was 26 to 734 which is down 877 units year on year. The service company results season is upon us and we will be reminded just how bad things are in North America but maybe not so bad on the international front as reported by SLB and HAL.
Petrofac profit warning- Maybe my model was better than theirs…
Another profit warning from PFC this morning as yet again the costs on Laggan-Tormore have run away with them. Having already set aside $230m they now say that due to inclement weather and industrial action there will be another $195m down the proverbial as they realise just how much man hour costs are over here. Although there will be some tax deductability it will mean a reduction in profit forecasts and even as someone with such a rudimentary model, as implied by the CFO, I can tell you that it is the red pen that is out…
Shares in Petrofac have fallen by a short 15% this morning which reflects that the market thought that unpleasant news from the lump-sum contracts at L-T and Stella was behind them, clearly this is not the case. Up until now I had been giving the company the benefit of the doubt on the experiment with the deep offshore investment, maybe I have been too kind, let's hope that this is the ultimate wake-up call on lump-summery. Until both these contracts are signed off with no further red ink the market will caution, and having risen by circa 80%…
