WTI S45.94 +$2.74, Brent $49.05 +$2.24, Diff $3.11 -50c, NG $2.03 -6c
Oil price
A meaningful rally yesterday but not much red meat to get stuck into, the Fed kept rates on hold whilst not ruling out a hike in December which actually strengthened the greenback, the bounce might have been higher otherwise. The EIA inventory stats also provided a glimmer of hope, albeit slightly clutching at straws. The build was only 3.4m barrels, lower than the whisper by 0.2m and importantly lower than the API number on Tuesday, stocks at Cushing fell by 785/- barrels which also helped. On the product front stocks fell by more than expected with gasoline down by 1.1m barrels and distillates by 3m barrels which is quite telling at this time of the year.
Shell
3rd Quarter figures from Shell this morning and the clean figure is all but obscured by some hefty write-offs. The number they are pointing us to is $1.8bn of profit which is some way below the whisper. The picture is pretty much the same as elsewhere with upstream being smashed and downstream putting in a good shift, operationally the company is in good nick and costs are falling across the board. Once again it is worth emphasising quite how important these cost savings really are, most of these companies are already fitter than they were at over $100 oil by some distance. Shell say that dividends are covered by operating cash flow at $60, gearing remains at 12.7% and production gains continue to be made. The BG deal is very much alive although write-offs for the Arctic and Carmon Creek are substantial.
Wood Group
Wood has cemented its relationship with BP by announcing a global subsea contract with the company over a five year period. No mention of value or more importantly margins but Wood have been remarkably confident lately on the mark-up front.
Falkland Oil & Gas
After last week's announcement it did look like Humpback might be dry and today’s announcement of ‘non-commercial quantities of oil and gas in a number of sandstone intervals, including the main APX-200 target’ confirms that call. Whilst some faint hope can be taken from the existence of a working hydrocarbon system I find it difficult to come to any other conclusion than further exploration in the south may be a long time coming. The operator also said that for ‘operational reasons’ it was…
