WTI $50.89 -2c, Brent $57.72 +21c, Diff $6.83 +23c, NG $2.87 +2c
Oil price
The oil price drifted last week mainly as a result of the conclusion of the Iran nuclear talks. I detailed the time-frame in the blog which implies exports of crude maybe early next year but as for floating storage it is more a case of gentlemen start your engines, with tankers already heading east from the Gulf. Quite how much there is out there is debatable but let's assume something approaching 50m barrels which sounds a lot but is only half of one day's world supply…
The Chinese 2Q GDP data was reassuringly in line with central Government's ‘ahem’ forecasts of 7% in what is a quiet week for economic data but the rig count on Friday had a minus in front of it when a number of forecasters were suggesting a bounce. Baker Hughes has overall rigs down 6 at 857 with oil units down 7 at 638. Canada rigs rose sharply again, this week it was gas rigs up 16 of the overall gain of 23.
My traditional adage of Saudi production vs exports in the summer months looks like being franked again this season with some data showing that May exports were down to 6.94m b/d down from 7.74m b/d in April. My industry spies tell me that it is only a matter of time before the production number gets to 11m b/d so we can read two things into this differential. One is my old theory that during summer months domestic demand for oil increases substantially as power generation rises to cope with mainly air conditioning, the other is that the Kingdom is refining much more of its crude to export as product thereby adding value in the chain.
Elsewhere the dollar remained strong creating more downward pressure on oil prices which fell around 3% on the week, Brent expired last week and the WTI August contract goes off the boards tomorrow.
Finally there have been a few whispers that the 14th round of UK onshore licences are about to be announced, certainly my read on the gossip is that the new team at DECC are pushing for release ‘within weeks’.
Tullow Oil
Tullow has announced that gas exports from the Jubilee Field in Ghana have been suspended since July 3rd for technical reasons and will resume in mid August. As a result of this oil production…
