WTI $46.75 +50c, Brent $50.68 +18c, Diff $3.93 -32c, NG $2.72 +8c

Oil price

As the weekend approaches and we see some consolidation in oil prices the markets are as uncertain as ever and looking further out there is no strong feeling of security. I suspect that market participants, as we can call them, will be happy enough with $46.50 and $50.54 respectively for WTI and Brent but not exactly doing handstands quite yet. That is because for the oil market, particularly in the USA this weekend is a meaningful one. It’s the Labor Day holiday weekend and that means only one thing, the end of the driving season with all that that entails. From now on the demand for gasoline falls off quite sharply and even at $2.51 a gallon the temptation to drive halfway across the States diminishes rapidly. Refinery runs should slow as the owners use the autumn downtime to switch to heating fuel and the risk of crude oil stocks rising is a real one.

This weekend also is preceded by the Non-farm payroll number, more eagerly awaited than usual as the Fed is trying to decide whether to raise rates at their September 17/18 meeting or to wait. I understand that with consensus at around 217/- added jobs a low figure will push the rise off maybe by a quarter, 300/- would mean September for sure. The only other stat worth watching should be the pay numbers, inflation is also a key factor in the process. Finally Baker Hughes will provide the rig count this afternoon.

Egdon / Europa

News from Egdon this morning about the EWT at Wressle-1 which has had somewhat mixed fortunes. Nothing to seriously upset the apple-cart and generally quite bullish when you ask Mark Abbott to explain it as I did. In the Penistone, oil and gas have both flowed but so far it is yet to produce any formation water. It appears that the oil/water contact is deeper than previously thought and in such a reservoir with gas over oil it is important to know just where that is if only for optimisation of future well placements.

So for now the plan is to prepare for a work-over of the well to remove the existing completion, cement off Zone 3A perforations and open new ones. After that they will use radial drilling, again which I had to ask Mark Abbott about…

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