WTI $49.20 +$3.98, Brent $54.15 +$4.10, Diff $4.95 +12c, NG $2.69 -3c

Oil price

With WTI rising by 8.8% and Brent by 8.2% yesterday, the rise from last Wednesday's $39 and $43 plus change has been nearly 30% in less than a week. Such volatility was helped by a solid blast of short covering and a belief that something was going on behind the scenes involving Opec and ‘other helpful parties’ strongly thought to be the Russians. This morning some of the froth has been blown off with the Chinese manufacturing PMI numbers being just as bad as expected and markets have fallen accordingly.

The Opec monthly bulletin was out yesterday and the statement within it also helped to fan the flames saying that; “Needless to say, OPEC, as always, will continue to do all in its power to create the right enabling environment for the oil market to achieve equilibrium with fair and reasonable prices. As the Organization has stressed on numerous occasions, it stands ready to talk to all other producers. But this has to be on a level playing field. OPEC will protect its own interests.”  For other producers read Russia….

The EIA also had a report of its own and actually revised down US production to 9.3m b/d in June after expectations of a bit higher, also the average for first half production was only 9.4m b/d, again slightly less than expectations. Friday's rig count showed a fall overall of 8 units but in oil it was actually up one to 675 maintaining the recent base. With stocks of product rising as the driving season nears its conclusion at the forthcoming Labor Day weekend, retail gasoline prices have fallen again, at $2.51 a gallon juice is off another 13 cents on the week or a whopping 95 cents on the year which has to be helping the economy.

This week will again be very important on the inventory front, the API stats tonight are forecast to show a draw of 1.5m barrels, anything better than that will probably keep the market happy, a build would deflate the recent optimism.

Eni

It is rare for an oil company to make a find that might change the economy of the country in which it operates, but the announcement by Eni that its Zohr find may contain 30 TCF of gas and maybe some oil is truly significant for Egypt. The company estimate that…

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