WTI $57.26 -$2.17, Brent $64.02 -$2.25, Diff $6.76 -8c, NG $2.95 -6c
Oil price
Another bad day in the crude markets yesterday as a combination of continued dollar strength, absorption of Saudi export numbers and profit taking in WTI as the June contract expired. Indeed volumes of the next month July contract were noticeably higher than usual as traders saw more than usual rolling over of positions, not surprising considering the massive amount of open long positions at the moment.
Upward pressures at the moment might come from the better than expected GDP figures from Japan at 2.4%, a possible strike in the UK North Sea as the GMB and Unite unions protest about new working conditions and inventory reports from the US ahead of the Memorial Day holiday weekend. The inventory figures are beginning to help out a bit, last night the API numbers showed another draw, this time of 5.2m barrels against a consensus of only 1m which shows that the analysts aren’t getting any better…Let's see how the EIA numbers look tonight.
Faroe Petroleum- Ahh Bister….
Faroe has announced that its Bister well in the Norwegian Sea has not encountered hydrocarbons. Whilst this is a disappointment to the company I believe that the upcoming wells, particularly on Pil are much more important and have always thought that it will be the second half of the year that will determine value addition for Faroe. After Pil, where the company are drilling the first of two follow-up wells, Faroe will target the Blink and Boomerang prospects. Whilst this is not good news for Faroe and the shares are off their recent peak of around 90p I would reiterate that investors should not lose faith and that the stock remains firmly in the bucket list.
Sound Oil
Yet more news from Sound this morning as early indications are appearing from the Nervesa gas well which is drilling at the moment. The well is ahead of schedule and below budget and the wireline logs and the logging while drilling have shown evidence of gas very much as per the original discovery. The next few days of testing should be most interesting and for ten days the webcam on site will be highly educational. Should Nervesa come in satisfactorily then the next piece of the Sound jigsaw will have worked, my intermediate valuation of 30p will be franked with substantial upside to come from the…
