WTI $50.42 -$3.56, Brent $55.55 -$3.55, Diff $5.13 +1c, NG $2.62 -6c
Oil price
I said yesterday that the oil price was 'resilient' in the face of most influencing numbers being bearish and yesterday it was the EIA inventory stats that broke the camel's back, so to speak. Market expectations were for a build of 3.3m barrels of crude so coming in at 10.9m when the so called experts had gone low in the hopes of the high API number just being a catch-up were proved wrong. In fact, stock levels are very high across the board, crude has 100m barrels more than this time last year and even gasoline and distillates are 33m higher year on year and we haven't even started building ahead of the driving season yet. I mentioned also that the EIA had forecast lower US production, the actual number is now a mere 9.39m b/d 'well' off the peak of 9.42m achieved on March 20th….
Shell
Taking a look at the press today it seems that most journos have elected to err on the side of caution with regard to the BG bid describing it as 'a huge bet' or a 'huge bet on LNG and Brazil' or using 'aggressive oil price assumptions'. One or two have seen through the short term and see it for what it is, a potentially game changing deal for Shell in which it solves a lot of problems in one go. I dont think that they have overpaid for BG, I think that BvB has done a 'transformative' deal and consider the near 10% fall in the B shares to be a great buying opportunity.
Rockhopper / Premier / FOGL
For the above three Falklands participants the drilling programme in the northern basin goes on with the spudding of 14/20-1 Isobel Deep well. This is a high-risk, high-impact well targeting the Isobel deep fan in the area of maximum mapped reservoir thickness and has a GCoS of 20%. The well is targeting Gross Pmean resources of 72mmbbls (range 9-207mmbbls) although the complex as a whole in this area has gross Pmean prospective resources of just over 500mmbbls. As such the well is an out and out exploration prospect and will take around 30 days to complete.
Rockhopper has two other announcements this morning in the form of final results and the confirmation of the CGT liability…
