WTI $59.13 +$1.13, Brent $63.31 +$1.28, Diff $4.18 +15c, NG $2.59 -4c

Oil price

So, the Opec meeting concluded as expected with a rollover of the existing 30m b/d quota and to add insult to injury the communique ‘urged members to adhere to it’ which adds fuel to the fire. The market had a relief rally after the announcement as some commentators had predicted that the cartel would abandon the number given it is so flagrantly breaching it. Having said that crude was down on the week, $1.17 for WTI and $2.25 for Brent which given the short term fundamentals is probably not enough. June still has many gifts to give the oil market and whilst most informed opinion coming from the Iran talks say that nothing will be agreed it would be foolish to assume no more Iranian crude on the market quite yet.

From the USA, the non-farm payrolls on Friday came in at 280/- which was way up from the consensus of around 225/- indicated that the economy may be hotter than previously expected and that more dollar strength is likely, again not good news for the oil price. Against that, US car sales are up again, now at a 14 year high giving credence to not only the economy bulls but to those predicting higher gasoline sales. Finally the rig count figure on Friday was mixed, the number was down by 7 rigs, 4 in oil, but remember that the number is a net one, I am led to believe that in some areas of high production rigs are now adding and it is surely only a matter of time before its a plus sign on the number. Comfortable at $60? US shale operators are now cutting costs so much that apparently they are making more money at this price than they were at $95 crude…..

Sound Oil

Sound has made two announcements this morning regarding Morocco and Nervesa. They have signed off the recently announced farm-in to the Tendrara licence in the country which they describe as ‘ a transformational deal in the Mediterranean gas strategy’ and will lead to an exciting exploration phase with multiple TCF potential. Expect this to start with a well in the 4th quarter of this year and if successful at least a three well programme in the country.

Regarding Nervesa it looks like there is more time needed to clean up and stimulate…

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