WTI $44.96 +$1.09, Brent $50.41 +$1.80, Diff $5.45 +71c, NG $2.84 +4c
Oil price
A decent rally in the crude price yesterday and it was actually better than it looked, Brent had traded as low as $48.24 during the day, before rallying to close near the highs, WTI not so good as BP’s Whiting refinery distillation plant went down apparently temporarily. All sorts of factors were at work, the Chinese trade data had disappointed on the export front but imports reached record highs in July, partly including oil but all round the world refineries have been flat to the boards so watch out for build up in those markets. The dollar weakened as the Fed’s Fischer was less sure about a September rate rise and of course on the currency front China has devalued the Yuan by 1.9% this morning causing markets to worry about the economy further.
This morning has seen the restart of the first Japanese nuclear power station since the Fukushima disaster, the Sendai plant operated by Kyushu Electric Power has passed all tests and in due course both its reactors will be up and running. When the disaster happened the impact on the economy was significant, since then Japan has had to import LNG and crude oil for all its needs and will continue to do so. There are significant protests about the nuclear industry over there and it will be a long time before the country lessens its need for conventional hydrocarbons.
Today sees the Moscow summit in which the Saudi Foreign Minister visits to discuss global crude prices, specifically to discuss ‘closer coordination on global energy markets’. I don't see this as anything of significance for the oil market per se as Russia’s economy continues to rely on its oil earnings, in dollars, and any cooperation can be modest at best. Finally the retail gasoline and diesel prices fell again last week in the US, gas was $2.629 a gallon, down 6 cents on the week making 88 cents on the year and diesel remains cheaper at $2.617 down 5c and 123c respectively reflecting the continued availability of product.
Wood Group
Wood has announced a $28m, 3 year offshore engineering blanket order from PEMEX for field development in the Mexican sector of the GoM. The order encompasses deepwater as well as complex shallow water engineering and the company feel that they are very well placed in the region.…
