WTI $59.96 -81c, Brent $63.87 -$1.24, Diff $3.91 -43c, NG $2.75 -8c
Oil price
The oil price had a mixed week ending up slightly for the better, WTI was 83 cents up with Brent up 56 cents to the good. On the plus side the dollar was weak, massive refinery runs backed by strong product demand drew stocks down and the rig count was down again, albeit by only 9 rigs, 7 in oil. Countering that was that Saudi Aramco told anyone who was prepared to listen that it could and would increase production ‘to meet demand’ thus rendering time spent by Opec in Vienna pretty much worthless. In this scenario it is worth listening to oil expert David Hufton of PVM when he points out that Opec have revised down their ‘fair price’ from $100 a barrel only six months ago to $75-80 now and the range might be $40-80…
There is little doubt that despite some weeks of stock draws in the US the second half of this year will still see over production of oil and pretty much whatever demand figure one uses worldwide stocks will go into 2016 higher, not lower than expected. It does look like it is the majors’ reduction in their capex budgets that will be more responsible for taking crude oil off the market in the next year or two rather than a battle for market share between Opec and US shale.
ENOC/Dragon
It looks like we are witnessing the denouement of the Dragon Oil story as ENOC have returned with a bid of 750p in cash which has secured the recommendation of the Independent Committee of directors of Dragon. Although there might be some curmudgeonly shareholders who consider the price to still be parsimonious if I were them I would take the money and run. With ENOC saying that once it has reached the threshold of acceptances it will de-list I think that the time for being a braveheart is now over and the time for counting the cash has begun.
Plexus Holdings
I was just thinking that it was about time for some news from Plexus and sure enough another decent order from a new customer pops up. This time it is for Total in the Norwegian North Sea on the Solaris gas exploration well and is worth £3.3m. This well is ultra high pressure and high temperature, indeed it may be the…
