Firstly there was no "massive sell off" only around 5 million shares were traded and many of those trades were wrongly shown as sells instead of buys. The Saudi oil minister has been removed because his strategy was not working and has damaged Saudi Arabia in the process. Let's see what happens under the new minister who will in effect control OPEC.
Today our favourite underperforming share has a massive sell off and the price goes up. No material new news unless we didn't like the Saudi oil Minister. Ho hum, more of the same please as I have a long way to go to break even!
Malcy's Daily Blog WTI $44.66 +34c, Brent $45.37 +36c, Diff $0.71 +2c, NG $2.10 +3c Oil price Last week the bears had it, WTI fell $1.26 and Brent exactly $2 as fears of over supply, weak Chinese data, a strong dollar and poor labour data from the US meant that oil drifted in patchy trading. This week could be anything but for choice the bulls may have the upper hand. For them they see supply outages around the world becoming more meaningful as Canada joins Iraq, Libya, Nigeria, Venezuela, Brazil and others who have cut back production one way or other recently. Indeed the fires in Canada could mean more cuts and for longer, I am hearing around a third of production is shut-in, say 600/- b/d and may be for some time, with that number and the others mentioned it’s not difficult to see 1m b/d off the market, albeit of a temporary nature. Not of a temporary nature is the excellent article by Ed Crooks in the FT today, ‘investment cuts see oil discoveries hit 60-year low’. As you know I have been banging on about what is now the best part of $500bn worth of investments canceled or back-burnered, here Ed talks about last year’s discoveries of 2.8bn barrels of oil and liquids as being the lowest since 1954. With offshore spend apparently taking the biggest hit, then the medium and longer term projects will be the hardest hits, in the absence of fossil fuels being replaced there is only one meaningful and long term source… Talking about Saudi Arabia, much is changing and the weekend found Oil Minister Ali al-Naimi replaced at the helm by Khalid al Fatih who was Chairman of Saudi Aramco so policy will probably not change per se. What is changing under MbS is that project 2030 means that lessening of dependence on oil and of course the potential flotation of SA in 2017/18 at a mooted price of some $2.5tn means that if I can use the expression, ‘nothing is sacred’.
Range Resources More good news from Range this morning, one cannot dispute that the management are continuing to make deals that, should all go according to plan, and the guidance target of 2,500 b/d by the end of 2017 is achieved, then returns should be higher. Today they have announced that they have agreed with Petrotrin that they will reduce overriding royalty rates on the Morne Diablo, Beach Marcelle and South Quarry fields which will mean that the revised ORR’s will apply when the WTI price is below $50. At current production levels the impact will be minimal but will progressively increase at higher production levels with the revenue benefit estimated to be 7% at 2,500 bopd and the same oil price. The company say that this is ‘a welcome incentive introduced by Petrotrin at a time of sustained lower commodity prices’.
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