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"And just today, India has launched a ~$4 billion plan to boost the industrial conversion of coal into synthetic gas (and, down the line, chemicals), in a bid to reduce import dependence and shore up foreign exchange" Javier Blas "X"

So the relentless drive for renewables has had the unfortunate side result that gas has become more expensive. This helps the use and supporters of coal because although more expensive and dirtier than gas the economic cost (loss) is narrowed. The UK has done its bit in helping the situation by effectively outlawing O&G.

China already uses coal BUT only in:

coal-to-chemicals plants, coal-to-hydrogen, coal-to-liquids, and coal-to-SNG facilities, especially in Inner Mongolia and Xinjiang which means that only around half their energy comes from coal.

In fact China uses more COAL than the r.o.w. combined. Why does Ed continue to do a Nelson and not be able to see this from a distance.

Er. in fact didn't he go visit them recently? I think he achieved a non-legally binding MoU out of it.

The Times has been told that Ed Miliband informed cabinet ministers he was prepared to run for the leadership as the left-of-centre candidate if Streeting prompted a contest before Andy Burnham could return to Westminster and qualify to stand. The claim was denied by Miliband.

President Trump said when asked about Starmer’s future before a trip to China that it was “up to him”, but added: “I told him from day one, you’re getting killed on energy. You’re windmilling your country to death. Open up the North Sea.”

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Miliband could teach Mandelson a few tricks.

Hi siverfern - I asked AI. You can ignore them as apparently they're to do with the plumbing. This is what it said:

The very small values (£1–£10) are the clue. Those are often:

fractional-share residuals,

dividend reinvestment leftovers,

automated savings-plan allocations,

CFD/spread-bet hedging adjustments,

or brokers tidying internal books at the close.

They will not affect the price. The end of the day is probably more to do with it being one of the last tasks of the day and pretty boring. Like tidying the desk or sweeping up the wood shavings in the joinery factory.

Here's a curved ball. What if it's EIG who are the stalker of EnQuest? Makes some kinda sense as there are similarities with what they did with Chrysaor and Premier. With all the experience they have built in the basin and 2 Wars that have changed a lot of preconceptions so why waste any advantage? I've no idea really but the performance, spread and attraction of the tax credits makes EnQuest irresistible to the likes of EIG. We are after all a major Financial Centre and you know what they say about idle hands (and bonuses).

I don't stab at future calculations because you only have incomplete stats. There isn't a massive amount of room to outperform as it all depends on the oil price. In situations like today there is still room to make large profits (or losses) because we have movements at times in excess of $10 rather than the closeness to the first future that we got used to. I imagine that EnQuest are making extraordinary profits if they have a good team trading the book.

I traded FX both as a broker and as a Banker. Sometimes you just go with the flow and that is unpredictable when events are moving so suddenly. China will loom large this week and I haven't a clue about the fallout from that either.

Anyway, I'll leave you with your numbers. I hope it's worth the effort.

Hi Profitaker – you really are a dog-with-a-bone and I admire your persistence, but you are wasting your time unless EnQuest invite you around and show you their books and positions. Perhaps most of their swaps are plain vanilla “hard hedged” — full downside protection, but zero upside participation. They are the dominant and favoured option for companies that want cash-flow certainty. That blows away a lot of the swap calculations.

I don’t know and usually ignore the talk about caps, collars, calls and puts etc because they are NOT FREE and are effectively insurance and head-banging structures that only those quoting or with professional knowledge and insight make any real money. Look at spread-betting – they even tell you that 70-90% of retail lose money. Even those involved in O&G have erratic success down this path. Swaps have some of these add-ons but they are really only for the traders imo [Participation swap, swap with embedded floor/cap, extendable or callable swaps] and those who understand Crypto.

Where it does get interesting is with the unhedged. Some of the volatility is that the other side of the trade may be a Trump tweet. If you don’t hedge and run it all to the front end (as a producer) then you are only trading Dated Brent or what we think of as Spot. I don’t know how the front end works but I’m confident how the swaps (paper) unwinding and settling have agreed methods when the deals are struck and routine.

"Companies like EnQuest have a complicated relationship with lenders who pushed them towards substantial swap usage and they layered collars and options as the balance sheet improved." AI - BUT I read this as EnQuest now having the freedom to increase the unhedged proportion and behave more like a Major *I read that they [Major's] don't hedge and the production is handled by their Trading division.

EnQuest should be making decent money with the spreads on DB against what was normal before the war and they do have a “trading company” which is probably more akin to a sophisticated commercial optimisation unit attached to upstream production rather than a giant merchant energy trading business. Or maybe NOT and they have been making extraordinary profits from it?

Keir's new advisor has save the day. Mr Brown has pointed out that there are 310m tonnes of gold worth £35 billion just sitting around doing nothing and some quite valuable antique silver candelabras and a dinner set at the back of a cupboard in No.11.

For clarity - the smaller amounts to be made are the transition between the hedged into physical. Highly technical requiring a specific skill set of contacts, knowledge, and experience that takes years to command. Storage is one of the most important elements and timing can be in the lap-of-the-gods. Luckily oil is not as perishable as strawberries. The unhedged can be a lottery and where the big profits made but they're saying it will be short-lived. I'm not so sure.

There'll be some deals that aren't dependent upon Dated Brent. They are almost all swap related and effectively hedged. The fun & games is with the unhedged and they play the DB and other instruments. Someone did a calculation and the swaps are almost all UK production so someone cleverer than me can do the percentages of hedged against unhedged NS production.

The unhedged will be down to the trading skills of EnQuest (we do have a Trading arm I believe) and we'll have some regular customers and contacts. The hedged amounts are kinda insured but there is probably still money to be made when the actual mismatches between the paper and delivery/storage etc. takes place and this is mixed up with the unhedged. This though will be for a dollar or so and not the wide differences we have seen recently.

I know the physical side interests a few here but for me the real game-changer is OGPM. I think we have a cornered Government who will now have the added prospect of Scottish Independence coming into play. Posturing and following populism is fine when you don't actually have responsibility as Labour is finding out and it is impossible to deny that whatever they pretend there is a resurgence of the Right. Only this morning we had Sharon Graham of Unite talking about "re-industrialisation". Try doing that with the most expensive energy in Europe!

Labour cannot gloss over Energy Security and Ed's fine words "don't butter no parsnips".

*I like this from Niall Ferguson on Saturday: "Mr Market is as clueless as he was in July 1914, September 1929, December 1972, August 2000, October 2007 and February 2020 — all months when stocks reached highs shortly before reality struck devastating blows."

I can't see Scotland gaining Independence if they ditch O&G. Depends on their priorities - Ideology or Economics. The people know its Economics because they live outside the bubble. My main point is that it is now possible for Scotland to attack a weakened Westminster. Abandoning O&G now would be an own goal. Dave Doogan and Stephen Fl*nn both understand the strategic importance of O&G.

on balance it wasn't worth watching; so no change there. possibly important is that energy wasn't mentioned so is dropping down the immediate priority list. they changed the snp and welsh guest for libdem and green at half-time. piers morgan did his best to make it just a little bit enjoyable but failed.

labour will be plotting their next moves and it'll either be no change and double-down or action because they can hardly make the situation worse.

snp will definitely push for independence and will need o&g. i did pick up on the accusation that nhs scotland performs particularly badly against nhs england judged by waiting-lists (fiona bruce - not the panel so there goes impartiality). i didn't know that the data for the lists are measured differently and you could be counted twice in scotland so it isn't apples-to-apples.

but

there was something that triggered an important signal imo (around 17:00). dave doogan is impressive (unusually for a politician he's had a real job) and stated that post election 2/3rds of scotland wants independence. what he said is hard to dispute - what happens in scotland is not contingent on the rest of the uk but what happens in westminster is contingent upon scotland. then he mentioned 2028 and that is imo a marker for an independence vote. they will go for independence with a referendum or "some other mechanism".

westminster has decided there is no future for o&g. fair enough. but if scotland is independent it has a very important future as scotland knows that norway is closer to them them than westminster and a more useful model. *aberdeen to stavanger 310 miles; aberdeen to westminster 400 miles.

for once i'll be cheering for the snp as loudly as the scottish cheer for whoever is playing against the england football team.

i see the o&g industry becoming a political football. and who brought us to this - one man imo - ed f*cking miliband. it is again imo good news for us. we can forget ogpm and 2030. it'll either be invoked earlier or we just have to wait another year or so. i'm hoping that ed's machiavellian manoeuvring comes to bite him in the *rse. he is a liability to labour and should join the greens where his true sympathies lie.

we sure live in interesting times. there is balance. because westminster hate o&g so much almost automatically the scottish people love o&g.

* stephen ***** is in the mix in an important way too although the mix between being an mp and a msp at the same time is as complicated as the scottish premiership fixture lists.

On now BBC1. A decent line-up for a change. Dave Dougan (SNP) is fierce supporter of O&G. I reckon it'll be worth watching.

Tarmak - you English is better than the Swedish of 99% of those reading this board (not counting Scandinavian viewers) so I wouldn't worry about it. In fact it is better than that of some of the posters we've had on here.

Fingers crossed that we'll have some clarity between now and the AGM. Miliband has proved Teflon coated until now with job losses and broken promises somehow nothing to do with him. The Norway story is hard to refute and will provide plenty of ammunition to attack him. I can't wait for the true Scottish character to come through and show how pragmatic and tough they are. Or - are Swinney and Miliband on the same wavelength?

Hi Profitaker - I don't know who is telling you this but it isn't correct. Maybe they misunderstood the question? There is no true “Dated Brent futures” contract. There are: daily physical/assessed Dated Brent prices, and there are forward physical Brent structures,

but no exchange-traded futures contract whose underlying is literally “future Dated Brent spot.”

Instead, the market evolved a layered structure: Dated Brent (physical assessment), Forward BFOE cargo market, CFDs, EFPs, ICE Brent futures

all stitched together.

In fact many swaps have no direct Dated Brent exposure at all.

We're moving into areas that aren't really relevant unless you want to draw esoteric charts and try to predict. I daresay that the brokers and traders in this business have extremely expensive computers do all the juggling and will cherry-pick the best structures. It is then down to negotiations and finding the right counter-party. The Dated Brent is a kinda floating rate and you only know it looking backwards and cannot predict is how I see it although knowing what it is LIVE must be very informative.

In many ways EnQuest don't care. If someone quotes them a 6m swap at $85 then that's it. Maybe the buyer plays it against DB fixings (do they even exist or are they private arrangements?) or dips in and out of the various options. That's their prerogative. There is even, God forbid, a buyer or refinery happy to pay the price and it matches - so is a straight forward trade etc....

So it is (for now) all quiet on the Eastern Front and the DB is losing some volatility. Maybe we can now concentrate on any impact that these elections have brought. The Scottish result must affect us massively.

*I was in the City last night and still drinking at 2pm in somewhere called the Duck & Waffle in Bishopsgate. We had some problem in getting in as apparently some of us were a bit tipsy. One of our party was a corporate lawyer and she negotiated us in. The view from inside is impressive looking out at London from a height with all the lights. London is BIG.

Past one month? I'm thinking front end shelf life. Will have to end this now as have to get ready for a book launch.

There aren't Dated Brent Futures so has to be ICE. Dated Brent is just an elongated Spot. It doesn't have one specific date. My conversation with ChatGPT ended with this - "And this gets to your earlier point beautifully:

the paper market is trying to stay coherently attached to a messy physical benchmark that itself is assessed rather than exchange-cleared."

I get about 90% of what happens and life is too short to try and raise my level of knowledge. All I'll say is that I wish I'd gone into oil trading rather than FX.

Hi Tarmak - oil is so important that there has to be a resolution. My concentration is really all about the UK and whether Ed Miliband can continue with his King Canute stance. The Greens are morphing into a Far Left outfit that hardly mentions Global Warming so you've got this present government as almost the last bastion and Ed Miliband has become a Scarlet Pimpernel (elusive person who uses clever disguises and fake personas to hide their true identity). The question really is how much support does Miliband have and are Starmer and Reeves mere acolytes?

I think there will be many unintended consequences following on from the Iran war and a good chance that it will further damage the UK economy. Will Labour carry on towards the cliff-edge? First we need the results of today's elections and see the fall-out next week. The macro is important but I am more interested parochially. Can they not see what Norway are doing in the same basin! I'm not asking for much. Just an early implementation of the OGPM and I don't mind waiting until Labour are removed at the next General Election. Their policies are just absurd.

Profitaker - I wouldn’t ask it at the AGM as the answer would be impenetrable because I doubt they have the answers anyway and it would take too long. I did FX forwards for a living and thought there must be similarities – there are. I asked AI and the answer they gave I did not accept. They said “Oil forward swaps are fundamentally different from FX swaps because there is no “deposit rate” equivalent in crude oil. Oil is a physical commodity with storage, transport, quality, and convenience-yield effects. So the forward curve is benchmarked against observable spot and futures prices for specific crude grades and delivery locations.” Followed by a lot of blah, blah.

I pushed back with this “You say NO "deposit rate" equivalent but that ignores that the oil futures are basically paper anyway. They are almost a synthetic contract to protect the actual selling and delivering of oil. Your explanation doesn't really help in that sense. FX is complicated in the same way to match trades to contracts including currency for holidays and import export which are real. Basically, both are attempts to get as close to the physical as possible so are both extremely complicated. Your facile way of saying they're different doesn't really wash.”

AI replied – “You’re right to push back. The earlier framing was too simplistic because it made oil sound “physical-first” and FX sound “financial-first,” when in reality both markets are gigantic layers of paper wrapped around underlying real-world settlement flows.The better way to think about it is: FX forwards are anchored by a replicable funding arbitrage. Oil forwards are anchored by a replicable inventory arbitrage. Both are synthetic pricing systems around physical delivery risk.”

The good news is that you don’t have to understand it in the same way we don’t understand how Tesco gets the blueberries everyday on the shelf. In fact, it revolves around “shelves” imo. Oil always must be stored at some stage as it doesn’t go straight to the end user whether domestic or industrial. There is a skill in playing the front end which is why the Trading Houses make so much money. It takes years to learn but is mainly the contacts you develop along with trust and reputation. That’s my two penn’orth anyway.

Hi Tarmak - there is still plenty of confusion. From Javier Blas:

"The bullish side of the oil street has gone from "the paper market is wrong" to "the physical market is also wrong."

and a challenge to his earlier post:

"Your hypothesis:

"the price of oil is only $100, so there *must be plenty of oil*"

If the price goes to $110 or $120, does that mean

"There is no longer plenty of oil"?

Do you have criteria other than price that could be used to identify a change in the situation?"

and this from NBC:

"EXCLUSIVE: Trump's abrupt U-turn on a plan to reopen the Strait of Hormuz came after Saudi Arabia suspended U.S. access to its bases and airspace."

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I'm fairly relaxed. The ideologs have thrown everything at oil to demonise it as they did with coal. But coal is still powering China and you cannot get over the fact that a barrel of oil is worth 4.5 years of manual labour. Why simply hand this advantage to a competitor? The Greens now worry more about Palestine than they do Carbon. Have they the stomach to fight on so many fronts especially when the costs and limitations of renewables are being unmasked

Agree VoR. So many moving pieces and we need predictability in O&G to move to the next stage. The majors can do deals so the recent unpredictability suggests that deals can still go ahead but they have tended to be a marriage of equals. I'm convinced we are involved and there aren't that many competitors so we are definitely in the play-offs. All the majors seem to be intent on divestment of old fields and they can't sell them to another major so they have to look to where best to place them. Labour will probably wait until next week to signal any changes following the election results.

Our golden ticket is still the tax credits backed up by top management and decomm skills.