WTI $22.60 -$1.89, Brent $26.34 -$1.05, Diff -$3.74 +84c, NG $1.64 -2c
Oil fell yesterday, although markets continued to rally on the back of the $2tn stimulus oil was hit by a number of negative factors. Jobless claims of 3.3m are totally meaningless unless to give an idea of how bad the economy really is and on the plus side the Fed Chair said that ‘we have not run out of ammunition’.
On the negative side the IEA who are regularly wide of the mark said that demand would fall by 20%, that isn’t helped by the US deciding not to top up the SPR at this stage. On the supply front Russia claims it can do another 500,000 b/d which I dont believe, the UAE are adding 1m b/d which I do believe and Kuwait is adding 400,000 b/d plus shortly more from the neutral zone. The biggest plus will be when the Permian and others start to shut-in their oil which can’t be far away.
Just to wrap the week, I have just done two interviews, the first was for the US investing channel who wanted an oil price view with some thoughts about when the turn might come. Here is the link, it’s only five minutes:
Investing Channel: OPEC Game Theory & Oil Volatility
The second is an interview for Core finance, a bit more general with some mention of US and UK stocks.
Core Finance interview: The Big Picture for Oil Amidst Coronavirus
Cairn has announced significantly reduced capex for this year as they say that ‘deferrals have been identified for the 2020 programme’. This is a 23% reduction in capital spend for the year and the company says that further initiatives relating to the whole forward programme is under discussion with its partners and so budget is now $65 down to $45m.
It is worth noting that four different Board members of Genel bought shares yesterday and whilst I wouldn’t normally mention it it does indicate a show of a positive attitude to the business at this time.
The same goes for iog where four executive directors also put their hands in their pockets and bought shares for cash yesterday, another good sign.