WTI $12.78 -$4.16, Brent $19.99 -$1.45, Diff -$7.21 +$2.71, NG $1.82 +7c
By Malcolm Graham-Wood
Blog almost all about the oil price today as one or two specials are around affecting the physical market place. One of the reasons for the negative oil price recently was the huge open position in the front month May contract amassed by USO and them and others being forced sellers so close to expiry. As I understand it the fund has decided to close all positions in the June contract by this Thursday and has reallocated to July 30%, August, September, October and December 15% each and the remaining 10% to the June 2021 contract.
When speaking to Markus Koch on his Wall Street show last week I was explaining how the investors have been trying to catch the falling knife that is the oil price, getting so close to expiry that it eventually hurt. This move by USO is to try and mitigate that might work to some extent but first we have the June expiry let alone July.. Finally on this two things, if I was USO having told the market that I was selling by thursday I would close up by today so as not to have an uncompromising market to work with then and also remember that the new Chicago margin rules naturally dictate some lack of protection.
My weekly look at the gasoline market can’t be missed, overall US price is now $1.77 which is down another 4c w/w, 23c m/m and $1.14 y/y. Maybe the product market maybe the better call, for when the USA starts driving again and with the driving season, this year due to start on 25th May on the Memorial Day Holiday who’s to say that it won’t coincide with the reopening of the country…?
Finally as we see companies reporting quarterlies at the moment, they will be awful upstream and worse downstream but there will be some themes to draw. BP today have differing qualities with gearing at 36.2% well over the comfort zone of 20-30%, a 25% cut in capex, an aim for cash break-even of $35 next year but a rise in the dividend…
Slipped by yesterday after all the calls etc was that Rathlin Energy, as operator for the West Newton EWT has received a positive decision from the EA with regard to the well test. The ‘variation’ to the permit from the EA will allow Rathlin to use mechanical methods such as pumpjack/nodding donkey for wellbore fluids and for utilisation of a smaller incineration unit during the testing of the WNA-2 well. This test is aimed at optimising evaluation of the famous oil column discovered at West Newton but is waiting on the virus to go ahead. For me this is a modest piece of good news from WNA which it the long run will pay out and both companies are very well placed in a market where it is difficult to shine.
Again from yesterday President confirmed that CGC has completed the 2nd quarterly installment of its share subscription programme. CGC has invested a further $200,000 at 1.315p per share which is good for President.
An investor with good eyesight has noticed that there have been some share stake movements over at Block Energy with TR-1’s showing that Georgia Oil & Gas have recently been selling their stake down in two 1% lumps and are now below the 3% limit.
Who might be going the other way I ask, could it possibly be oil industry mover and shaker Jon Fitzpatrick who appeared on the shareholder register with a shy 3% stake a little while ago, we shall see as one must assume that GOG who have 2.8% left might just be an ongoing seller…
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