Benchmark: August 25
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By Duncan Sutherland – Exclusive to Crude Investing News
Market news
Barrel prices nosed upward of US$115 on Monday, largely due to a sagging dollar. An analyses of this in reference to last week’s barrel and dollar prices shows the extent to which crude is tied to currency differentials.
The relationship is not one-sided either. For Canadians, high oil prices are keeping its dollar near par with that of its neighbours. Not only our dollar, but also the S&P/TSX composite index is bound irrevocably to commodities prices, especially oil.
Bloomberg’s tracking of US gas stores offered the interesting factoid that accumulations witnessed their largest increase since March 2001.
OPEC is set to meet in Vienna on September 9th, but I do not expect any significant news to be made. Any facade of a unified output target fell apart years ago. I would agree with Sven Ridley-Wordich’s analysis that the meeting is more interesting in that it will “for the first time give some insights in the future role of Angola”.
Company news
Chinese energy firms China National Petroleum and China Petroleum and Chemical (NYSE:SNP) are to bid for Petro-Tech Peruana, a subsidiary of the privately-owned Offshore International. Royal Dutch Shell (NYSE:RDS.A) has also been kicking the tires on Petro-Tech, so a counter-bid might be in the offing, especially given Peru’s relatively friendly attitude to multinational energy companies, at least in comparison to its South American neighbours.
Good news out of Nigeria for a change! Chevron’s (NYSE:CVX) Agbami deepwater field is to inaugurate exports this week on production of 100,000 barrels per day. According to the offshore-technology website, Statoil (NYSE:STO) and Petrobras hold minority stakes in the project. Agbami is particularly good news as it offers an extremely high-quality crude with a 45° API gravity.
Tullow Oil, (LSE:TLW) which this space has tracked since its inception, has been experiencing a resurgence from recent lows. UBS has rated the stock as a buy; up from neutral as of August 21st. Tullow has been much in the news lately for its odds-beating exploration results across Africa, especially in Uganda. Depending on your viewpoint, Crude Investing News was either prescient or lucky when it upgraded Tullow to “buy” more than two weeks ago.
International news
As usual, there is a lot of international supply security news to report, so I will try to distil some important patterns from the noise.
First, Caucasian transhipment remains especially troublesome despite the cooling of Russo-Georgian tensions. Though BP’s (NYSE:BP) Baku-Tbilisi-Ceyhan pipeline is operating again as of today, two other incidents have underlined the uncertainty in the region. An explosion derailed an oil-transport train going through central Georgia on Sunday, possibly as the result of a Russian-laid mine. Though short on details, I would think that placing explosives near or on a railroad has fairly foreseeable results.
Second, Russian troops are continuing to occupy the port city of Poti on Georgia’s Black Sea coast. As I underlined in the Fracas in the Caucasus article elsewhere on this site, the city exports roughly 100,000 barrels of oil per day. Supsa and Batumi are more significant ports, so it seems quite the coincidence that the USS McFaul destroyer with nuclear-capable Tomahawk cruise missiles was the first ship to dock in Batumi for an American humanitarian relief mission. McFaul will be joined by US Coast Guard cutter Dallas, USS Mount Whitney and two other as yet unnamed ships. McFaul’s position as first to arrive may be a coincidence, but it certainly sends a signal to the Kremlin that Batumi is a line in the sand.
More Benchmark to come on Thursday, hopefully with news that the Russo-Georgian situation has calmed down further.
Tags: agbami, bid, bp, chevron, crude, Dollar, exploration, georgia, invest, investing, news, Nigeria, offshore, Oil, opec, petrobras, petroleum, pipeline, price, prices, shell, south, stock, tullow
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