The rise on Friday of 10% have energised oil market punters

The rise on Friday of 10% appears to have energised oil market punters so much so that on a dog walk yesterday I was advised by a local know-all to buy the Brent future, and sharpish. I think however that a bit of short closing and a spell of bad weather on the East coast is insufficient to turn the oil market around on a sixpence and this particular gentleman probably hadnt seen the report from the Straights of Hormuz where an Iranian tanker was sailing with the first shipment of post-sanctions crude bound for South Korea.

Prices were up over 10% at the end of the week and WTI finished up $2.77 and Brent $3.24 in the period. The rig count was down 13 at 637 and minus 5 in oil to 510. If you didnt see it, it is worth reading the article by Dan Yergin in the FT last week, as usual an interesting perspective and one in which we share a common view regarding the medium to longer term. Readers will know that I believe that the Opec move which might have made US shale blink didnt actually achieve that for various reasons. It was the majors that blinked and now we have consensus that around $400bn of capex has been cut from their budgets. Yergin takes it another way and using IHS stats, points out that there will be a reduction in $1.8tn worth of supplies between 2015-2020 another pointer to higher prices down the line.

With Dav-oh wrapped up for another year what will all those wind bags do you ask? Well they might get back to their desks and find some work to occupy themselves with, shareholders in BP, Standard Chartered and Alliance Trust to name but three might be suggesting that it really isnt worth the money just to purchase kudos