Having flirted with positive territory, WTI and Brent differential rises back above $3

The oil price had, by its own recent standards a fairly quiet week, Brent was only down $1.38 whilst WTI fared a little worse after those awful inventory numbers to finish down $3.54 over the period. This meant that having flirted with positive territory the differential has risen back to over $3, those inventories are at long time highs. Cold weather in the States with ice and snow in the North East has had a modest effect on the natural gas price but stocks remain high and I would be surprised if the price went back up towards $4 but you never know.

The Baker Hughes Rig count showed another big fall last week, 43 more units were lost taking the number to 1,633 which is down 287 in the last two months and at the lowest level since 2010. This week sees the start of the oil majors results season and whilst 4Q numbers will in most cases be dire, I suspect that it will be the statements and the cost-cutting that will attract most attention. Shell and ConocoPhillips are on Thursday with Chevron on Friday, in Shell’s case their comparable quarter is with that of the profits warning last year so will actually show an increase y/y. For BvB, who was shocked into significant cost cutting then, it will be more of the same I suspect but maybe not as much as some other, we shall see.

Finally, the situation regarding fraccing in the UK is facing yet more hurdles as the House of Commons Environmental Audit Committee is apparently calling for a moratorium and also some papers are suggesting that political groups in Scotland are also climbing aboard the bandwagon. The thought of job creation, local investment and profit sharing has been pushed aside by politicians ahead of a general election in which they are primarily look after number 1. The noise at one site, for which planning was vetoed was said to be ‘as loud as a humming fridge’ for householders and the refusal was not about the gas extraction but noise and traffic. There appears to be little listening to actual scientific facts here.

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