Malcolm Graham-Wood
Independent Analyst
Its the last working day of the month and whilst for Brent its been quite good, up 13% over the period, for WTI it has not been so much fun, indeed at $48.17 it is flat, only three cents higher than at the beginning of the month. This has had its effect on the differential which you can see is nearly at $12, as I have already said, one would normally start to think about taking action here in expectation of a narrowing of the prices of the two crudes but at the moment I would keep my powder dry. WTI will continue to be driven by stock levels in the States and I dont see them coming down in the short term, in fact with imports needed for some refineries, the strike if anything gathering momentum and domestic production taking a while to ease, it may get worse before it gets better.
Internationally the spike in the prices caused by the words of the Saudi Oil Minister were just that, another, familiar spike which is how it has been going lately. There is a mixture of production news, parts of the Middle East are still shut in for bad weather, Libya has not got back up to 100/- b/d yet and Statoil shut in Statfjord C after finding cracks in the flare tower, a modest loss but it did hit sentiment in the very short term. Of course all eyes will be on the rig count due out shortly but even gifted amateurs are now realising that A) Every swallow doesnt a summer make, ie a big fall is only good for sentiment amongst bulls but B) Even a big fall in the rig count doesnt mean that production comes to an immediate halt, watch for that lag effect.
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