Sunday, 28 November 2021 02:23 GMT

The Pay Zone: Oil Price Northern Petroleum Sound Oil and Finally....


(MENAFN- ProactiveInvestors) WTI $52.86 +$1.17 Brent $58.34 +54c Diff $5.48 -63c NG $2.60 +2c

Oil price

The Opec monthly report was out yesterday but too late for the blog it did however carry enough good news to maintain the positive momentum for the oil price. Within the report there were two major positives US supply forecasts were trimmed and demand numbers including the call on Opec crude were raised. US supply growth has halved on the 2014 increase and non-Opec supply of 850/- b/d is down by 420/- b/d. With demand numbers steadying up 2.17m b/d for this year and weighted towards the 2nd half ( Q1 demand of 91.38m b/d to Q4 of 93.7m b/d) call on Opec crude of 28.02m b/d in the first half rises to 30.37m b/d in the 2nd half. Readers will know that I expect the oil price to be ‘U’ shaped and rise towards the end of the year as a delayed reaction to the rig count falls and slow burn effect of the fall in investment worldwide to make the bounce more pronounced. Whilst the recent rally will be welcomed by the industry there is a long way to go yet.

Chartists however are strutting their stuff at the moment as their support levels are being held and upward resistance being tested. For Brent support is seen as being at $53.99 and $52.40 while resistance is at $59.15 and after that at $69.23. Brent’s intra-day high yesterday was $59.61 and whilst we are well off that at the moment if it should close above that level then they are in Nirvana…

It is worth remembering amongst all this joy that the Chinese data out overnight was poor Grexit is looming and the talks about Ukraine hardly encouraging. Last week I had great hopes that average US gasoline prices would fall below the magic $2 per gallon level as we got down to $2.04 i’m afraid that they stalled around there and the price has picked up albeit helped by the refinery strikes and now stands at $2.19 up 12.3c week on week.

Sound Oil (LON:SOU)

Sound has received technical approval for their EIA for Nervesa gas production from the Veneto Regions technical committee final approval and production concession is expected to follow. The company say that first commercial production for Nervesa is expected in 2015 and will be a ‘landmark’ which is no doubt correct as the first well is expected to produce €4m of annual revenue. For a company that already covers its overheads from current production and has an exciting exploration programme with significant upside Sound more than justifies its position in the bucket list the risk here is not being in the shares…

Northern Petroleum (LON:NOP)

Somewhat disappointing news from Northern this morning as the 102/11-30 well has not performed as had been hoped. The reef drilled was as pre-drill expectations but the flow dynamics of the play need further analysis. It is entirely plausible that having produced more recently than other reefs drilled this well may have needed more recuperation either way more interpretation of the reservoir is to be done. Elsewhere a mixture of news 102/15-23 has intermittent flow and although in need of a pump may flow reasonably well also wells 16 and 19 should produce profitably numbers on this at the time of the update later this month but between them we can maybe expect a conservative 150-250 b/d. The other wells are being shut in for the time being as they aren’t profitable at current oil prices and no other wells will be drilled until next winter’s season by which time much more information will have been gathered.

Whilst this is a setback for the company they can use the off season to get a better understanding of the dynamics after all the seismic is exactly as expected and this news is not a ‘death knell’ for the play and the reefs involved. The company has cash of 12m and is continuing to actively attack its cost base at an operational and corporate level by an active management team.

And finally…

Tonight and tomorrow sees a full Premiership fixture list the pick of tonight’s games without doubt the HubCap Stealers v Harry Kane while Gooner players should watch out for attacks by the Leicester City manager if they stray towards his dugout…Elsewhere Hull Tigers host Villa and the Maccams host manager less Super Hoops…


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