WTI $38.28 +$1.02, Brent $40.53 +92c, Diff -$2.25 -10c, NG $2.36 +5c
Its the turn of the bulls to take charge but maybe only temporarily as the news is still very much mixed. On the plus side the latest bout of economic news has helped, the Chinese data I mentioned yesterday was added to by good US factory news and also encouraging reports from Germany.
Add to that, again as predicted, Sally has become a Cat 2 hurricane and both GoM shut-ins and refinery closures will tighten the market. Finally on the upside the API inventory stats after the close showed a substantial draw of 9.5m although gasoline built by 3.8m and distillates drew 1.1m, take from that what you will.
On the downside there is a substantial increase worldwide in virus numbers which must hit oil demand in due course. This was added to by the regulation bearish stance from the EIA after the Opec report on Monday had trimmed demand forecasts. On the subject of Opec+, the JMMC meet tomorrow and whilst I wouldnt expect any policy changes they might just mention that quotas should be addressed by the next meeting of the grown-ups.
IGas is buying GT Energy, a developer of deep geothermal heat projects in the UK with the consideration all in shares. This is ‘in line with IGas’s strategy of diversifying into the wider UK energy market whilst leveraging its core competencies as an UK onshore operator’.
GT’s principal project is a 14MW project in Stoke-on-Trent and is anticipated to supply zero carbon heat on a long term take or pay contract with Stoke-on-Trent City Council (“SoTCC”). It is anticipated that the heat will be supplied through the SoTCC owned and operated district heating network, which is undergoing installation. Depending on planning renewal it could be operational by March 2022.
The cost to IGas is an initial payment of GBP500,000 in IGas shares up to a maximum of GBP12m not to exceed 29.9% of the share capital of IGas. Sellers are to be locked in by at least 12 months with the exception of GT MD Padraig Hanly who will be locked-in for 24 months. He will continue to run GT but also go on the IGas Ex-Comm.
This is a very sensible, smart move by IGas who are ‘re-balancing the portfolio’ and starting with a virtually perfect ready made project. Given the progress that has been made by similar projects in Europe this could be a decent bet by IGas CEO Steve Bowler and he may have positioned the company right at the heart of the renewable revolution.
Time can’t go quickly enough for Tony Durrant and his team who are battling with the combined forces of the restructuring and market requirements. Yesterday they had to reply to press speculation that that it has been in discussions with ‘a number of parties’ including Chrysaor re the restructuring.
The company point out that to date none of the discussions ‘provide better outcomes than those already proposed and that whilst such discussions will continue to be explored ‘there can be no certainty that these discussions will reach agreement’.
Constant whispers abound that there is some behind the scenes activity at Block are being nurtured by the drip feed of TR-1 notices from most interesting market players. Few people know more than Alastair Ferguson in the energy market and he has upped his stake and along with Jon Fitzpatrick and possibly others, looks to be orchestrating something from behind the scenes. As they say, watch this space….