WTI (Dec) $72.36 +67c, Brent (Jan) $75.63 +71c, Diff -$3.27 +4c
USNG (Dec) $2.70 -5c, UKNG (Dec) 106.25p +4.12p, TTF (Dec) €42.335 +€1.29

Oil price

My comments yesterday are unchanged, whilst the onshore patch may not immediately benefit from a loose promise to drill baby drill, as independents maintain their iron discipline there will be an international boost as it is likely to see the US stop showing a blind eye to Iran’s nuclear development and thus a tightening of sanctions. LNG will also become a top priority as an incoming Trump administration sees revenue opportunities in abundance. 

China’s latest stimulus is worth some $1.4 trillion in itself not what the market had been hoping for I’m told. They are probably thinking about Tariffs at the moment…

US Oilfield Service companies, Hunting

I mentioned briefly yesterday in my oil price comment that on the arrival of President elect Trump that I would expect to see a significant increase in domestic drilling and whilst that would not on its own create a lot more production, the incentive will end the recent quiet spell in the US onshore patch. 

Yesterday saw the results from Halliburton which effectively completed the season and its figures missed the whisper, primarily blaming weaker North American revenues amongst other things. Previously Schlumberger had beaten the whisper, again marginally as did Baker Hughes last month. SLB got a boost but from the Gulf of Mexico and Canada so onshore USA was still under pressure.

Now I’m not expecting a dramatic rise in US drilling immediately but I do expect to see a much more favourable attitude towards drilling in all areas onshore and offshore with fraccing in particular seeing renewed activity. I am also expecting an increase in the exports of LNG as the US continues to fill the increasing worldwide demand especially if Trump policies hit competition in that market, here Baker Hughes have a strong deck. 

Hunting, as I said yesterday altered guidance recently claiming, like the others that the US onshore patch had been hit by lower oil and gas prices and remained subdued hitting both the Titan and perforating systems divisions. 

But the company has a very strong balance sheet with a huge order book of some $652m and a very high margin international business which continues to grow and accordingly I feel that the hit that the share price took was overdone, as it often is in this under appreciated stock and should have a minimum of a 50% bounce from these levels. 

Original article   l   KeyFacts Energy Industry Directory: Malcy's Blog