The Oil Man: Touchstone, Tullow, Velocys

WTI $63.39 -76c, Brent $66.86 -76c, Diff -$3.47 n/c, NG $2.76 +1c

Oil remains nervous in the risk-off market place, and with the EIA STEO forecasting increased US production, bulls were to a large degree holding off. Selling when the squids shoved up their forecasts would have been wise but that's like shooting fish in a barrel…

The EIA forecast that US production is now 10.2 million b/d (mb/d)and expected to be 10.6 mb/d this year and 11.2 mb/d next year, which is another increase in expectations, but this will only happen if crude oil remains well above $50 which seems pretty likely just now.

Last night's API stats surprisingly showed a draw in crude of 1.1 million barrels, better than expected as was the draw in gasoline stocks, distillates grew by more than expected as recent months.

Tullow Oil

Results from Tullow were in line with expectations, production was 89,100 b/d with guidance for this year of 82/- to 90/- showing no growth, but an exciting drilling programme starting in Namibia. Gross profits were $815 million (£586 million) and after write offs and impairments the company showed a post-tax loss of $189 million. Capex is substantially up as one might expect, $460 million this year after $225 million last year.

Touchstone

Touchstone announce the start of a ten well drilling programme in Trinidad which is fully funded and should be completed by August, giving potentially good news quite quickly. A second rig should shortly be operational giving further operational scope, and the company seem confident of good news on the drilling front.

Velocys

I am deeply saddened by the removal from the Velocys board of Julian West, one of the brightest sparks in the industry and who would be a great addition to any board of directors. Velocys' loss will surely be someone else's gain…

And finally…

Swansea continue their good run of form by putting 8 goals on Notts County last night, the Terriers beat Birmingham City to secure a home tie against the Red Devils, which they will relish after their previous game at home. Tonight, Spurs have an unwanted game against Newport who they couldn't see off last time but surely will tonight.

The first T20 against Australia is underway and the Aussies have won game one at a canter.

Malcolm Graham-Wood is an independent oil industry expert and freelance contributor, not a direct employee of Interactive Investor.

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