The barrage of anti-fossil fuel statements late last week and over the weekend in New Zealand has included the grand statement that the oil era is now officially over.
What has amplified the proclamations has been the actions of the coalition Government led by Prime Minister Jacinda Ardern and while a lot of the rest of the world pursues oil and gas exploration, the perception is that it’s all over in New Zealand. Just ask Greenpeace.
Well some of those advocates may end up choking on their alfalfa because global markets are re-appraising oil and gas explorers and producers and giving them a big tick.
The steady climb out of the basement of the oil price is gathering momentum and this may lead New Zealand Oil & Gas Ltd (NZX: NZO) in finding that its current selling job in finding a partner or partners for its approved offshore permits much easier.
The Oamaru region is well aware what the impact of a discovery on the Barque-Clipper target could have and there will be members of the Labour and New Zealand First parties who would not want to stand in the way of exploration success that could bring prosperity worth billions of dollars, though the Green Party members of the coalition may do their best to block progress.
The Australian stock market website smallcaps.com.au was bullish about oil’s near-term future after it reached a per barrel price of $US77.
Smallcaps cited Bank of America claiming oil could hit $US100/barrel again next year – a level not seen since 2014. Factors cited by the American bank included the collapse of the Iran nuclear deal, rockets flying between Israel and Iran and a broad pick-up in the world economy threaten to simultaneously restrict supply and boost demand.
“Already since President Trump decided to back out of the Iran nuclear deal the price of Brent crude has spiked above $US77/barrel – a rise of 8% over the past month and 15% since the start of this year,” the website said.
The website said other factors at work including the current agreement between OPEC and other major producers including Russia to slash output already helping to move the oil market from a supply glut to more balance.
That deal is due to expire at the end of 2018, but the Bank of America analysts said that OPEC and Russia are likely to continue working together to prevent prices from falling.
The Middle East website gulfnews said at the weekend that on international bourses energy shares soared as crude oil prices reached 3.5-year highs, with investors betting the US withdrawal from a nuclear agreement with Iran would increase tensions in the Middle East and curtail oil supply.
The website concluded with a comment about the $NZ retreating to a five-month low against the Greenback of $US0.6915 after the Reserve Bank of New Zealand “wrong-footed hawks. It kept interest rates steady as expected, but said its next move might be a cut or a hike.”
“The RBNZ surprised markets with a slight dovish shift,” said Imre Speizer, an economist at Westpac.
Sources: smallcaps.com; gulfnews.com; nzresources.com