Crude Oil Firms In Front Of Tonight’s OPEC Vote

Posted on | by Todd

Prices of all grades of Crude Oil pushed higher overnight as OPEC members prepare to vote on future production levels today in Vienna.

Reports from the meeting have shown no clear consensus from the cartel with the Saudi’s proposing an increase of 1 million bpd, Qatar suggesting 500,000 and Iran rejecting any increase in the daily quota.

Market reports suggest a 500,000 increase is the likely outcome, which would be moderately bearish for crude prices. The result of the vote is expected by 10:00pm, Sydney time.

Both OSH and WPL have been trading near the top-end of their recent ranges and will likely be driven by OPEC’s decision next week.

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Woodside Petroleum

 

Crude Oil Plunges 4% On Increased Production Plans

Posted on | by Todd | Leave a Comment on Crude Oil Plunges 4% On Increased Production Plans

The price of West Texas Intermediate (WTI) crude oil dropped 4% overnight to $67.50 on the news that Saudi Arabia and Russia are discussing plans to raise production by over 1 million barrels per day.

Ahead of a key OPEC meeting in Vienna next month, the energy ministers of Russia and Saudi Arabia met in St. Petersburg yesterday to review the terms of a global oil supply pact that has been in place for 17 months.

For the week, WTI tumbled about 4.9%, its biggest loss since early February and a sharp reversal after six weeks of gains. Additional production from US drillers also added weight to WTI prices.

We would expect to see both OSH and WPL trade lower to start the week with key support levels at $7.80 and $31.50, respectfully.

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WTI Crude Oil Retreats From 4-Year High

Posted on | by Todd | Leave a Comment on WTI Crude Oil Retreats From 4-Year High

Over the past three weeks, the price of WTI Crude Oil has rallied over 12% and posted a four-year high at $69.35 in early NY trade last night.

However, WTI closed the session down 1.4% at $67.70 after the US and France announced they were close to reaching a deal to renew the Iran nuclear agreement, and a surprise increase of a million barrels in weekly API inventory data.

It’s worth noting that speculators have amassed a very large net long position in the WTI futures market. As of the April 17th report, the non-commercial net long position stood at 728,000 contracts.

This long exposure is just below the record high of 739,000 contracts set in early February when WTI peaked at $66.30.

Technically, the daily internal momentum indicators for WTI are stretched but not yet overbought.

The deadline for renewing the Iran agreement is May 12th. It’s likely that the  ongoing negotiations of that agreement will have a strong influence on the near-term price action of WTI.

From a “cause and effect” perspective, any political hurdles in extending the Iran agreement will see WTI trade higher, while the perception of a successful agreement will likely push WTI lower.

Local shares OSH, STO and WPL have all rallied sharply over the last three weeks and have a strong correlation to crude oil prices.

As such, we urge investors to be cautious of increased volatility in the crude oil market and how it could impact these local oil names.

WTI Crude Oil

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OSH Nears Resistance at $7.90

Posted on | by Todd | Leave a Comment on OSH Nears Resistance at $7.90

The price of West Texas Intermediate Crude Oil (WTI) posted its largest weekly advance in over four years.

The 9% gain for the week in WTI also lifted the local oil names, including OSH, STO and WPL

Our ALGO engine triggered a buy signal in OSH on February 13th at $7.10.

At the time, our initial upside target was at $7.70.

With today’s high posting of $7.75, We can see the logic in taking profits in OSH and rotating into WPL.

Taking into account the sharp selloff after announcing a capital raising on February 2nd, we consider WPL a better long-term value in the oil sector.

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Local Oil Names Firm As WTI Extends Recent Gains

Posted on | by Todd | Leave a Comment on Local Oil Names Firm As WTI Extends Recent Gains

West Texas Intermediate (WTI) Crude Oil rose over 3% in NY trade to reach a 7-week high of $65.70.

The boost was a result of EIA data showing US crude stocks unexpectedly fell by 2.6 million barrels, or 0.6%.

For the week, WTI has risen over 5%.

In Monday’s blog, we mentioned our preference to buy local names STO, WPL and OSH.

These three stocks are up over 2% for the week and we still see scope for further upside range extension. Also, all three of these stocks are in our ASX Top 50 Model portfolio.

On the daily charts, the next area of resistance for STO is near the $5.65 level, with support at $4.90.

The chart of OSH shows resistance at $7.70 and support at $7.05

The valuation metrics for WPL are more complex. The share price has under performed the Spot WTI price by 24% since September and is 21% below it’s EPS momentum trend.

At 6.50 X EBITDA, WPL may be the best pick for a move back into the price gap above $29.65.

Santos

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WTI Rally Lifts Local Oil Names

Posted on | by Todd | Leave a Comment on WTI Rally Lifts Local Oil Names

The price of West Texas Intermediate (WTI) Crude Oil rose 3.5% last week and settled just over $62.00.

This places WTI pretty much in the middle of the $66.80 to $58.00 range we have seen so far this year.

What makes this noteworthy is that last week’s rally coincided with a rally in the USD.  In short, the USD vs Crude inverse correlation looks to be diminished for now.

The technical picture in WTI is improving and the next upside target is near the February highs of $63.40.

As a result, shares of STO, WPL and OSH are all up over 1.5% in early trade today.

All three of these stocks are in our ASX Top 50 Model Portfolio and we prefer the long side from current levels.

We’ll update each of these stocks in subsequent postings.

Woodside Petroleum

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ALGO Buy Signal For Oil Search Ltd

Posted on | by Todd | Leave a Comment on ALGO Buy Signal For Oil Search Ltd

Our ALGO engine triggered a buy signal for OSH into the ASX close yesterday at $7.05.

OSH is widely regarded as owning some of the southern hemisphere’s best LNG assets and as such is a favorite stock for retail investors.

The stock’s performance has closely tracked the global energy markets, which have been very active recently.

Technically, we see scope for a upside move to $7.80 and good support near the $6.90 area.

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WTI Drops 3% On Higher US Production

Posted on | by Todd | Leave a Comment on WTI Drops 3% On Higher US Production

West Texas Intermediate (WTI) crude oil fell to a seven-week low of $58.07 per barrel, before paring losses to close Friday’s NY session down 3.2%  at $59.20.

This was the sixth consecutive day that Crude oil has traded lower. For the week, crude oil was down nearly 10%.

WTI broke below $59 a barrel after Baker Hughes reported the U.S. oil rig count rose by 26 rigs to 791, the highest total since April 2015.

The week’s losses accelerated on Wednesday after AEI data showed weekly U.S. production jumping to a record 10.25 million barrels a day. Meanwhile, the nation’s stockpiles of crude rose for a second straight week.

Our ALGO engine triggered a buy signal in both OSH and WPL on Friday’s close.

We expect the sharp down move in WTI to push both OSH and WPL back in the buy zone near last week’s lows of $7.20 and $31.05, respectively.

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Woodside Petroleum

 

Crude Oil Rally Pauses on Trump’s USD Comments

Posted on | by Todd | Leave a Comment on Crude Oil Rally Pauses on Trump’s USD Comments

Since posting an intra-day low of $55.80 on December 6th, the price of West Texas Intermediate (WTI) crude oil has rallied almost 20% to hit a 3-year high of $66.60 in NY trade last night.

The sharp rise in WTI has had 2 primary tailwinds: a seasonal drawdown of crude oil in storage and a 4% drop in the USD Index.

However, this week’s events could diminish, or possibly reverse, those 2 market impulses.

According to the American Petroleum Institute (API), the amount of WTI in storage has dropped for 11 consecutive weeks. This week’s drawdown was 1.1 million barrels compared to an expected reduction of 2.3 million barrels.

In addition, the recent rise in WTI has seen the US rig count rise from 789 in early December to 939 this week. More production from rigs online will likely break the string of weekly drawdowns in the near-term.

With respect to the USD, Mr Trump told CNBC yesterday that the Greenback will strengthen over time and that recent remarks made by Treasury Secretary Steve Mnuchin about a weakening USD were misunderstood.

Our ALGO engine currently has a sell signal in OSH from the $7.60 area. A material correction in the WTI price could see the stock trade back to November support level near $7.00.

Oil Search

 

Energy Names – Best Buy-Side Opportunities

Posted on | by Leon Hinde | Leave a Comment on Energy Names – Best Buy-Side Opportunities

Within the ASX 50,  OSH, STO, WPL, ORG & BHP are the names investors consider when looking for exposure to Oil and LNG.

Currently WPL, ORG and BHP remain in our ASX50 model following a series of structural “higher low” formations.

OSH is not currently in our model portfolio.

The negative we see in the stock relates to market concerns surrounding their stretched balance sheet.

Oil Search has committed to substantial projects in PNG and Alaska and should oil prices fail to hold $60 – $80 per barrel, Oil Search may need to raise capital.

This week, Oil Search reported solid 4Q17 production at the upper end of their guidance range, with revenue of US$389mn.

Our preference remains adding long exposure on any pullback in BHP, WPL & ORG.

We are also watching for the next Algo Engine buy signal in the oil ETF OOO.AXW.