The Crude Oil Rally Is Looking Stretched

Posted on | by Todd | Leave a Comment on The Crude Oil Rally Is Looking Stretched

Since December 1st, the price of WTI Crude Oil has rallied over 14%.

Just in the last 5 days the WTI price has risen 5% from $60.25 to a 3.5 year high today of $63.50.

Recent reductions in crude inventories combined with Geo-political tensions in the Middle-East have support prices.

However, there have been many analyst sceptical that this will be a protracted rally in Crude prices.

This scepticism can be seen in the price action of some of the local oil-based names.

Despite the 5% rise in WTI over the last week, shares of OSH have dropped by 2.5% to $7.90, and the share price of WPL and STO have been consolidating off their recent highs and look to be pointing lower.

We urge caution on the sustainability of the recent run up in Crude prices and would suggest exiting long exposure to WPL, STO and OSH

Woodside

Santos

Oil Search

 

ALGO Update: OSH Is Back In The Sell Zone

Posted on | by Todd | Leave a Comment on ALGO Update: OSH Is Back In The Sell Zone

Our ALGO engine triggered a sell signal for OSH on November 11th at $7.50.

Since then the share price traded as low as $7.00 last week.

A combination of the OPEC production agreement last week and the PNG LNG expansion this week has seen the share price rally back over $7.30.

We still prefer the Short side of OSH back below $7.00 on lower longer-term Crude Oil prices.

We suggest short-term investors look to sell OSH CFDs on our SAXO Go trading platform.

Oil Search

 

Crude Slides Lower On Saudi Comments

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Spot Crude Oil prices dropped over 2% after comments from a Saudi official that the November OPEC meeting may not result in an extension to the current production cut agreement.

This announcement comes as the return of supply from Libya and increasing rig counts in the USA have kept prices under pressure.

For the week, the front month November Crude Oil contract fell close to 5%.

Technically, Friday’s settlement at $49.25 is the first close below the 200-day moving average since September 10th, which suggests near-term range extension to the downside.

Our ALGO engine triggered a sell signal in OSH on September 28th at $7.10, and a sell signal in STO on September 26th at $4.20.

These trades have been slow to develop but we maintain our downside targets of $6.30 in OSH and $3.35 in STO

Oil Search

Santos

ALGO Trade Update: Sharp Reversal In Crude Oil

Posted on | by Todd | Leave a Comment on ALGO Trade Update: Sharp Reversal In Crude Oil

The recent rally in Crude Oil reversed overnight as November futures fell close to 3% after OPEC output rose by 120,000 barrels per day during the month of September.

US drilling firms also added rigs for the first time since August, which suggests more supply coming online into the end of the year.

As a result, shares of local oil producers STO, OSH and WPL are all priced lower in early trade.

Our ALGO engine triggered a sell signal in OSH on September 28th at $7.10. If Crude Oil extends its correction lower, we would look for the next key support level near the September 9th low at $6.50.

A sell signal for STO was generated on September 26th at $4.20, which is developing slowly with a downside target near the August 18th low of $3.35.

We didn’t get a sell signal in WPL, however, we would expect a break of the $29.00 level would extend down to the $28.30 level in the near-term.

 

Oil Search

Santos

Woodside Petroleumosh

 

 

 

ALGO Signal: Sell Oil Search

Posted on | by Todd | Leave a Comment on ALGO Signal: Sell Oil Search

Our ALGO engine triggered a sell signal on Oil Search at yesterday’s ASX close at $7.11.

Over the past 2 months, the share price of OSH has been strongly correlated to, and benefited from, the rise in Spot Crude Oil.

With the internal momentum indicators in both markets approaching overbought territory, we expect to see a pullback in OSH.

As the chart below illustrates, there is stiff resistance near the May highs of $7.35 and the next key support level can be found just below $6.40.

Oil Search

 

OSH Finds Support After 1H Earnings

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Shares of Oil Search got as lift yesterday as the company announced 1H17 results, which included an underlying NPAT of USD129 million and a higher-than-expected dividend of USD 4 cents per share.

Total profit increased to AUD7.30 per share. OSH management also tightened guidance towards the higher end of production, and the lower end of costs and capital expenditure for the calendar year 2017.

The company expects the PNG LPG yearly production rates over 8.6 metric tons per annum, which is the top end of the last year’s guidance.

OSH shares have lost over 15% since trading at $7.50 in mid-April.

We see scope for a medium-term lift from the $6.30 support area, but would consider the company a buy/write opportunity at current levels.

 Oil Search

 

 

OVERNIGHT News: FOMC and Crude Oil

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The FOMC announcement to raise the target Fed Funds rate by 25 basis points to 1.25% was largely priced into the market.

However, the “hawkish” guidance  about further upward adjustments and the specific plans to reduce the FED’s $4.5 trillion balance sheet have raised concerns about current stock market valuations and the impact of tighter monetary conditions.

The major US indexes were mixed with the NASDAQ down .50%, THE Dow Jones 30 up .25% and the SP 500 down .10%.

US Energy stocks were all lower as Crude Oil prices slumped on a downbeat assessment from the IEA and increased production from both the US and OPEC nations.

The front month WTI Crude contract closed down over 3% to $44.65, which is the lowest closing price in over 18 months.

As a result, shares in both BHP and Oil Search have opened more than 2.5% lower.

Chart – Dow Jones

 

ETF Watch: Buy OOO For Mean Reversion Trade In Crude Oil

Posted on | by Todd | Leave a Comment on ETF Watch: Buy OOO For Mean Reversion Trade In Crude Oil

Over the last 10 trading sessions, WTI Crude Oil has dropped over 13% from $52.00 to last nights low of $45.20.

Technically, we see good support near the $43.75 area, which was the reversal low posted on May 5th.

Fundamentally, increased political tensions between OPEC members Qatar, Saudi Arabia and Iran could escalate into military engagement with some associated levels of supply disruption in the near-term.

As such, we have been looking to buy the dip in some of the local energy names like Origin Energy and  Oil Search. (The ALGO engine gave a buy signal on OSH yesterday)

Further, we have also suggested that investors looking for a mean reversion higher in Crude oil prices can buy the BetaShare Oil ETF with the symbol OOO.

OOO traded as high as $8.10 just a week ago and has now in the low $7.00 area.

BetaShare Crude Oil ETF

 

Origin Energy

Oil Search

 

Oil Search Points Lower On Weaker Crude Prices

Posted on | by Todd | Leave a Comment on Oil Search Points Lower On Weaker Crude Prices

After falling over 7% last week, WTI Crude Oil dropped another 1% last night to trade at a four-week low of $49.05.

Concerns of oversupply in both Crude and Gasoline are dragging prices down as both products are now trading below their 30 and 50-day moving averages.

This weakness in both the technical and fundamental indicators will likely put downside pressure on the shares of Oil Search.

On April 19th, Oil Search announced a quarterly report which showed a 2% decline in total production for the March quarter, along with a 1% decline in total sales revenue.

Based on these data sets, we would expect OSH shares to trade back down to the initial support at $6.70 in the near term.

Oil Search