Tag: ASX:STO

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.

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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.

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Woodside

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.

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Santos

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

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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.

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