Technical Analysis 22nd January 2019

OIL and the Producers

Oil prices jumped about 3 percent on Friday (18th), after OPEC detailed its production-cut activity to ease global oversupply, and on signs of progress in ending the U.S.-China trade war.


From my note 17th December.
 The corrective move lower from $76.0 highs has failed to find support at the key level of $58.90 with the following price fall to this current key $50.00 level.
With the current Relative strength value below the key “50” level further consolidation would be expected, a breakdown from this key level would bring in the lower support level of $42.0

Currently :    The daily chart of West Texas Oil  (USOIL) shows the price rally from the low of the 24th December 2018 being the major low and turning point for the early 2019 price rise.
Several key observations should be made at this point, the first being the reversal bar at the low is an engulfing bar, the following price moved across the $50 resistance level with a small retest prior to the current price range testing the old November / December 2018 bearish consolidation range with $54.54 as the current resistance level. The Relative strength Indicator continues to signal strong positive price momentum as it remains above the key “50” level. In the coming weeks a solid close over this $54.54 resistance area will give considerable comfort to Oil producers and explorers.


Lets take a look at a few of the bigger producers.

Haliburton   HAL

Halliburton Company provides services and products to the upstream oil and natural gas industry throughout the lifecycle of the reservoir, from locating hydrocarbons and managing geological data, to drilling and formation evaluation, well construction and completion, and optimizing production throughout the life of the field.
Halliburton Co is expected to show a decrease in its fourth quarter earnings to 37 cents per share when it reports results on January 22, according to the mean Refinitiv estimate from thirty analysts. Wall Street expects results to range from 34 cents to 40 cents per share.

On the Daily chart of HAL the OPu ( Outside Period Up close ) was the key reversal on the 26th December, the current price rally found support over the $30.00 level with a current breakout looking to test the $33.11 level.
The daily price ranges remain strong on each move following the December 24th Low and price strength can be seen following the recent consolidation.

The average price target from the thirty analysts providing estimates is $41. (Refinitiv)


Woodside WPL
Woodside Petroleum Ltd is an oil and gas company. The Company is engaged in hydrocarbon exploration, evaluation, development, production and marketing. It operates in three segments: Producing comprising North West Shelf Project, Pluto Liquefied Natural Gas and Australia Oil; Development comprising Browse floating liquefied natural gas and Wheatstone LNG.

The daily chart of WPL Woodside shows the December 24th Low followed by the opening gap back above the $30 level.
Significant resistance is in play at this $34.00 level with $33.00 shown as the recent support level.

Results released on the 17th January 2019 contained the following statements.
Production rose 10% compared to the fourth quarter of 2017, while sales revenue climbed 43% to $1,419 million on the back of higher prices. “A highlight of the quarter was the start-up of the Greater Western Flank Phase 2 project in October, six months ahead of schedule and $630 million under total budget.
Overall sales were up 7% for 2017 / 2018.


Northern Oil and Gas NOG

Northern Oil and Gas, Inc. is an independent energy company. The Company is engaged in the acquisition, exploration, development and production of oil and natural gas properties, primarily in the Bakken and Three Forks formations within the Williston Basin in North Dakota and Montana. Proved reserves are approximately 65.3 million barrels of oil.

This company also remains a strong buy amongst analysts.

The daily chart for NOG displays an inverse Head and Shoulder pattern, with price currently approaching the neckline. The inverse pattern is a highly reliable Trend reversal pattern.
In this daily view several resistance levels remain at $3.20 and $3.88.
The relative strength Indicator is rising, and has again turned higher over the key 50 level.

Santos STO

Santos Limited is a natural gas company. The Company is engaged in the exploration, development, production and sales of natural gas both onshore and offshore. The Company produces liquid petroleum gas, ethane, methane, Coal seam gas, Liquefied natural gas, shale gas, condensate and oil. The Company’s segments comprise its five key assets/operating areas: Cooper Basin; Gladstone LNG; Papua New Guinea; Northern Australia, and Western Australia gas.

The daily chart of Santos STO display the inverse Head and Shoulder pattern with a recent breakout over the neckline. Support this bullish move was the RSI divergence with price prior to the December 24th price reversal, currently the RSI remains over the “50” level indicating strong positive price momentum.

The current daily price bars are short and indecisive, a retest of the neckline would be an important development in this emerging up trend.


Beach Energy      BPT

Beach Energy Limited is engaged in oil and gas exploration, development and production and investment in the resources industry. The Company is engaged in the business of exploration, development and production of hydrocarbons. The Company’s segments include Cooper Basin, Other Australia and International.

Credit Suisse recently upgrades the oil & gas explorer’s stock rating to “outperform” from “neutral”; raises target price to A$1.75 from A$1.25. Credit Suisse says it considers Beach uniquely placed as a focused domestic gas player to potentially capture the east coast gas trading and consolidation opportunity

The daily chart of Beach energy shows the current resistance levels of $1.75 to $1.80 being a key resistance area. The price rally from the  December lows has been strong back to this key level.
The relative strength indicator 14 shows Beach energy in a very strong position over 70, but the indicator is turning down showing a loss of upward momentum as key resistance prevails.
This chart should be monitored for a breakout above resistance in the coming weeks.


In summary.

The overall picture for Oil as displayed in the USOIL chart above is bullish, a number of players in the Oil space have made significant price recoveries from the December lows and formed continuation patterns. Traders interested in the Oil space should monitor each company on an individual basis.

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