The ASX Energy Index (below) has been off the charts lately having began its bull run from early-2016. In particular the main Energy Stocks in our market are listed below and all of them have been moving beautifully since this run (or slightly later). In any case, you have to question what triggered this move!
- Caltex (CTX)
- Origin Energy (ORG)
- Oil Search (OSH)
- Santos (STO)
- WorleyParsons (WOR)
- Woodside Petroleum (WPL)
- AWE (AWE)
- Beach Energy (BPT)
- New Hope Corporation (NHC)
- Senex Energy (SXY)
- Whitehaven Coal (WHC)
Most of these moves are heavily driven by the U.S. Crude oil prices, and I’ve inserted a chart below for you to have a look. Clearly from the lows of early-2016, we’ve been seeing this recovery, and although the price has struggled to stay above $50.00 around early-2017, we’re finally back up above it, and dare I say, close to breaking 2-Year Highs!
To go back, Oil had a dire performance after concerns about China’s economy that demand for the commodity would fall drastically as they start moving from an infrastructure focused economy to a service economy. Add to that concerns of the effect of the first hike in U.S. interest rates since 2009, and the issues with Greece/the EU.
Luckily the situation regarding Oil has been better since with OPEC talking production cuts and Trump’s economy looking surprisingly bullish for the U.S. markets. Although the uncertainty of how the OPEC supply restrictions would happen created a lot of choppy trading between $45-50 (mainly as conflicting data points were being released), stronger news from this year with Kuwait and Oman saying they would fulfil production cuts boosted prices.
Oil has been a really slow mover when we talk about momentum in percentage terms, and it isn’t blatantly obvious yet whether Oil will continue its recovery, but we know one thing for sure: it’s bullish on the charts.
While we might experience a few swings down, overall the picture is pointing north, and in times like these, individual stocks as mentioned above will get a boost. I would keep a close eye on some of these stories as any strong movement in oil will translate to a correlated move, and I urge you to stay alert for news regarding Oil.
Happy trading and have a fantastic weekend!