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Oil stocks off their highs

On Tuesday the US flexed its muscles, withdrawing Iranian sanctions waivers on oil exports. In a bid to strangle the Iranian economy by blocking its main export, the US pushed oil prices higher. Brent Crude Oil hit fresh 2019 and multi-month highs of $75/barrel.

We can now expect China/India/Russia to face reprisals if they get caught ignoring US sanctions, importing oil (cheaper?) from Tehran.

Geopolitics and macro-economics aside, the 5 big Oil Producers all saw their shares rise to make fresh highs.

BP and Royal Dutch Shell shares rose by around 2.5% initially. The smaller, more oil price sensitive names (Tullow, Cairn, Premier), however, fared much better, up by 3-5%. Understandably so. Less supply, unchanged demand, higher prices.

However, oil prices have since pulled back. Down 5.6% from their highs.  This is due to some considering this week’s knee-jerk reactions to have been overdone. Even talk of a suspension of some Russian exports on quality concerns failed to hold prices up.

Furthermore, we are in the midst of results season which means share prices are at the mercy of numbers and outlook. Tullow shares are now 10% off this week’s highs due to yesterday’s trading update failing to inspire (lower production, delayed investment in Uganda).

Note that BP (-4.5% from this week’s highs) reports Q1 Results next Tuesday with Shell (-4% from this week’s highs) following suit on Thursday. Premier Oil (-11% from this week’s high) issues a Trading and Operations Update on 17 May.

Whether you are bullish or bearish on Oil and the Oil Majors/Explorers, get access to our research and trade opportunities via our Research Gold Pass. Make sure you know when BP is making a breakouts, when Shell is trending with Momentum, when Cairn is in a range or when Premier could bounce off support.

Let us do the hard work searching so you can take it easy investing/trading they way you want to.

Charlie Rexstrew, Trader, 25 Apr 2019

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This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.

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Prepared by Michael van Dulken, Head of Research

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