Trading Room – Thursday 25 Oct 2018
Oil prices on Wednesday broke their key supports despite a looming U.S. sanction against Iran coming into effect soon.
Front-month Brent crude oil futures were traded around US$76.76 a barrel while US West Texas Intermediate (WTI) crude futures were at US$66.58 a barrel.
Brent closed down 4.3% and WTI dropped 4 .0% in the previous session.
Saudi Energy Minister Khalid al-Falih said that despite expected supply disruptions from U.S. sanctions against Iran that kick in from Nov. 4, Saudi Arabia would step up to “meet any demand that materializes to ensure customers are satisfied”.
Despite this, analysts quoted said markets remained tight because of the upcoming sanctions.
However, with the breaking of the key support for the Brent at two key levels (see report), pressure will now be on direct upstream oil and gas players whose share prices have been pushed up recently (and of which we had taken substantial 20%-30% profits in just two weeks – see mPower Algorithm report 1st October).
These include Hibiscus, Sapura Energy, Deleum and Reach Energy. Meanwhile, upstream oil and gas maintenance and supply players have already broken their key levels much earlier and are now mostly weak.
Which oil and gas stock may buck the trend and should you buy on weakness (BOW)?
With the break of the major support, Brent oil price may now head towards this key level (see report) and how it reacts here will be key towards interest in oil and gas stocks on the market.
There is still one oil and gas stock which is interesting to trade on weakness because it tends to rebound very well. Look to trade and exploit this high-beta stock propensity (only at its algorithm-calculated critical levels shown) as highlighted in today’s mPower Algorithm report.
Note: Certain info presented here has been redacted to comply with the agreement with elite members of the mPower Algorithm program and mPower Trading program. Please refer to the full report inside for the complete info.