Morning Report Friday 9 May 2014
Oil price remains stable despite building tensions between the Ukraine and Russia. What about the oil stocks?
For the last three and a half years the oil price has traded in a relatively tight range, with a mean price of ~US$95/bbl over this period. Not surprisingly, the oil stocks have remained quiet.
A few of our oil stocks,however, led by Woodside (WPL), have recently started to rally; I believe this is because investors are pre-empting a rally in energy overall, or people are simply looking for value in a market that I believe is fully valued. Either way, it's worth being on top of a sector that is potentially coming to life.
Woodside Petroleum (WPL) - Not a stock that I am a fan of but technically looks set for a decent rally. Buy at $41 with stops under $39.50 - see chart 2.Santos (STO) - Remains neutral but fans of the stock can buy at $14 with stops under $13.10, targeting $16 - see chart 3.Oilsearch (OSH) - Remains positive, breaking to new all-time highs. Buy around $9.10 with stops under $8.70.Beach Energy (BPT) - I am neutral here.
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