NZX-Listed Oil Stocks Under Sentiment Splash- NZO, CEN, and GNE

  • Jun 18, 2020 NZST
  • Team Kalkine
NZX-Listed Oil Stocks Under Sentiment Splash- NZO, CEN, and GNE

Summary

  • NZX-listed oil stocks are now under a recovery mode with prices of many stocks such as New Zealand Oil and Gas Limited (NZX:NZO), Contact Energy Limited (NZX:CEN), Genesis Energy Limited (NZX:GNE) moving up on charts.
  • OPEC and allies along with Russia had committed to curb 9.7 million barrels per day of oil production for additional one month (until July) against the previously deadline of June 2020.
  • Apart from that, Saudi, UAE, and Russia have decided to trim additional 1.18 million barrels per day of oil output until July 2020, which coupled with a slightly improving oil demand should address the global supply glut, leading towards a gush in NZX-listed oil stocks.

Brent crude oil futures has seen a price gain of over 171.0 percent, surging from the level of USD 15.98 (intraday low on 22 April 2020) to the level of USD 43.41 (intraday high on 8 June 2020). Thanks to the rally in crude oil prices, Oil and gas sector is under a sentiment splash, and the stock prices have recovered considerably. NZX-listed oil & gas stocks such as New Zealand Oil and Gas Limited (NZX:NZO) gaining an upswing on the exchange. 

The recent oil market challenges concerning demand had led to a bloodbath in oil & gas stocks and a profound impact on energy markets across the globe. The pressure on oil prices was unprecedented, so much so that the market had witnessed prices of WTI or the U.S. crude slipping to negative territory, where suppliers were actually ready to pay buyers to park some of their crude oil.

The carnage in the oil market has prompted many oil and gas companies across the exchange to notch various defence mechanisms to sail across the stormy oil market, which still remains challenging over the estimation of poor demand during the year 2020.

NZX-listed oil Stocks Under Recovery Mode

  • New Zealand Oil and Gas Limited (NZX:NZO)

The stock recovered 38.37 percent, from its recent low of $0.4300 (intraday low on 24 March 2020) to the present high of $0.5950 (as on 11 June 2020). However, post reaching that level the stock tumbled to level of $0.5100 (as on 12 June 2020) and has been recovering since then to presently trade at $0.5500.


NZO On a Daily Chart (Source: Refinitiv Thomson Reuters)

NZO On a Daily Chart (Source: Refinitiv Thomson Reuters)

 

On the daily chart, it could be seen that the stock is moving in a secondary uptrend after halting the decline seen under the primary downtrend. In the recent past, the stock has breached its horizontal resistance level of $0.5081, which would now act as the primary and decisive support.

It should be noticed that the stock has given a volatility breakout after breaching the +1 Standard Deviation (SD) of the 20-day simple Bollinger band along with the horizontal resistance breakout, reflecting on the current bullish sentiments around the stock.

NZO has even breached the 200-day exponential moving average, but, is pending any crossover between the short-term (50-day) and medium-term (200-day) EMAs, reflecting on the bulls’ strength.

However, it should also be noticed that the rally is on weak volumes, which coupled with a rapid surge in price suggests a pending correction (minor trend). The 12,24,9 MACD indicator is giving a positive signal.

If the prices correct ahead or enter any minor trend into the secondary uptrend, the +1 SD followed by the mean value of the Bollinger band could act as immediate support for the stock.

As suggested above, the primary support would be at $0.5081 and it should be decisive in nature as the same level is overlapping with the support suggested by the -1 SD of the 20-day simple Bollinger band.

CEN surged ~ 48.45 per cent after hitting the low of $4.54 (as on 23 March 2020) to reach a high of $6.74 (as on 9 June 2020). Post hitting that level, the stock is hovering around the same and is currently poised to test the horizontal resistance level $6.616.

 

CEN On a Daily Chart (Source: Refinitiv Thomson Reuters)

CEN On a Daily Chart (Source: Refinitiv Thomson Reuters)

 

On the daily chart, it could be seen that the stock attempted a resistance breakout during the trading session on 9 June 2020; however, failed and closed below the resistance line of $6.616.

In the recent past, the stock has given a volatility breakout; however, just like the resistance break remained unable to sustain the same with stock closing below the +1 SD of the 20-day simple Bollinger band for few successive trading sessions, while revising the mean.

However, it should be noticed that the post the volatility breakout, the Bollinger band has witnessed a squeeze, and is observing small volumes on declines while 12,24,9 MACD indicator is giving a positive signal, reflecting on the seeding bullish sentiments.

At present, CEN is taking the support of its 50-day EMA, which is currently overlapping with the mean value of the Bollinger band. If the stock sustains above the horizontal resistance and 50-day EMA, it could further seed bullish sentiments while failure to do so could attract bears.

On the resistance counter, the primary resistance for the stock is the horizontal level of $6.616, followed by the 200-day EMA. It should also be noticed that the horizontal resistance line and the 200-day EMA are relatively close to each other, which is turn, is creating a resistance zone from $6.616 to $6.734.

 

GNE On a  Daily Chart (Source: Refinitiv Thomson Reuters)

GNE On a  Daily Chart (Source: Refinitiv Thomson Reuters)

 

On following the daily chart, it could be seen that the stock has tested the resistance line of $3.24 but failed to breakout and fell. However, if the price manages to close above the same resistance level, the stock could seed bullish sentiment, as it would be confirming a swing up move. The stock is presently trading above the pair of 50- and 200-day EMA, reflecting upon the prevailing bullish sentiment.

Furthermore, the stock has also given a volatility breakout with prices breaching the +1 SD of the 20-day simple Bollinger band. Over the medium-term, the projected Fibonacci fan lines (projected by connecting the recent low to the recent high) should act as support for the stock, and the 1/3 fraction of the Fibonacci fan or the first line from the top should act as decisive support- as it is overlapping with the -1 SD of the Bollinger band.

 


Disclaimer
The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. The above article is NOT a solicitation or recommendation to buy, sell or hold the stock of the company (or companies) under discussion. Kalkine does not in any way endorse or recommend individuals, products or services that may be discussed on this site.

 

   
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