Our Algo Engine has flagged a second buy signal within the uptrend on Origin that started back in January 2016.
The first “buy on the dip” signal occurred in March 2017 at $6.25 and now a new Algo Engine buy signal has been triggered at $6.90.
WPL, OSH and ORG are all likely to find support and trade higher from the current price levels.
Over the last 10 trading sessions, WTI Crude Oil has dropped over 13% from $52.00 to last nights low of $45.20.
Technically, we see good support near the $43.75 area, which was the reversal low posted on May 5th.
Fundamentally, increased political tensions between OPEC members Qatar, Saudi Arabia and Iran could escalate into military engagement with some associated levels of supply disruption in the near-term.
As such, we have been looking to buy the dip in some of the local energy names like Origin Energy and Oil Search. (The ALGO engine gave a buy signal on OSH yesterday)
Further, we have also suggested that investors looking for a mean reversion higher in Crude oil prices can buy the BetaShare Oil ETF with the symbol OOO.
OOO traded as high as $8.10 just a week ago and has now in the low $7.00 area.
BetaShare Crude Oil ETF
Origin Energy
Oil Search
Origin Energy has been trading in a broad range between $6.70 and $8.10 over the last four months.
We recently took profits for client portfolios at $8.00 and are currently looking for a retracement into the $7.50 area to re-enter long positions.
The recent weakness in crude oil has had a dampening effect on various energy names. However, we feel Origin’s natural gas assets will keep the share price fairly well bid over the medium to longer-term.
Origin
We continue to track the Betashares oil ETF OOO.AXW
Oil prices have rallied from the recent low after this week’s largest inventory drop of 2017. EIA data has revealed U.S. crude stocks fell by 5.2M barrels. In addition, OPEC supply cuts have been agreed to by Iraq and Algeria joined Saudi Arabia.
Concerns regarding the abundant added supply of US shale oil will keep a lid on any meaningful rally, but we may see a bounce from the recent low. Investors should run stop losses under the trend low on both ETF and individual stock names.
Our best performing energy trade has been the long ORG position. However, due to the extended price rally since the Algo Engine buy signal, we’re now inclined to take profit in ORG and consider the OOO.AXW ETF as a replacement.
ORIGIN INCREASES INTEREST IN PROSPECTIVE BEETALOO JOINT VENTURE TO 70%
Origin Energy Limited (Origin) today announced it had increased to 70% its share in the Beetaloo Joint Venture after acquiring Sasol Petroleum Australia Limited’s (Sasol) 35% share.
Origin CEO, Frank Calabria said, “Having recently announced the discovery of a material shale gas resource in the Beetaloo Basin, Origin has seized the opportunity to increase its interest in the Beetaloo Joint Venture by acquiring Sasol’s 35 per cent share.
Our Algo Engine triggered a buy signal in early March at or near $6.25. We remain long the stock and see upside potential to $8.00.
The Betashare Crude Oil Index has now rallied 10% from the recent low. At an individual stock level, our preferred energy plays remain WPL, OSH & ORG.
Origin has been triggered as a buy signal from our Algo Engine. We expect the stock to find buying support at or near the current price level.
Origin Energy looks like it will find buying support in the $6.25 to $6.50 range.
Shares of Origin Energy continue to slide after announcing yesterday that the company will take a $1.031 billion impairment charge on the APLNG gas export project in Queensland. This was the largest part of a broader $1.9 billion post-tax write-down.
Origin raised the bottom end of its forecast range for annual EBITDA by 3% to $2.45 billion, but kept the top end of the forecast at $2.62 billion.
Origin shares are down over 2% so far today at $7.10. We see initial support coming in at or near the $6.88 level.
Our Algo Engine created a buy signal in September 2016 at $5.00
Our long ORG position continues to perform well with Origin being one of the standout recovery stories over the past 6 months. We think this has further to play-out as ORG restructures assets, pays down debt and grows LNG export volumes.
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