Interactive Investor

Can Tullow Oil shares really double in value?

5th October 2021 08:43

Alistair Strang from Trends and Targets

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After a difficult decade, independent analyst Alistair Strang sees early signs that something may be changing for the better.

With Brent Crude hitting the $81 level, once again a bunch of folk were anticipating major oil shares to do something special. Once again, major oil shares tended not to respond.

It’s worth remembering when Brent Crude attempted the $130 level, BP (LSE:BP.) shares dithered below the five quid level. The concept of a link between the price of crude and oil company shares appears illusory, mostly.

If we choose to look at Tullow Oil (LSE:TLW), during 2013 the price of Brent Crude was pretty stable around the $120 mark. Tullow, alas, was trading initially at 1,200p and now, with Brent at $81, Tullow ‘enjoys’ a share price down at just 52p. As the chart below illustrates, the last decade has not been kind to Tullow but, in fairness, there are early signs something may be changing for the better.

Source: Trends and Targets. Past performance is not a guide to future performance

The immediate situation seems pretty straightforward, with movement above 52.6p hinting at the prospect of some growth toward an initial 56.7p.

While conceding this target is about as interesting as a Scottish weather forecast (always rain, obviously…) the secondary ambition gives some hope for the longer term as it’s at 68.7p. The effect of the secondary, despite any hesitation which shall probably occur should it appear, is the price will illustrate a “higher high”.

This could prove quite a big deal, having bettered the high prior to the break of the Blue downtrend. This has the potential for some Big Picture impetus to make itself known, calculating with a long-term cycle commencing to an eventual 125p as a serious point of interest eventually.

For the present, Tullow needs to slip below 39p to cause panic. In such a scenario, we can calculate a bottom of 22p. Unfortunately, that’s also the point where we run out of numbers as every result is tainted with a minus sign thereafter.

Source: Trends and Targets. Past performance is not a guide to future performance

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea. 

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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