Hurricane Energy and its share price potential

Financial markets analyst Rajan Dhall picks out the day's key industry news and runs the numbers to see what this share price might do next.

Oil markets remain under pressure this week despite talk over the weekend that Saudi Arabia and its OPEC allies may be organising another output cut as soon as next month. 

Crude prices have been taking a battering after Donald Trump underwhelmed the international community and allowed India and China to keep importing oil from Iran. This masterstroke by the US president left OPEC nations no choice but to intervene once again and try to address the supply-demand balance.  

Inventories have been steadily rising in the US since the busy summer period came to an end. Not only this, it seems that US production has gone through the roof as they are now consistently printing an 11 million-plus daily production number week-on-week.

Source: TradingView  Past performance is not a guide to future performance

So what steps will OPEC take? It was reported this weekend that OPEC members will come together and reduce output by 1 million barrels per day from December. Within hours, Trump responded on Twitter and said:

''Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply!''. 

Following that tweet, spot WTI moved below $60 per barrel. Today we get the latest OPEC monthly report and the latest supply and demand figures which will make for interesting reading.

Hurricane Energy

This morning we received a very brief operational update from Hurricane Energy. 

The company is currently moving the Aoka Mizu FPSO (floating production storage and offloading) vessel from Dubai to Rotterdam, with its final destination set to be Lancaster (Q4). 

Today the company announced that the vessel has been put into Algeciras, Spain for planned personnel changes and bunkering. This is where work to repair an auxiliary system associated with power generation can be carried out. 

Although the share price fell this morning, the stopover does not materially change plans. Commissioning activities being undertaken en route mean less downtime on arrival. The company is still set to produce at the Lancaster field in the first quarter of 2019 and, until we hear of any major issues with the floating rig, then there is no reason to believe otherwise. 

Much of the move lower in Hurricane shares is in line with the fall in oil prices as Shell, BP, Premier and Solo have all shown recently.

Chart analysis

From a technical perspective, and despite the clear promise that Hurricane's assets offer, price action is still pretty bearish. 

We have recently broken an important trendline originating in late 2017 (marked on the chart) but there is a chance of a rebound to retest the area. 

The main value area (where trades exchanged the most contracts) is around 46p. If we do see a clear rejection today and hold above 40p, there is a possibility the price could head back to those levels. 

Sustain this bearish action, however, and the price falls below 39.34p, then a move to the lower trendline support at around 32p is the next target. 

Source: TradingView  Past performance is not a guide to future performance