Oil stock analysis: Genel Energy bounces back
9th October 2018 13:59
by Rajan Dhall from interactive investor
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.
Brent crude and WTI have moved higher early this week after another weather warning in the Gulf of Mexico. The hurricane named Michael gained new strength over warm tropical waters, and new forecasts suggest it could swiftly intensify into a major hurricane before striking Florida's northeast Gulf Coast.
Over this region, production may be affected as there are some major refineries located there. In addition to the hurricane, the International Energy Agency's (IEA) executive director Fatih Birol believes the oil market may need more supply to keep up with global demand.
He also points out that Venezuela's market is in freefall and where production may soon fall below 1 million barrels per day (bpd). Today, spot WTI is up around 0.77%, bouncing back from yesterday's lows of $73.10 per barrel. Later this week we are due to hear from OPEC and the IEA as they both publish monthly reports.
Genel Energy
Genel Energy, a large holder of reserves and resources in the Kurdistan region of Iraq, has provided an update on the Tawke PSC project, driving its share price up 5%.
They say that production at the Peshkabir field has ramped up to 50,000 bpd, meeting the end-2018 target ahead of schedule and below budget.
The company went on to comment: "One of two recently completed wells, Peshkabir-7, is producing over 10,000 barrels per day from nine Cretaceous zones through temporary test facilities and exported. The other, Peshkabir-6, drilled as a production well, but with the additional objective of appraising deeper formations, has established a deeper Cretaceous oil/water contact level than previously estimated." So, good news all round for Genel.
Chart analysis
From a price perspective, the company has been performing well.
On the daily chart below, Genel shares have hit a consolidation patch at higher levels between 216p and 302p. The 216.5p support level, last touched on 10 September, is unlikely to be troubled today after a spate of good news.
However, the next level of attack at 258p resistance has held strong a few times, once on 28 August before another rejection on 25 September. Could this be third time lucky for a break higher?
If we see a break of 258p on higher volume, a challenge of the previous high at 302p is possible.
Past performance is not a guide to future performance
Rajan Dhall is a freelance contributor and not a direct employee of interactive investor.
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