Is now the time to short Tullow Oil?
The UK-based oil and gas company’s shares are down 70% this year, with oil prices collapsing under the weight of the economic fallout from Covid-19. But is it time to short Tullow Oil?
Tullow Oil shares are down 70% year-to-date, with the stock struggling amid weakening demand for oil as a result of the Covid-19 pandemic.
Unsurprisingly, short interest in Tullow Oil has grown in recent weeks, with Värde Partners Europe increasing their position against the stock in April to 2.64%.
Tullow Oil shares find support but for how long?
After hitting a low of 7p a share on 18 March, Tullow Oil has seen its shares rebound by 130% - closing at 17p on Thursday.
However, with oil prices continue to fall as demand for the commodity hit a 25-year low on Wednesday, pressure is mounting on the stock and short interest could continue to build.
Earlier this month, Tullow Oil is trading Tullow Oil said that it is targeting capital expenditure of around $300 million in 2020, down from its previous guidance of $350 million.
‘Savings have been identified primarily through the deferral of activities across the portfolio and through savings that can be realised by ongoing farm-down activities,’ the company said in a statement.
‘In Ghana, for example, savings will be made through the early termination of the Maersk Venturer rig and the deferral of some well activity, combined with the removal of any non-critical work that does not focus on safety and asset reliability.’17p a share as of 14:30 (GMT) on Thursday.
IEA tells oil market to brace for lowest demand in 25 years
The International Energy Agency warned the oil market on Wednesday to brace itself for the lowest level of demand the sector has seen in 25 years as a result of the global coronavirus lockdown.
The energy regulator said that oil demand in April will likely hit its lowest level, falling to 29 million barrels of oil per day (bopd) below last year’s average.
‘Even assuming that travel restrictions are eased in the second half of the year, we expect that global oil demand in 2020 will fall by 9.3m barrels a day versus 2019, erasing almost a decade of growth,’ the IEA said.
The IEA also made it clear that OPEC+ supply cuts will do little to offset the impact the Covid-19 pandemic is having on global demand and declining oil prices.
Echoing similarly negative sentiments, the International Monetary Fund said that the economic impact of the coronavirus crisis will likely bring about the deepest recession since the Great Depression.
How to trade stocks with IG
Create an IG Trading Account or log in to your existing account
Enter ‘Tullow Oil’ in the search bar and select it
Choose your position size
Click on ‘buy’ or ‘sell’ in the deal ticket
Confirm the trade
The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.
React to global volatility
Market volatility continues as coronavirus dominates the global agenda. Trade with us to take advantage of:
- Tight spreads – from just 1 point on major indices, and 2.8 on US crude
- Guaranteed stops – they’re free to use, and you’ll only pay a small fee if they’re triggered
- Round-the-clock assistance – our highly skilled teams are available when you need support
Live prices on most popular markets
You might be interested in…
Find out what charges your trades could incur with our transparent fee structure.
Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.
Stay on top of upcoming market-moving events with our customisable economic calendar.