FTSE 250 oil & gas firms: solid rallies but still in long-term downtrends
We look at some UK mid-cap firms in the oil & gas sector as they struggle to escape the long-term downtrends.
Mid-cap oil and gas firms have been given a significant boost by the bounce in oil prices, bolstering their rallies from the lows of mid-March. But while this has been good for short-term swing traders, the longer-term weekly charts remain generally bearish.
We take a look at where four UK oil and gas stocks are headed next.
John Wood Group
The John Wood Group price here has surged off the lows, nearly doubling since the second week of March when it fell to 100p. But the downtrend is still intact. Indeed, a longer-term view shows that the shares have been losing ground since September 2018. Since then the weekly chart has seen lower highs and lower lows, pointing the way towards more weakness. A rally towards 350p leaves this downward move intact.
John Wood Group’s losses are nothing compared to Petrofac, which has been falling since mid-2012. Here too lower highs and lower lows on a weekly timeframe have been forming for several years. The latest drop, to 14-year lows, merely amplifies the existing downward move. Indeed, the price is now just a third of what it was in mid-2018. Rebounds towards 400p might provide another shorting opportunity in the longer term, but there is at least some significant short-term upside here.
Energean's share price has also seen a significant rebound, but there will be some who will be looking for a lower high around the current level, or below the £7.80 zone. In addition, a reversal back below £6.25 and the 50-day simple moving average (SMA) would be another bearish development. A much longer-term view shows the broader bearish performance, although it must be said that the current bounce has not yet shown signs of a reversal.
We have already seen signs of weakness in Cairn Energy, as the bounce of the past month begins to weaken around 100p. 2020 has seen Cairn break through two vital support levels, at 141p and 124p, and as a result it is not surprising to see these two previous support levels now work as resistance. Even a recovery above 150p would still mean the price is facing a longer-term challenge, namely trendline resistance from the late-2010 highs.
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