One of the key movers was PetroChina which enjoyed a 7% jump yesterday to a one-week high of $8.50.
Another top performer was China Petroleum, which saw its biggest advance in 10 months at 7.6%.
These stocks rose together with the wider energy sector on the temporary rebound of oil prices.
WTI had risen for the second day due to a surprise drop in US crude inventories, where production fell by 3.7 million barrels, against the consensus forecast of a rise of 1.3 million barrels.
Today, reports that PetroChina found an oilfield with over 1 billion tonnes of reserves has further boosted investor sentiment. This helped PetroChina rise in the morning trade session to as much as $8.60.
However, fundamentally, we have yet to see any convincing signs of a revival in the global oil demand outlook to support WTI and Brent prices. Concerns still linger over Europe’s growth, while recent Chinese PMI numbers have continued to be soft. Until this turns around, it will continue to weigh on PetroChina and other oil-related stocks and cap any advances.
From a technical perspective, this is likely to be a brief respite for PetroChina’s stock price, which appears to be respecting its downtrend line.
There are also further headwinds looking at the daily chart, where the 50 daily moving average (DMA) has crossed under the 200 DMA to form a Death Cross. This signals a bearish bias and suggests it will test its support level at around $8.00.
The 20 DMA will be a key level to watch as it is likely to cap any move upwards. Any sustainable turnaround will first need the stock price to make a clear break above it.