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Occidental Petroleum and Diamondback Energy may be poised for a rally after U.S. oil prices rose above key resistance levels on Friday, according to chief market strategist Miller Tabak. Strong U.S. growth, as evidenced by better-than-expected fourth-quarter gross domestic product (GDP) and China’s pledge to spend more to stimulate the economy, pushed U.S. oil prices to 1. The barrel settled at $78.01, ending the week at its best since September 1st. Miller Tabak’s Matt Maley told CNBC that if West Texas Intermediate futures rise above the 200-day moving average of $77.64, it should confirm a significant move to the upside in oil prices. . “This paves the way for higher prices,” said Bob Yawger, managing director and energy futures strategist at Mizuho Americas. Yawger said not only did WTI rise above its 200-day moving average, but settling above that level would be “definitely much more bullish” for oil futures prices. Next week will be a key test, he said.The energy sector has lagged oil prices for the past four to six weeks and confirmation that oil prices are starting to pick up could help stocks “catch up,” Maley said. Stated. The strategist said the key next week will be whether WTI prices remain above the 200-day moving average, which has been acting as resistance on the price chart. However, Maley pointed out that it is also important to monitor the 200-week moving average of US crude oil at $71.58 per barrel as a price support level. “If oil prices turn around and fall below that level, I’ll be proven wrong. It’s not working,” said Miller Tabak strategist. Maley said Occidental and Diamondback in particular may be poised for a rebound because they are heavily influenced by oil prices. Occidental is down 2.2% this year, while Diamondback is up less than 1%. The U.S. Oil ETF, a good proxy for crude oil, is up almost 10% in 2024. Occidental could return to its 2022 highs of $75 to $80, Maley said. This represents an increase of up to 37% from Occidental’s Friday closing price of $58.40. Buffett’s Favorite Maley also noted that Occidental is Warren Buffett’s favorite. Berkshire Hathaway will increase its stake in the Houston-based company from about 21% at the end of 2022 to 34% by the end of 2023. “He’s not a big guy who’s big on leverage,” Maley said of Buffett. “And this tells us that if he’s buying stocks that are highly linked to oil prices, he believes oil prices will go up.” Diamondback could reach $170 said Maley, suggesting a 9% increase from Friday’s closing price of $156.24. About 58% of Wall Street analysts own Occidental’s stock, according to FactSet, and 38% rate it a buy, with a consensus price target of $67. Wall Street is more bullish on Diamondback, with 82% of analysts rating the stock a buy and an average price target of $178. Yoerger thinks energy stocks will rise on the back of higher oil prices as traders look for stocks that have fallen, but the sector won’t lead the rest of the market. Pack it,” he said. That said, Yawger points to declining U.S. inventories and production, the U.S. economic expansion, China’s fiscal stimulus, and the stock market recently hitting all-time highs (if the market is a leading indicator). We believe that the outlook for crude oil prices is favorable due to the combination of . It goes without saying that geopolitical risks are increasing due to the continuation of the Middle East conflict and the Russia-Ukraine war. Just on Friday, Houthi militants claimed responsibility for a missile attack on an oil tanker, while a Ukrainian drone attack on a Russian fuel terminal in the Baltic Sea contributed to a rise in oil prices earlier in the week. . “The only wild card is a Ukrainian attack on Russian infrastructure, oil infrastructure,” Yoger said. “They’ve raised it even higher. That could potentially lead to bidding in the market as well.”
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