Price Correlation of Different Energy Streams and the Fed Stance
(Continued from Prior Part)
Moving averages
The Chinese (FXI) energy companies CNOOC (CEO), China Petroleum & Chemical Corporation (SNP), and PetroChina (PTR) have fallen below their 100-day and 20-day moving averages by an average of 15.3% and 18.6%, respectively. After touching a high of $175 in April 2015, CNOOC has been in a falling trend. Since June 2015, the company struggled to cross its 100-day moving average. On January 27, 2016, the stock rose 1.1%. Overall these Chinese energy companies were flat as of that day’s closing.
The energy sector benchmark, the Energy Select Sector SPDR Fund (XLE), is trading 13.6% below its 100-day moving average and 2.3% below its 20-day moving average. Moving averages are lagging indicators used to confirm an existing trend. When an underlying asset’s price is above its long-term and short-term averages, this indicates a rising trend and vice versa. Moving averages provide important support and resistance levels for an underlying asset’s movement.
Analysts’ estimates
Wall Street estimates suggest that China-based integrated energy companies may rise by an average of 25% over the next 12 months as compared to 11.7% for their peers in the United States. These estimates indicate rises of 28%, 25%, and 23%, respectively, from the current prices for CNOOC, China Petroleum & Chemical Corporation, and PetroChina. The table above shows the moving averages and analysts’ estimates for these Chinese energy companies.
In the next part of this series, we’ll discuss the moving averages and analysts’ estimates of European energy companies.
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