Oil Stocks (PBR, SLB, PSX) And ETF (USO) Outlook

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The price of oil plays a key role in many industries, and has the potential to impact stock prices. Yet not all oil sector stocks are directly related to the price of oil, and often have their own technical outlooks and opportunities, independent of what the price of oil is doing. Looking first at the price of oil, as represented by an exchange traded fund (ETF), we will then look at three major oil stocks from varying industries relating to the oil sector.


United States Oil (ARCA:USO)

The United States Oil (ARCA:USO) stock rose in July and August, but stalled and pulled back in mid-September. Resistance is at $35 and support at is $32.50 – the price range the ETF has been in since September 19. A breakout of that range indicates the short-term direction of the ETF. A rally above $35 points to a move towards $36, and if the ETF can keep rallying through $37.17 (September 14 high), it signifies that the ETF is in the midst of a longer-term uptrend. On the other hand, a drop back below $32.50 is bearish, with the potential to move to the $29.02 June low, and possibly lower as the longer-term downtrend since March continues.

SEE: Technical Analysis: Support And Resistance



Petroleo Brasileiro S.A-Petro (NYSE:PBR)

Petroleo Brasileiro S.A-Petro (NYSE:PBR), the large Brazilian drilling and exploration company, fell aggressively from the 52-week high of $32.60 in February to a $17.27 52-week low in June. Since the low though, the stock has been pushing higher and is currently within a flag formation – traditionally a continuation pattern. Since mid-September the stock has had little volatility as it moves sideways with a slight downward bias. A breakout above that sideways range (flag) at $23.70 indicates another pop higher in the stock, with a target of $26 to $26.50. A sharp drop nullifies the flag pattern and is likely to be bearish since the long-term trend remains down.

SEE: Continuation Patterns: An Introduction



Schlumberger Limited (NYSE:SLB)

Schlumberger Limited (NYSE:SLB) is an oil and gas equipment and services provider which has been in a “ranging” mode going back to the latter part of 2011. Tapping out near $80 to $81, this is has been the area to short or sell the stock over the last year. A breakout above this region is likely to cause a buying surge though, with a target of $100. A good buy point for the range has been $60 to $65, but a drop below $59 could the send the stock toward $50.

SEE: The Anatomy Of Trading Breakouts



Phillips 66 (NYSE:PSX)

Phillips 66 (NYSE:PSX), an oil and gas refining and marketing company, has been rallying since May when it began trading. Since mid-September the stock has moved sideways in a tight range. The breakout of the range indicates the direction of the stock over the coming weeks and potentially over the coming months. A rise above $48.22 keeps the uptrend going, with a target of $52 or higher. If the price drops below $44, a fall toward support at $40 is probable. Dropping below $40 draws the overall uptrend in question.




Bottom Line:

All of the aforementioned oil related stocks are worth trading, but each come with a different trading opportunity. Traders should trade with an ideal trend, but trendlines as well as support and resistance can be used to determine when the tide may be changing. Due to the global nature of oil, oil stocks and ETFs can move quickly and aggressively, therefore, be aware of and always manage your risk.

Charts courtesy of stockcharts.com

At the time of writing, Cory Mitchell did not own shares in any of the companies mentioned in this article.

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Energy ETF: Oil (USO) and UNG (Natural Gas)

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If you are looking for no brainer stocks investment opportunity, you can look at these two energy ETF, USO (United States Oil Fund) and UNG (United States Natural Gas Fund). Energy is a necessity is any economy and we need it every day. Imagine how we are going to live in the modern day without energy.

Energy related stock or ETF have direct correlation with the economy activities. When economy recovery gathers pace, the energy demand and consumption increase and thus drive the energy price up.

Looking at both USO and UNG charts, these two ETF are super under value and post the greatest upside potential. Downside is limited because now we are in slow recovery mode unless the whole world enters into double recession.


  • Background:  The United States Oil Fund, LP (“USO”) is a domestic exchange traded security designed to track the movements of light, sweet crude oil (“West Texas Intermediate”). USO issues units that may be purchased and sold on the NYSE Arca.
  • Historical High: US$118
  • Current Price: about US$36





  • BackgroundThe United States Natural Gas Fund LP (UNG) is an exchange traded security that is designed to track in percentage terms the movements of natural gas prices. UNG issues units that may be purchased and sold on the NYSE Arca.
  • Historical High: US$64
  • Current Price: about US$6

Assuming both ETF shoot up to HALF of the historical high when the economy is fully recover, you can do your math how much upside potential the ETF have…. If you look back the chart in Jan – June 2008, you can see how the bull pushed the price up close to 100% within 6 months. If you time it right, you will be able to achieve your handsome retirement plan. If you are not good at how to time the entry, you can just start to accumulate these ETF and hold for a few years. I am sure you will be rewarded pretty handsomely because you are buying low now and selling high later.

Additional Useful Information for your reference:

  • What is ETF? A security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange. ETFs experience price changes throughout the day as they are bought and sold.  You can view the video here.
  • If you want to learn how to trade ETF safely, click here.
  • If you want to find out more on the energy related information for your long term investment, check it out the report here. Hottest Investment Plays In North America: Oil And Gas Bulletin. – by Keith Schaefer

Disclaimer: This is my own analysis and it is not a recommendation to buy or sell the ETF. Use the information at your own risk.

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