Crude oil is under fresh pressure on Thursday, with West Texas Intermediate falling below the $46-a-barrel level for the first time in more than a year. This despite crossing headlines that both OPEC and non-OPEC nations such as Russia are expected to agree on a further six-month extension to the supply freeze agreement signed last year.
Why is the market ignoring the news? Because it’s increasingly clear the cap isn’t working. U.S. shale producers stepped into the void, encouraged by the price recovery OPEC initially created, to increase drilling rig activity and recapture market share the oil sheiks won during the oil price war they started in 2014.
Moreover, inventories continue to swell suggesting the production cap did little to actually rebalance global supply and demand.
As a result, stocks in the energy sector are suffering breakdowns. Here are eight that are suffering:
Energy Stocks Breaking Down: Exxon Mobil (XOM)
Exxon Mobil Corporation (NYSE:XOM) shares have been hanging by a nail to critical two-year support just above the $80-a-share level. A breakdown would be dramatic, setting up a retest of the early 2016 lows near $70.
That would be a boon to Edge Pro subscribers holding a position in the May $80 XOM puts.The company will next report results on July 28 before the bell. Analysts are looking for earnings of 96 cents per share on revenues of $68.97 billion.
On April 28, company executives sounded a cautious note about the prospects of a global increase in oil prices during their earnings call. While noting underlying energy demand has been strong, they highlighted ongoing supply-side pressures.
Energy Stocks Breaking Down: Noble Energy (NBL)
Noble Energy, Inc. (NYSE:NBL) shares have dropped more than 10% out of their March-April trading range to return to levels not seen since early 2016. This represents a 25% decline from its late-2016 high.
NBL, like many energy companies, has focused on cutting expenses and divesting non-core assets to survive in this persistent revenue constrained environment. Earlier this month, the company announced the sale of all of its upstream assets in northern West Virginia and southern Pennsylvania for $1.2 billion.
The company will next report results on July 31 after the close. Analysts are looking for a loss of 10 cents per share on revenues of $1.1 billion.
Energy Stocks Breaking Down: ConocoPhillips (COP)
ConocoPhillips (NYSE:COP) shares are falling to test support at its 200-day moving average for the first time since late March. Shares have already fallen more than 11% from their early December high, and are at risk of exiting a six-month consolidation range to return to mid-2016 levels near $40.
That would be worth another 13% decline from here.The company will next report results on Aug. 1 before the bell. Analysts are looking for earnings of 17 cents per share on revenues of $7.27 billion.
Energy Stocks Breaking Down: Cabot Oil & Gas (COG)
Cabot Oil & Gas Corporation (NYSE:COG) shares are testing below their 200-day moving average, dropping out of a three-month consolidation range near $24.50. That, in turn, represents a resistance level going back six months and comes in the context of a long topping pattern throughout 2016 near $27.
Long story short: There is a lot of overhead resistance that the bulls, despite two years of trying, have been unable to break through.
The company will next report results on July 28 before the bell. Analysts are looking for earnings of 15 cents per share on revenues of $441.5 million.
Energy Stocks Breaking Down: Murphy Oil (MUR)
Murphy Oil Corporation (NYSE:MUR) shares are threatening to fall down and out of a very long consolidation range with support at $24 and resistance at $34.
A breakdown here would set up a move down to the early 2016 low near $14, which would be worth a painful 44% decline from current levels.The company will next report results on Aug. 2 after the close.
On Wednesday, the company reported mixed results with a loss of six cents per share (vs. a three-cent loss expected) on a 26.6% increase in revenues to $544.7 million.
Energy Stocks Breaking Down: Hess (HES)
Hess Corp. (NYSE:HES) shares are threatening to break down below a two-year support level near $45, which would set up a retest of the early 2016 lows — a pattern that’s mimicked often in the sector.
The $45 level is made more important because it provided support in September 2015 as well during the initial decline from the mid-2014 high of $100-a-share.
The company will next report results on July 26 before the bell. Analysts are looking for a loss of $1 per share on revenues of $1.23 billion. The company reported mixed results on April 26, with a loss of $1.07 a share beating estimates by three cents but revenues of $1.27 missing estimates despite a 28.4% jump over the year prior.
Energy Stocks Breaking Down: Baker Hughes (BHI)
Shares of oilfield services provider Baker Hughes Incorporated (NYSE:BHI) are testing critical support at its 200-day moving average, setting up a decline to levels last seen in November.
After spending the past four months holding near the $60-a-share level, shares have been drifting lower in the wake of a downgrade from analysts at BMO Capital Markets on April 26.
The company will next report results on July 25 before the bell. Analysts are looking for a loss of 13 cents per share on revenues of $2.35 billion. The company reported a loss of four cents per share on April 25, 17 cents ahead of estimates.
Anthony Mirhaydari is founder of the Edge (ETFs) and Edge Pro (Options) investment advisory newsletters. A two-week and four-week free trial offer has been extended to Investorplace readers. Redeem by clicking the links above.