Crude oil is getting smashed lower on Tuesday, with the United States Oil Fund LP (ETF) (NYSEARCA:USO) falling to levels not seen since February 2016. In turn, numerous oil and gas stocks are getting hammered into dangerous territory.
The decline is ugly — a gapped move lower in West Texas Intermediate, with a loss of 2.4% in mid-day trading to fall just below the $43 per barrel mark. That caps a decline of 17% from the early April high and a 26% decline from the January high.
Make no mistake: This is officially a full-on bear market in oil.
Energy prices are continuing the powerful downtrend that’s been in place since December — as equity investors sniffed out the downturn before commodity traders did. The Energy Select Sector SPDR (ETF) (NYSEARCA:XLE) is down nearly 16%. But oilfield services stocks have been hit the hardest: The VanEck Vectors Oil Services ETF (NYSEARCA:OIH) is down 31%.
Several negative catalysts are in play, including growing doubt about OPEC’s oil freeze agreement to normalize the global energy oversupply, increased U.S. shale activity (at a lower cost structure), bloated inventories, and tepid gasoline demand.
As a result, here are five oil and gas stocks spilling lower, sporting downside of up to 35%.
Oil and Gas Stocks Melting Down: Halliburton (HAL)
Shares of oilfield services provider Halliburton Company (NYSE:HAL) have gapped down and out of a two-month consolidation range centered on $46. The technical breakdown, combined with price below the 20-day, 50-day, and 200-day moving averages, suggests a full-scale downtrend is in place.
Watch for a move down to the September 2016 low of $40, a 7% decline from here. If that doesn’t hold, watch for a move all the way down to the January/February 2016 low near $27.50, a 35% drop from here.
The company will next report results on July 24 before the bell. Analysts are looking for earnings of 16 cents per share on revenues of $4.8 billion.
Edge Pro subscribers are enjoying a 35% gain in their Jul $45 HAL puts.
Oil and Gas Stocks Melting Down: Apache (APA)
Apache Corporation (NYSE:APA) shares are down 4.1% in trading on Tuesday, falling back below their 50-day moving average. If support at $46 doesn’t hold, it’s free air all the way down to the early 2016 lows near $32.50, which would be worth a 12% drop from here.
The decline from the December high of $68.39 has already resulted in a loss of more than 30%.
When Apache last reported results on May 4, earnings of 8 cents per share missed estimates by 7 cents. The independent oil and natural gas company’s next chance at redemption is Aug. 3 after the bell, when analysts will be looking for earnings of 17 cents per share on revenues of $1.48 billion.
Oil and Gas Stocks Melting Down: Schlumberger (SLB)
Schlumberger Limited (NYSE:SLB) is pushing below its lower Bollinger Band on Tuesday, down some 23% from its January high. Support near $70 — going back to the early 2016 reaction lows — didn’t hold, setting up a move to the mid-February levels near $65.
A breakdown from there would likely result in a touch of the January 2016 low near $57, which would be worth a 15% drop from here.
When Schlumberger last reported results on April 21, earnings of 25 cents per share matched analyst estimates but revenues, which rose 5.7% year-over-year, missed. Next up on the quarterly earnings docket is a July 21 morning announcement. Analysts will want to see earnings of 29 cents per share on revenues of $7.2 billion.
Oil and Gas Stocks Melting Down: Hess (HES)
Shares of Hess Corp. (NYSE:HES) — the E&P company with the iconic toy trucks — look particularly ugly, dropping down and out of a 10-month trading range with support near $46 and more recently losing a one-month range with support near $43.
HES stock already is down 36% from its December high, and investors now need to watch for a decline to the January 2016 low near $31, which would be worth a 25% decline from here.
When it last reported on April 26, a loss of $1.07 per share was 3 cents better than expected but revenue growth of 28% missed estimates.
Hess will next report results on July 26 before the bell. Analysts are looking for a loss of $1.07 per share on revenues of $1.26 billion.
Oil and Gas Stocks Melting Down: Marathon Oil (MRO)
Marathon Oil Corporation (NYSE:MRO) shares are losing their one-month consolidation range, falling below the $12-a-share threshold for the first time since March 2016.
MRO, which Jefferies downgraded on May 17, has already lost 37% from its December highs. But the movement today sets up a drop to the March 2016 reaction low near $9.50 — just more than 20% lower from current prices. And in the awful-case scenario, if Marathon plunges to its February 2016 lows of $6.36, we’d be looking at a loss of nearly 50%.
Marathon’s next report is coming up Aug. 2 after the close. Analysts are looking for a loss of 10 cents per share on revenues of $1.25 billion.
Anthony Mirhaydari is founder of the Edge (ETFs) and Edge Pro (Options) investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.
