Among the news headlines on Tuesday was a 16% jump in the West Texas Intermediate per-barrel oil price. This development seemed to provide an emotional boost to the entire stock market, as we’ll see in today’s big stock charts.
It was the fifth consecutive day of positive oil price moves. What’s behind the risk-on sentiment in the petroleum market? RBC analyst Michael Tran explains, “The reopening of economies has injected a degree of cautious optimism back into an oil market that plunged to historic lows only weeks ago.”
In a similar vein, Alerian Director of Research Stacey Morris added, “There’s reason to believe the worst of the demand destruction is behind us. Commentary from multiple companies pointed to an improvement in U.S. demand at the end of April, particularly for gasoline.”
How has this relief rally affected the charts of major players in the petroleum market? To help answer this question, Wednesday’s big stock charts feature names that dominate the oil industry.
Exxon Mobil (XOM)
With a $196 billion market cap, Exxon Mobil (NYSE:XOM) is the undisputed heavyweight champion of the petroleum industry. A glance at the XOM stock chart could shed some light on how the oil price surge has impacted trader sentiment regarding this energy giant.
- Tuesday’s candlestick for XOM stock shows an upper wick but no lower wick. This indicates that the stock closed at or near the low of the day, which is a bearish sign.
- A small rising wedge has been forming since March. This could be bullish, but the buyers will want to see a decisive breakout above the upper resistance line of the wedge.
- XOM stock is above the 20- and 50-day moving averages. However, the bulls still want to see it clear the 200-day moving average, preferably sooner rather than later.
Not far behind Exxon Mobil in the petroleum market is another giant corporation, Chevron (NYSE:CVX). With its headquarters located in San Ramon, California, Chevron is a heavily watched player in the American energy sector.
Charts often tell a story, but what tale is the CVX stock chart telling now?
- Since early April, there has been a divergence with the price going up but the volume going down. That may signal that the uptrend in price could be a false move.
- CVX stock is above the 20- and 50-day moving averages, so that’s positive. However, the 50-day moving average is slanting downwards, so caution is advised.
- The $100 is a psychologically significant resistance point. The bulls will need to clear that hurdle as soon as possible.
Royal Dutch Shell (RDS.A)
Oftentimes, oil company traders will concentrate their research on familiar names like Exxon Mobil and Chevron. However, there are other contenders worth considering, including some very big companies. One of these is Royal Dutch Shell (NYSE:RDS.A).
This massive energy company is headquartered in The Hague, which is in the Netherlands. However, Royal Dutch Shell has shares that can be traded in other countries, including the United States.
Dividend investors like the fact that RDS.A stock pays a generous forward annual dividend yield of around 10%. Checking the stock chart might provide some insight into how the oil-price spike is affecting the market’s sentiment surrounding Shell.
- The main feature of the RDS.A stock chart is the symmetrical triangle. The share price broke below the triangle, but it turned around and is heading back towards it, so the action is really getting exciting.
- $37.50 is a major battle line for the bulls and the bears. Whichever side wins this battle will be in control of the price action.
- Moreover, the bulls really want to get above the 20- and 50-day moving averages. These are very close at hand, so expect major struggles between the buyers and sellers this and next week.
As of this writing, David Moadel did not hold a position in any of the aforementioned securities.