Trading Canadian Oil Stocks
If you are trading Canadian oil stocks don’t be fooled by the notion that Canada is right next door. These are still foreign stocks trading in a foreign currency. And the Canadian dollar is in free fall as investors are getting out of oil investments in Canada and taking their money elsewhere. According to Bloomberg News money is flooding out of Canada faster than with any other developed nation. The reason is the low price of oil.
Money is flooding out of Canada at the fastest pace in the developed world as the nation’s decade-long oil boom comes to an end and little else looks ready to take the industry’s place as an economic driver.
Canada’s basic balance - a measure of national accounts that spans everything from trade to financial-market flows - swung from a surplus of 4.2 percent of gross domestic product to a deficit of 7.9 percent in the 12 months ending in June, according to analysis from Kamal Sharma, a foreign-exchange strategist at Bank of America Merrill Lynch. That’s the fastest one-year deterioration among 10 major developed nations.
"This is Canadian investors that are pushing money abroad," said Alvise Marino, a foreign-exchange strategist at Credit Suisse Group AG in New York. "The policy in Canada the last 10 years has greatly favored investments in energy. Now the drop in oil prices made all that investment unprofitable."
Crude oil, among the nation’s biggest exports, has collapsed to about half its 2014 peak. The slump has derailed projects this year in Canada’s oil sands - one of the world’s most expensive crude-producing regions. Royal Dutch Shell Plc’s decision to put its Carmon Creek drilling project on ice last week lengthened that list to 18, according to ARC Financial Corp.
If you are trading Canadian oil stocks you have seen prices plunge. As with all of the energy sector, there will be a recovery if and when demand increases and drives up prices. How will that happen?
Canadian Oil Stocks to Watch
The Wall Street Observer lists three Canadian oil stocks to watch: Canadian Natural Resource Ltd (USA) (NYSE:CNQ), CONSOL Energy Inc (NYSE:CNX), Cabot Oil & Gas Corporation (NYSE:COG).
Crude oil prices edged up on Friday after falling over 2 percent the previous session, with analysts saying oversupply and a strong dollar would continue to weigh on fuel markets.
Canadian Natural Resource Ltd (USA) (NYSE:CNQ) share price increased in the last trading session with a previous 52-week high of $37.36. The stock traded at a volume of 6,754,479 shares at a price gain of 5.48%.The share price is now up 3.29% for the past three months. Latest closing price was 17.19% above its 50-day moving average and -4.79% below its 200-day moving average.
While trading, CONSOL Energy Inc (NYSE:CNX) climbed 4.06% at the end of recent close. Its previous 52-week high was $42.07, trading at a volume of 12,037,128. Shares have fallen -74.64%over the trailing 6 months. The stock is currently trading -24.36% below its SMA 50 and -62.08% below its SMA 200.
Cabot Oil & Gas Corporation (NYSE:COG) closed at $22.64, up 0.98% from previous close and at a distance of 1.29% from 20-day simple moving average. Over the last 12 months, a return on equity of -10.50 percent was realized due to the financial situation and earnings per share reached a value of $-0.54. Last fiscal year, $0.08has been paid in form of dividends to investors.
The bottom line is that all three of these Canadian oil stocks have depressed values and will be recovery stocks if and when the oil market starts to improve. But when will that be?
And if the current situation is not bad enough, Yahoo Finance says that oil prices could be headed even lower.
Crude (CLZ15.NYM) oil prices have been hovering in the $40-range for months, but could be headed even lower.
A leading indicator of sentiment in the oil markets – the CBOE Crude Oil Volatility Index (^OVX, referred to as the “Oil VIX”) – closed at 41.54 on Wednesday. Though down from the mid 50s in July, it has been above 30 for much of the year. Last year, when crude prices were around $100 per barrel, the Oil VIX rarely poked above the 20 level.
The options market is a good indicator of the future of oil prices and oil stocks. If you are trading Canadian oil stocks it is a good idea to keep an eye on the options market or even consider trading oil options.