INCREASE IN EQUITY SHORTS AS CRUDE PRICES COLLAPSE

INCREASE IN EQUITY SHORTS AS CRUDE PRICES COLLAPSE

After trading as high as $65.65 on Jan. 8, WTI crude oil futures have fallenWTI crude oil traded around $53.14 on the NYMEX in early Monday trading, down almost $5 a barrel in the past week and only $3 short of a 52-week low . Oil began 2020 with a quick 7.5% gain as tensions between the U.S. and Iran escalated.
January has seen the price of WTI fall by over $8 per barrel a drop of around 13%. The market sees a decline in China’s economy as a result of the coronavirus and a reduction in demand for oil with China being the world’s largest importer of crude oil, after importing a record 10.12 million barrels per day in 2019. The oil benchmark collapse has taken place at a time when traditionally bullish inventory reports such as the EIA's most recent report, showed inventory fell by 400,000 barrels for the week ending Jan. 17, compared with analyst estimates of a 500,000 barrel build, has done little to arrest the plummeting prices.

This has created increased short interest in energy stocks which during the two-week reporting period ending January 15. Global concerns related to the impact of the coronavirus outbreak first revealed on January 7 have weighed heavily on oil stocks. Occidental Petroleum Corp. (NYSE: OXY) saw short interest soar by 31% to 27.92 million shares. Days to cover rose from two to three, and about 3.1% of the company’s shares were short. In the two weeks of the period, the share price increased by about 14.7%. The stock’s 52-week range is $37.25 to $68.83, and shares closed Monday at $41.24, down by about 1% for the day.

ConocoPhillips (NYSE: COP) short interest increased by 7% in the first half of January. Some 12.18 million shares were short, representing about 1% of the company’s total float. Days to cover remained at two, and the stock price remained essentially flat during the two-week period. Shares closed Monday at $61.04, down about 2.5% for the day, in a 52-week range of $50.13 to $71.01.

Chevron Corp. (NYSE: CVX) also saw short interest decrease by 2% to 21.11 million shares, which represents about 1.1% of the company’s float. Days to cover remained unchanged at four. In the two-week short interest period, the stock’s share price dropped by about 3.6%. Its 52-week range is $109.98 to $127.34, and it closed at $110.39 on Monday, down about 1.3% for the day. . Exxon Mobil Corp.’s (NYSE: XOM) short interest rose by 2% to 39.58 million shares, or 0.9% of the company’s float. In the two weeks to January 15, the share price fell by about 1%. The stock’s 52-week range is $64.70 to $83.49, and it closed at $64.74 on Monday, down about 2.4% for the day.

BP PLC (NYSE: BP) saw a drop of 22% in short interest during the first two weeks of January. About 0.1% of the total float, or 3.25 million American depositary shares (ADSs), were short, and days to cover remained less than one. The company’s shares traded up by about 2.6% over the period, and shares closed Monday at $37.44, down by about 1.8% for the day, in a 52-week range of $35.73 to $45.38.

 

Petrobras (NYSE: PBR), posted a jump of 30% in short interest during the two-week period. Some 23.24 million ADSs were short as of January 15, less than 1% of the total float. Petrobras closed at $14.21 on Monday, down by about 3.8% for the day, in a 52-week range of $12.68 to $17.90. Shares traded down by around 6.7% in the short interest period, and days to cover remained at one.

 

Femi Ogunkolati


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