Integrated Energy Stocks’ Returns in 3Q17: Here Are the Top 10

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Part 2
Integrated Energy Stocks’ Returns in 3Q17: Here Are the Top 10 PART 2 OF 11

Petrobras Stock Skyrockets to Lead the Top 10 List in 3Q17

Petrobras stock’s performance in 3Q17

Petrobras (PBR) stock has provided the highest returns among the top ten stocks being analyzed in this series. PBR has risen 25.9% since July 3, 2017—the start of 3Q17—outperforming the broad market indicator, the SPDR S&P 500 ETF (SPY).

SPY has risen 3.3% in the same period. The other two stocks in our top tier include Statoil (STO) and Suncor Energy (SU). STO and SU have risen 18.3% and 16.3%, respectively, in 3Q17.

Petrobras Stock Skyrockets to Lead the Top 10 List in 3Q17

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PBR’s moving averages

In 3Q17, Petrobras’s 50-day moving average (or 50-DMA) stood below its 200-day moving average (or 200-DMA). However, the steep rise in Petrobras stock has led to a rise in its 50-DMA. PBR’s 50-DMA stood 12.0% below its 200-DMA on July 3, 2017, and it currently stands 5.4% below its 200-DMA.

The rise in Petrobras stock may have pushed up its 50-DMA. If this trend continues, PBR’s 50-DMA could soon cross over its 200-DMA—a bullish technical sign—which could lead to an acceleration in the rise of its stock price.

Why the rise in Petrobras stock?

Integrated energy stocks like Petrobras are significantly influenced by movement in crude oil prices. Petrobras stock’s correlation coefficient versus WTI for past one-year period stood at 0.51, which implies a positive correlation. The 8.4% rise in WTI prices in 3Q17 may have boosted Petrobras stock.

In 3Q17, Petrobras has been actively managing its debt portfolio. Petrobras is raising new funds with the aim of reducing expensive short-term funds. Petrobras has one of the highest debt burdens in terms of its total-debt-to-capital ratio compared to its peers.

The company has been actively divesting its non-core assets. In 3Q17, Petrobras has been in the process of divesting its gas transportation unit, Transportadora Associada de Gas SA.

In its Upstream segment, PBR’s hydrocarbon production from the pre-salt layer has risen due to an increase in production from the Lula field. Also in the quarter, Petrobras and Royal Dutch Shell (RDS.A) have signed an agreement for technical collaboration and cooperation in logistics, well construction, and aviation security.

In the next part, we’ll look at the stock returns of STO in 3Q17.


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