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Is W&T Offshore's Stock Rally about to Take a Breather?

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Is W&T Offshore's Stock Rally about to Take a Breather? PART 1 OF 5

Is W&T Offshore’s Stock Rally Over?

W&T Offshore facing headwinds

Last week (ended September 29, 2017), W&T Offshore’s (WTI) stock price rose more than 7%, from $2.85 to $3.05. The stock started the week on a positive note and continued in a rising trend for the first four trading days of the week.

At its weekly high price of $3.69 on Thursday, September 28, the stock was showing huge gains of ~29%. But on Friday, WTI’s stock price suffered a steep decline and gave up the majority of its gains for the week.

Is W&amp;T Offshore&#8217;s Stock Rally Over?

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WTI stock has risen ~74% in the past six weeks. Last week, the stock’s price made a weekly high by moving above $3.50—its first since April 2014. Now the stock is trading above its 50-week moving average.

However, WTI’s stock failed to close the week above the $3.50 level. During its past two rallies, in 1Q16 and 4Q16, the rallies ended at this level. If WTI’s stock closes above $3.50 on weekly basis, it has the potential to rally again.

Crude oil gained but natural gas lagged

Last week (ended September 29, 2017), crude oil (USO) prices rose from $50.66 per barrel to $51.67 per barrel—a rise of almost 2%. Crude oil rose ~3% on Monday but then failed to capitalize further on the strong start.

Crude oil prices are now trading above their 200-day and 50-day moving averages. On September 29, crude oil closed at $51.67, while its 200-day and 50-day moving averages stand at $49.64 and $48.84, respectively.

Although crude oil’s 50-day moving average is below its 200-day moving average, the 50-day moving average is trending up and not too far from its 200-day moving average.

Natural gas (UNG) prices were slightly down last week, falling from $3.021 per MMBtu (million British thermal units) to $3.007 per MMBtu.

Peers

W&T Offshore primarily operates in offshore oil and gas exploration and production. Peers Kosmos Energy (KOS) and Stone Energy (SGY) each rose ~1% last week, while Cobalt International Energy (CIE) fell ~15%.

Notably, the SPDR S&P Oil and Gas Exploration & Production ETF (XOP) has outperformed the SPDR S&P 500 ETF (SPY) by a wide margin. XOP rose ~3%, while SPY rose ~0.7% last week.

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