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Marathon Oil’s Uptrend: Should We Be Worried?

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Marathon Oil’s Uptrend: Should We Be Worried? PART 1 OF 4

Marathon Oil’s Uptrend: Should We Be Worried?

Marathon Oil’s weekly performance

For the week ended November 10, 2017, Marathon Oil (MRO) stock rose a marginal 0.26%, from $15.58 to $15.62. The key highlight of the week was that MRO stock generated a reversal candle on the weekly chart. The stock rose ~5% on Monday, November 6. However, the rally failed on Tuesday and produced a reversal candle. On the last three days of the week, the stock traded with a negative bias and gave up nearly all its gains. Currently, MRO’s 50-day moving average is trading below its 200-day moving average, which is a negative technical indication.

Marathon Oil’s Uptrend: Should We Be Worried?

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Crude oil and natural gas rose

For the week ended November 10, 2017, crude oil (USO) prices rose from $55.64 per barrel to $56.74 per barrel, an increase of ~2%. Crude oil prices rose significantly on Monday by almost 3% and have been consolidating in a narrow range since then. The narrow range consolidating might indicate that the crude oil rally has further to go. On Friday, November 10, 2017, crude oil closed at $56.74. Its 50-day and 200-day moving averages were $51.56 and $49.66, respectively. Three weeks ago, crude oil’s 50-day moving average crossed above its 200-day moving average, which was a positive technical development. Natural gas (UNG) prices rose significantly last week, from $2.98 per mmBtu (million British thermal unit) to $3.21 per mmBtu.

A look at Marathon’s peers

Marathon Oil primarily operates in US resource plays, including the Oklahoma Basin, the Bakken Shale, and the Eagle Ford Shale. It also has operations at international locations in the Middle East, Africa, and Europe. MRO’s peers Energen (EGN), RSP Permian (RSPP), and Devon Energy (DVN) rose ~5%, ~8%, and ~3%, respectively, last week. Like Marathon Oil, they all have operations in the US resource plays. EGN and RSPP are primarily focused on the Permian Basin.

In general, the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) has significantly outperformed the SPDR S&P 500 ETF (SPY). XOP rose 3.2%, whereas SPY fell 0.14% last week. But MRO has underperformed XOP by a high margin.

In the next part, we’ll look at MRO’s correlation coefficient with crude oil prices.

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