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Chinese Energy Companies Trade below Moving Averages

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Jan. 27 2016, Updated 10:07 a.m. ET

Moving averages

Chinese energy companies CNOOC (CEO), China Petroleum & Chemical Corporation (SNP), and PetroChina (PTR) have fallen below their 100-day and 20-day moving averages by an average of 2.2% and 6%, respectively. CEO, SNP, and PTR are trading 2.7%, 2%, and 1.9%, respectively, below their 100-day moving averages.

After touching a high of $175 in April 2015, CEO has been in a falling trend. Since June 2015, CEO has struggled to cross its 100-day moving average.

The energy sector benchmark, the Energy Select Sector SPDR Fund (XLE), is trading 16.6% below its 100-day moving average and 6.5% below its 20-day moving average. The United States Oil Fund (USO) is trading 34.5% below its 100-day moving average and 13% below its 20-day moving average.

Moving averages are lagging indicators used to confirm an existing trend. When an underlying asset’s price is above its long- and short-term averages, this indicates a rising trend, and vice versa. Moving averages provide important support and resistance levels for an underlying asset’s movement.

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Analysts’ estimates

Wall Street estimates suggest that China-based integrated energy companies may rise by an average of 175% over the next 12 months, as compared to 17.3% for their US peers. These estimates indicate rises of 218%, 134%, and 173%, respectively, from current prices for CNOOC, China Petroleum & Chemical Corporation, and PetroChina. The graph above shows the moving averages and analysts’ estimates for these Chinese energy companies.

In the next part of this series, we’ll discuss the moving averages and analysts’ estimates of renewable energy companies.

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