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Moving Average Analysis of Chinese Oil and Gas Companies

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Moving averages

Chinese (FXI) energy companies CNOOC (CEO), China Petroleum & Chemical (SNP), and PetroChina (PTR) fell below their 100-day and 20-day moving averages by an average of 11.6%. However, these Chinese companies are trading 3.4% above their 20-day moving averages.

After touching a high of $175 in April 2015, CNOOC has been in a falling trend. Since June 2015, the company struggled to cross its 100-day moving average. On February 5, 2016, the stock rose by 1.1%. Overall, these Chinese energy companies rose by 2% as of February 5.

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The energy sector benchmark, the Energy Select Sector SPDR Fund (XLE), is trading 11.3% below its 100-day moving average and 1.3% above 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-term 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.

Analysts’ estimates

Wall Street estimates suggest that China-based integrated energy companies could rise by an average of 21% over the next 12 months. These estimates indicate rises of 21%, 22%, and 22%, respectively, from the current prices for CNOOC, China Petroleum & Chemical, and PetroChina. The above table 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 for European energy companies.

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