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Why Eni’s Stock Has Been Rising since February

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Apr. 5 2016, Published 10:56 a.m. ET

Integrated energy stocks rise

Integrated energy stocks have been rising since February 2016. This is due to firming oil prices backed by the possibility of consensus among major oil producers to support oil prices. From February 11, 2016, until April 1, 2016, Eni (E) saw its stock price rise by 17%.

Eni’s peers Suncor Energy (SU) and PetroChina (PTR) also rose by 31% and 16%, respectively, during the same period. Cenovus Energy (CVE) rose sharply by 28%.

If you’re looking for a portfolio comprising large integrated energy companies, you can consider the iShares Core S&P Total U.S. Stock Market ETF (ITOT). The ETF has ~6% exposure to energy sector stocks.

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Eni’s stock performance

Last year, Eni’s stock was on a downtrend, led by plunging oil prices. Continuing the trend, Eni’s stock had a weak opening to the 2016. Eni traded below its 50-day and 200-day moving averages. Eni’s downward movement stopped in mid-February, when the stock started rising amid volatility.

In January 2016, Eni closed a sale of 12.5% interest in Saipem, its subsidiary engaged in engineering and construction activities. This was followed by positive news from its upstream projects.

Eni also started production in the Mpungi field in Angola. This was followed by the approval of its Coral discovery development plan by the Mozambique government. The company also succeeded with a first production test of the Zohr field, a supergiant gas field, and started three oil and gas treatment plants in the Zubair field.

However, in March, Eni was downgraded by credit rating agencies Standard & Poor’s and Moody’s.

Eni’s stock price rose, but it’s still below its 200-day moving average

Oil prices, which hit multiyear lows in January 2016, started witnessing positive spikes recently. Eni’s stock crossed above its 50-day moving average, likely led by oil price spikes along with positive news on the Coral discovery and the Zohr and Zubair fields.

Currently, Eni is trading above its 50-day moving average but below its 200-day moving average. Next, we’ll see how analysts rate Eni.

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