Marathon Oil in Uptrend with Higher Trending Crude Oil Prices



Series overview

In the first two weeks of December 2016, Marathon Oil (MRO) stock saw a strong bounce of ~22%. For year-to-date 2016, Marathon Oil is up ~47%. The key question is whether the ongoing uptrend in Marathon Oil is supported by its fundamentals. In this series, we’ll answer this key question by studying Marathon Oil’s operational fundamentals in light of the recent bounce in crude oil prices.

We’ll explore how the uptrend in crude oil prices has affected Marathon Oil’s (MRO) production, realized prices, and margins in the most recent quarter. We’ll discover whether MRO benefited from its hedges during the recent crude oil volatility.

Later in this series, we’ll study Marathon Oil’s operational strategies, production, production mix, revenue mix, realized prices, hedges, costs, and margins. Before we jump into Marathon Oil’s fundamentals, let’s take a look at how its stock is performing.

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Crude oil prices

In 2016, crude oil (USO) prices have been in a strong uptrend. So far, crude oil prices have rallied ~96% from their February lows. The recent OPEC agreement to cut production by 1.2 million barrels per day added fuel to the crude rally, resulting in an ~13% jump in crude oil prices in just two weeks.

Marathon Oil

After a prolonged downtrend of 17 months and losing ~84% of market capitalization, Marathon Oil’s stock price started to increase in February 2016. In fact, higher trending crude oil prices in 2016 caused one of the strongest bounces in MRO, as it rose 184% since its bottom in February.

MRO crossed its 200-day moving average in June 2016 and since then, MRO stock found support at its 200-day moving average in August and November. Currently, MRO stock price is trading ~30% above its 200-day moving average.

Year-to-date performance

For 2016, Marathon Oil is turning out to be one of the stronger stocks in the energy sector. MRO is up ~47% for the year. Among the other oil and gas producers, Occidental Petroleum (OXY), Range Resources (RRC), and Energen (EGN) rose ~9%, ~42%, and ~41%, respectively, year-to-date. The SPDR S&P Oil and Gas Exploration & Production ETF (XOP) is up ~39% year-to-date.

Later in this series, we’ll see how Marathon Oil’s operational fundamentals are shaping up in light of the 2016 uptrend in crude oil prices. Let’s start with Marathon Oil’s operational strategies.


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