Stock of the day: Santos Limited
Santos signed a major LNG contract with Total Energy, boosting shares by 3%.
(AI video summary)
This video was created on 2 October for IG audiences by ausbiz.
ASX code: STO
Suggestion: Hold, Buy
Santos secures major LNG contract
Santos has made headlines with a significant liquefied natural gas (LNG) supply contract withTotal Energy, Gas and Power Asia. The contract entails delivering 20 LNG cargoes per year for three years, starting in the fourth quarter (Q4) of 2025. While Santos didn't disclose the value of the deal, its shares saw a 3% uptick following the announcement.
Impact of geopolitical tensions on oil prices
Crude oil prices have been affected by the escalating conflict in the Middle East, particularly after recent attacks linked to Iran. Despite this, the oil price remains relatively subdued, ranging between $70.00 to $73.00, down from $82.00 a year ago.
This lower response compared to historical increases during similar tensions suggests a more complex oil market. Santos shares have followed this downward trajectory, influenced by the broader market conditions and sentiment. An example of this is the company's brief gain when there were talks of a possible merger with Woodside Energy, indicating how external factors heavily influence stock movements.
Santos’ performance and market outlook
Santos has struggled to break out of its current trading range, which many attribute to the performance of its CEO, Kevin Gallagher. Over his tenure, the company has seen mixed results. Recent LNG deals, including one with Glencore, have positively influenced sentiment. However, the lack of disclosed contract values makes it challenging to gauge the exact financial impact. Analysts suggest that while the company has potential for upside moves, it still hinges on significant catalysts, such as considerable gains in oil prices.
Investment strategies for Santos
Given the current geopolitical context, some analysts suggest having exposure to oil prices as a hedge against escalating conflicts. While Santos might not be a strong buy, it's also not a sell. Investors might consider it a modest buy, banking on the potential upside driven by future market catalysts. However, for those looking for stability, Woodside might be a preferable option given its recent performance and higher valuation.
This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Speculate on commodities
Trade commodity futures, as well as 27 commodity markets with no fixed expiries.1
- Wide range of popular and niche metals, energies and softs
- Spreads from 0.3 pts on Spot Gold, 2 pts on Spot Silver and 2.8 pts on Oil
- View continuous charting, backdated for up to five years
1In the case of all DFBs, there is a fixed expiry at some point in the future.
Put learning into action
Try out what you’ve learned in this commodities strategy article in your demo account.
Ready to trade commodities?
Put the lessons in this article to use in a live account – upgrading is quick and easy.
- Deal on our wide range of major and niche commodities
- Protect your capital with risk management tools
- Get some of the best spreads on the market – trade Spot Gold from 0.3 points
Inspired to trade?
Put what you’ve learned in this article into practice. Log in to your account now.
Live prices on most popular markets
- Forex
- Shares
- Indices
