Is now the time to short Tullow Oil?
The UK-based oil and gas company’s shares are down 70% this year, with oil prices collapsing under the weight of the economic fallout from Covid-19. But is it time to short Tullow Oil?
Tullow Oil shares are down 70% year-to-date, with the stock struggling amid weakening demand for oil as a result of the Covid-19 pandemic.
Unsurprisingly, short interest in Tullow Oil has grown in recent weeks, with Värde Partners Europe increasing their position against the stock in April to 2.64%.
Tullow Oil shares find support but for how long?
After hitting a low of 7p a share on 18 March, Tullow Oil has seen its shares rebound by 130% - closing at 17p on Thursday.
However, with oil prices continue to fall as demand for the commodity hit a 25-year low on Wednesday, pressure is mounting on the stock and short interest could continue to build.
Earlier this month, Tullow Oil is trading Tullow Oil said that it is targeting capital expenditure of around $300 million in 2020, down from its previous guidance of $350 million.
‘Savings have been identified primarily through the deferral of activities across the portfolio and through savings that can be realised by ongoing farm-down activities,’ the company said in a statement.
‘In Ghana, for example, savings will be made through the early termination of the Maersk Venturer rig and the deferral of some well activity, combined with the removal of any non-critical work that does not focus on safety and asset reliability.’17p a share as of 14:30 (GMT) on Thursday.
IEA tells oil market to brace for lowest demand in 25 years
The International Energy Agency warned the oil market on Wednesday to brace itself for the lowest level of demand the sector has seen in 25 years as a result of the global coronavirus lockdown.
The energy regulator said that oil demand in April will likely hit its lowest level, falling to 29 million barrels of oil per day (bopd) below last year’s average.
‘Even assuming that travel restrictions are eased in the second half of the year, we expect that global oil demand in 2020 will fall by 9.3m barrels a day versus 2019, erasing almost a decade of growth,’ the IEA said.
The IEA also made it clear that OPEC+ supply cuts will do little to offset the impact the Covid-19 pandemic is having on global demand and declining oil prices.
Echoing similarly negative sentiments, the International Monetary Fund said that the economic impact of the coronavirus crisis will likely bring about the deepest recession since the Great Depression.
How to trade stocks with IG
Looking to trade Tullow Oil and other stocks? Open a live or demo account with IG and buy (long) or sell (short) the asset using derivatives like CFDs in a few easy steps:
Create an IG Trading Account or log in to your existing account
Enter ‘Tullow Oil’ in the search bar and select it
Choose your position size
Click on ‘buy’ or ‘sell’ in the deal ticket
Confirm the trade
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
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. Please see important Research Disclaimer.
Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
React to global volatility
Market volatility continues as coronavirus concerns amplify. Trade with IG and take advantage of:
- Tight spreads – from just 1 point on major indices, and 2.8 on US crude
- Guaranteed stops – they’re free to use, and only incur a fee when triggered
- Round-the-clock assistance – our highly skilled team are available when you need support
Live prices on most popular markets
- Forex
- Shares
- Indices
See more forex live prices
See more shares live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
See more indices live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.
