2 Oil Stocks in the News Today

Chevron will buy Anadarko Petroleum for $33 billion

by Patrick Martin

Published on Apr 12, 2019 at 10:12 AM

Energy names Chevron Corporation (NYSE:CVX) and Murphy Oil Corporation (NYSE:MUR) are reacting to headlines today in opposite ways. First up, Chevron inked a deal to buy Anadarko Petroleum (APC) for $33 billion that values APC at $65 per share. MUR stock, meanwhile, is higher on upbeat analyst attention.

The Anadarko deal gives Chevron greater access to the Permian Basin, the largest U.S. shale field. In response, Chevron stock is down 5.4% to trade at $119.17, at last check. The pullback halts a pattern of higher highs the shares have carved out in 2019, guided by their 30-day moving average. But the security ran out of steam below the $128 level, an area that has kept a lid on breakouts since June. Now, CVX is clinging to its 12-month breakeven level. 

Options traders have been targeting puts more frequently lately. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows the security with a 10-day put/call volume ratio of 0.93. What this shows is that although calls outnumber puts on an absolute basis, the ratio ranks in the 90th percentile of its annual range, showing unusual demand for long puts over calls in recent weeks.

Looking at Murphy Oil, the stock is up 4.5% to trade at $29.90, after a Goldman Sachs upgrade to "neutral" from "sell," and a Morgan Stanley price-target hike to $26 from $23. MUR is set to extend its year-to-date lead to 27%, and is on track for its best single-session gain since Dec. 26. However, the rally could hit a speed bump at the shares' 200-day moving average, lingering just overhead. 

A short squeeze could keep the wind at the equity's back. Short interest fell by 3% in the most recent reporting period, yet the 15.98 million shares sold short still account for a healthy 9.8% of MUR's total available float. At the stock's average daily trading volume, it would take shorts more than eight days to buy back their bets. 

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