Something I've noticed...27 May 2020 15:46
Been following the oil stocks for some time now and I have a noticed a trend.
With oil hanging around 35p for a while now it seems to me that say, benchmarking against PMO, the following often happens;
- Oil rises slightly - PMO does relatively better than TLW.
- Oil falls slightly - TLW does relatively better than PMO.
Both have similar traits and will be seen by the wider market as over-leveraged and have hurdles to overcome.
There will be some investors dedicated to oil stocks. Could be that wider market sentiment views TLW as less risky compared to PMO.
- As oil price increases investors move from TLW to PMO i.e. it is better relative news for PMO than TLW.
- As oil retreats investors move from PMO to TLW because of the hedging in place and is seen as a safer bet in a retreating market.
Just something I've noticed over the last few weeks. Of course, an event like in March/April would send both to the floor but these slight movements with oil stuck at 35-36p often sees the above IMO.
Of course I'm only comparing two stocks and accept there are a number of variables here.