Oasis Petroleum Inc. (NYSE:OAS) – Avoid

Oasis Petroleum Inc. (NYSE:OAS), an exploration and production company, is naturally affected by the movement in crude oil just like any stock in the oil & energy sector. With oil wandering about 6 year low, the stock is following the same path too. A new 5 year low has been registered in December 2014 and the stock has not managed to fly away too far away yet to not consider the possibility of a retest of that level.

Expert breakdown of the OAS candlestick chart.

Monday went bad for Oasis Petroleum Inc. (NYSE:OAS) as 157,000 shares were sold by the CEO Thomas B. Nusz, at the average price of $14.01. Any insider selling is never considered in any positive light and that near the 52-week low is hardly inspiring for the bulls. No slowdown in production growth has been visible yet, despite the cut in the number of production rigs and the record US supply is expected to burden the storage capacity in a big way. Then there is the possibility of a deal between US and Iran, which may increase the oil supply a lot more as Iran would like to fill its long starved coffers. All these issues do not paint a pretty picture for the company.

OAS

Source : Amigobulls

Technically, the stock is in a very weak state after the huge crash it suffered last year. The small band of $12.00-50 is providing support for the last 3 months, but a break below that would drag the stock to the lifetime low of $10.64. The volume has increased a lot since December, suggesting capitulation. That can interest smart money, but the resistance around $20 must be considered before any fresh investment. As long as the $12 level keeps supporting the price, a bounce to $15 can be expected or even another retest of $20 but no more.

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