Oil prices are always moving, and to say crude oil prices are rising in the final week of 2023 is only partially accurate. The threat of Yemen-based rebels to ships traveling the Red Sea trade route to and from the Suez Canal has dislocated a key link in the global oil supply. As a result, the price of West Texas Intermediate oil has rebounded from mid-December lows near $68 a barrel to around $75 now.
That's about a 10% jump. It leaves WTI oil prices still down about 20% from September highs above $93. The international benchmark Brent crude has made a smaller move, from $73 to $79. It remains roughly the same distance from its September highs above $94.
The Yemen-based group, a Houthi contingent also named Ansar Allah, have broadened the definition of their targets, from Israeli-owned ships to, now, to any ships appearing set to trade with Israel. Attacks on ships in the region led BP to announce a halt to its Red Sea shipments. It is unclear whether others have followed suit.
The Red Sea and Suez Canal are a critical link for oil coming from Persian Gulf ports, or from Europe and the U.S. toward Asia. With the canal route blocked, ships must be rerouted south around the African continent, adding weeks to delivery times.
That, and concerns that a broadening of the Hamas/Israel conflict could lead to sanctions against Iranian oil sales, are driving some jockeying among investors. Two names appearing to receive some of that attention in the oil and gas field services group are Tidewater and Helix Energy Solutions. Both outfits are based in Houston.
TDW, HLX Stock Track Oil Prices
Tidewater provides what is effectively a heavy-duty trucking fleet serving offshore oil and gas production in various regions around the world. The stock has jumped 38% since a bounce off its 200-day line on Dec. 13. Shares on Tuesday jumped into a buy zone above a 73.55 buy point in a 12-week cup base. Tidewater shares have logged a 111% gain so far this year.
The downside of that is that the base is a fifth-stage pattern — technically late stage, which means the breakout carries a higher risk of failure than prior breakouts. At some point the stock will need to pullback and undercut a prior base pattern in order to reset its base count. For now, the 40-week moving average has neatly cradled the stock's advance since a breakout in January 2022.
Helix Energy has shifted from a focus on petroleum exploration and development to offshore well remediation and well decommissioning, with a rising emphasis on offshore wind energy development.
Helix is up 20% from a Dec. 6 low, which was also test of 200-day support. It sits in a 14-week cup base, and could be working on a handle. For now, it is well below the base's 11.88 buy point. But it was a buy as it came back up through its 50-day moving average in very strong trade on Dec. 14. It needs another three days to form a handle, but that could also potentially offer a nearby entry.
IBD ranks Tidewater and Helix first and second in the oil and gas field services group. They carry IBD Composite Ratings of 96 and 83, respectively.
CVX, XOM Stock Post Smaller Gains
The largest names in the group, measured by revenue and market capital, are Schlumberger and Halliburton. Schlumberger has gained 3% so far in December, following a three-month slide. Halliburton is a fraction higher for the month, and down almost 6% year to date. Schlumberger's Composite Rating is 60. Halliburton's is 65.
In the broader industry, the biggest fossil fuel names have posted recent gains alongside the modest bounce in oil prices. Chevron has gained nearly 9% since Dec. 7. Exxon Mobil is up 5% since Dec. 12.
