Technical pull back was due.The pullback in oil prices is a result of a slowdown in China because of Covid resurfacing. Chinese stocks have melted down with oil. China is the second-largest consumer of oil.
$100 plus oil at the current level of inflation and at these stages of recovery are not good for the world economies.
The run-up in oil was too fast and had resulted into really overbought conditions in the entire oil sector. The run-up in oil stocks was stalling anyway even with big jumps in oil price increases.
Overbought conditions and with algos in total control of trading caused a brutal selloff. They force bigger swings in prices both ways. They will push and sell till buyers show up and push up till sellers show up. This results in profit-taking and allows others on the sidelines to move in. Noting goes up straight. There is still a huge war premium in oil prices.
$100 oil is not sustainable for the long run. This will result in demand destruction and expedite the transition to other cleaner energy.
Always look at the charts for overbought and oversold conditions. I use RSI, it works most of the time. I usually reduced when overbought and rotate on pullbacks to stock that will give a bigger bang.
The below chart highlights that stock was really overbought and a pullback was expected for the stock to cool down and now the stock is no longer overbought.
This stock is a laggard as compared to XEG ( energy ETF) but was catching up. One of the reasons was dilution and poor financials ( look at 3 & 4th qtr results ) Next quarter or two has some baggage too, lost of production about 3 weeks at one field in the first qtr and 50 % of the hedges are poor for the next two QTRs ( Q1 & Q2). After that, they have great hedges.
The stock is still in an upward trend and as long this trend continues we should see a new high.
Oil prices are the main factor. Under the current environment, there will be an extreme level of volatility.
Now the stock is trading with the sector. The impact of algos is a dominant factor. The moves in stocks prices are too fast. While the volumes are good not too many shares are actually changing hands at the end of the day.
[img][SGY.png](https://postimg.cc/dhSNZMy0)[/img]