This High-Flying Oil Stock’s Next Quarter Will NOT Match its Last

ConocoPhillips (COP – NYSE)

Wednesday, July 31, 2013

ConocoPhillips (COP – NYSE) reports this week, and anticipation on Wall Street has been strong for a month now, driving COP shares to a new all-time high at $66.25 last week.

But before you climb on board this gravy train, you should look to the U.S. Energy Information Agency’s latest Short-Term Energy Outlook, which notes:

“Refinery outages across the Midwest helped push the U.S. average regular gasoline retail price up from $3.52 per gallon on April 29, 2013, to $3.66 per gallon on June 10, 2013,”

But then, the report warns that prices are slumping...

“The expected recovery in refinery production combined with the total gasoline inventory of 224 million barrels on June 28, 2013, which is the highest level for this time of year since 1992, contribute to lower projected regular gasoline retail prices, averaging $3.38 per gallon in the second half of 2013.”

Finally, we should like to point out that the benchmark, Brent Sea crude oil, has been stuck in a $2 trading range for four weeks now, and is currently sliding to the bottom of that range — further proof of failing demand for COP’s products.

We anticipate that COP will declare a decent quarter, but warn of strong headwinds going forward, and guide lower.

COP 073113

Bottarelli Research Tip: The macro stats are not the only downside indicators for COP. Shares are currently rolling over after setting that all time high. COP has rolled over like this seven times in the past 12 months. The median follow-on loss was -7.9% and the average follow-on loss was -6.81%. A similar loss now would see COP drop neatly to its 38.2% retracement marker at $60.79.

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