Carrizo Oil is active in the oil and gas business, and of course, it is one of the companies set to profit the most by the biggest jump in oil prices in the last six years. An incredible result considering the figures from just one week ago.
Carrizo is basically an energy company that is engaged in exploration, development, and oil production, and any company in this sector must feel some relief when oil is rallying like this, however, numbers can be tricky. The recent rally shows a 10% increase on an intraday basis, but the percentage is actually calculated from a lower number, so in reality, the net increase is not that big after all.
Companies involved in the oil business will have their eyes on the US Congress next month as the Iranian Deal is voted on. If that does not pass, huge swings are expected in the market.
The reason for the jump in oil prices was attributed to a sharp increase in the US GDP for the second quarter. This saw the US economy rising at a staggering 3.7%, beating all analyst’s expectations.
One has to realize that such economic growth is really very impressive. Especially in a world that is struggling with zero or little growth elsewhere, so investors had something to cheer about.
Carrizo’s technical picture looks good as well. It is forming a so-called flat pattern on the bigger time frames. Such a pattern has three different legs, and the third one, if the pattern is bullish like in the CRZO case, will break the lows of the previous and first one.
This is exactly what is happening here, and now with the $32.51 print, we’re actually seeing the end of the move lower and a correction should start at the very least.
All in all, such a pattern should be followed by at least a 61.8% retracement, and this means that values around $50 should come sooner rather than later.
When it comes to economic growth and rate hike expectations in the United States, the NFP next week holds the key and, most importantly, the press conference after the interest rate decision is the one that investors should focus on.
It is expected that the NFP is going to confirm the strong US economic growth, and the oil market should continue its recovery. As a consequence, I am favoring call options for CRZO starting at the beginning of September, with an end of month expiration.
As you can see, what happens in the US influences the global economy. Future moves depend on the Fed and their rate decision.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
