Australian (ASX) Stock Market Forum

Oil price and shares

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Hi,
I was hoping someone might be able to explain how the oil price affects some shares. I own Caltex, which is quite a good share, but it fluctuates quite a bit and I am never quite sure if its to do with the oil price or other factors ie. profit taking or US news.
Another stock Woodside which is exploration and refinery often goes in the other direction to Caltex.
Does anyone have a handle on this?
cheers:confused:
 
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Supply and Demand change share prices

A higher oil price might make some people think Caltex shares are worth more, so demand will rise and more people will be willing to buy Caltex shares at a higher price.. Of course this isn't always the case and higher oil prices may make caltex shares fall..

It's really hard to say why the price of any shares change the way they do, because you'll have people looking at it from a Fundamental point of view, Technical Point of view, A combination of both and Maybe no point of view at all, they are just buying or selling for no particular reason. To encapsulate all of these views in one simple paragraph is beyond me (but maybe not beyond some of the great minds of this forum).

Brad
 
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Caltex is not an Oil stock but they are refiners with Wholesale and retail sales.

My understanding is that the higher Oil price is a negative for refiners and their refining margins are set by the Singapore price, which can also be a negative.

By comparing Caltex and Woodside, or any other oil producer, you are comparing apples and oranges.
 
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In terms of the crude oil price, it's something that Caltex buys, not sells, so for them if the crude price goes up then their costs go up. All other things being equal, a rise in costs isn't good for profits or share prices.

Caltex refines crude oil into petrol, diesel, kero and so on which they sell both wholesale (ie bulk quantities) and to the public through their service stations. They do not, however, have any involvement in getting oil out of the ground, they are purely a refining and marketing company.

Contrary to popular belief, refining is a market in its own right. The margin between crude and refined product prices fluctuates constantly and this is what impacts Caltex. Remember a year ago when diesel cost far more than petrol? That was an example of such market fluctuation and it was not an isolated case.

Woodside is at the other end. They explore for and extract oil and gas which they then sell to customers like refineries (eg Caltex) and utilities (gas). They don't deal directly with the public and they don't refine their oil into petrol etc.
 
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I have observed a correlation between oil stocks (WPL in particular) and oil prices. When oil prices are high, so is WPL generally. Although, it will fluctuate with general market movement.

I have noticed lately however, that WPL seems a little over-bought. It isn't rising with the ferocity that it was a few weeks ago, despite oil closing at > $70.00 per barrel. In other words, you can't ignore general market sentiment.

Just my observations.

WPL daily 1 Yr.JPG
Oil daily 1 Yr.JPG
 
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Not a chartist by any stretch but those who are what do you think in regard to WLP? As a daytrader i look at this as an easy share to trade in & out of. At some point i may miss out on this one if it heads north & continues on the up but while it flatuates between $42-44 it seems like easy pickings. By the way this is a great forum & some very interesting points of view. I'm new to the game ( only a couple of years) & have been stung badly along the by OZ in particular so i know what it's like to be down & almost out. I've learnt to except an early exit from bad signs as opposed to hanging on to loss cause. Who was that CEO?
 

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