The Tullow Oil share price has moved sideways in the past few weeks as investors reflect on the new developments and the surging oil prices. The TLW stock rose by more than 5% to 56.40p, which is about 42% above the lowest level in October last year. The price is also below the year-to-date high of 66.15. It has underperformed giant oil majors like BP and Shell.
Tullow Oil is a relatively small oil and gas explorer that has operations in countries like Kenya and Ghana. The company has performed well in the past few months, helped by the surging oil and gas prices. The global benchmark has rallied to above $124, and analysts believe it will keep rising. However, in a statement this week, the head of Trafigura warned that prices could soon go parabolic. This was a notable statement considering Trafigura is one of the biggest oil traders in the world.
The Tullow Oil share price has moved sideways after it decided to merge with Capricorn Energy. The new deal will create a company with over $1.9 billion. The new firm owns about 1 billion barrels of oil and produce 100k of them every day. They expect that the number of barrels will rise to 120k barrels in the coming years. Tullow shareholders will hold about 53% of the combined company. So, what next for the stock?
Tullow Oil share price forecast
The TLW share price has been in a tight range in the past few days. The stock is trading at 56.40p, where it has been in the past few weeks. It has moved above the 25-day and 50-day moving averages. At the same time, it is above the ascending trendline that is shown in black. A closer look shows that the stock has formed a head and shoulders pattern.
Therefore, while the Tullow Oil share price has some upside, the H&S pattern signals that it will likely have a bearish breakout soon. If this happens, watch’s next key reference level will be at 50p.