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Tickers in this Article: IOC, INT, UGP, EROC
There has been some interesting action among some of the oil refiners recently. Many of these stocks have been pushing to the upper range of the recent bases and should be watched to see if they can emerge to new highs. In general, they have been consolidating for several months and should be close to emerging into new trends. Bases are important because they allow for shares to be exchanged between two groups of participants. Stocks need these consolidations in order to form sustainable trends.

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Interoil Corp Ordinary Shares (NYSE:IOC) is an example of a refiner that needed to consolidate. It had a huge rally from September through January, almost tripling in price. This came on the heels of a rally the year before, which saw IOC's price per share increase from under $10 to over $30. While the swings in IOC have been fairly wide over the past two months, the trend can be best classified as sideways. IOC is currently under its 50-day moving average and it looks like it still has more consolidation ahead of it. As long as it remains in its base, the action appears healthy.

Source: StockCharts.com


World Fuel Services Corporation (NYSE:INT) is an example of a refiner attempting to break free of its base. Interestingly enough, INT attempted to break lower in February after consolidating for a few months. Buyers stepped in near the 200-day moving average and pushed it back into the base. INT then gapped sharply higher and has surged to new highs. This has the classic signs of a bear trap with the fake out lower and subsequent surge to new highs.

Source: StockCharts.com


Ultrapar Participacoes S.A. Com (NYSE:UGP) is a refiner that remains in its base, but also recently cleared an important price level. While UGP failed at resistance near $50, it recently cleared an important level near $45.80. This level also coincides with the 50-day moving average and divides two smaller trading ranges within the overall base. This would be an area to look for support on this pullback, and an area from which an assault on the $50 level could be launched once again.

Source: StockCharts.com


Eagle Rock Energy Partners, L.P (Nasdaq:EROC) is a lesser known small cap refiner that could be ready to emerge to new highs. EROC has been consolidating in a "base on base" trading range after breaking out in mid December. EROC recently cleared some trendline resistance that was holding it back and is in the process of testing its recent high. A move above this level would confirm the breakout and should lead to higher prices.

Source: StockCharts.com


Bottom Line
Oil has been in a large trading range the majority of the past year while these stocks have moved higher. While most of this is directly tied to the rally in the general markets, this group could get added attention if oil can break free of its trading range. If oil were to break higher, many of these stocks could get the boost they need to clear their current bases. With a several-month-long consolidation in place, if these stocks do break out they should have enough fuel to sustain a good move.

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At the time of writing Joey Fundora did not own shares in any of the companies mentioned in this article.

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