Woodside’s released its production report for the June quarter last week. It held no real surprise for the market.
Production was down 6.3% due to planned maintenance on its North West Shelf plant. Sales volumes and revenue were also down with revenue dropping 16% on the March quarter. LNG prices were down because much of Woodside’s revenue comes from long term contracts that have a lagged relationship to the spot oil price. This will work in Woodside’s favour over coming months as it begins to reflect the recovery in the oil price over recent months.
Last week, saw the Woodside chart hit its 40 week or 200 day moving average yet again. The oil price has retreated recently under the weight of large inventories and an increase in the number of producing US shale oil rigs. The 200 day moving average may prove a tough nut for Woodside’s share price for a while yet
However, there is growing visibility on a return to a sustainable balance in the oil market. That means prices are unlikely to fall a long way from current levels. If this hold true, Woodside could find support back in the $25.50/$26.50 zone and this could be a spring board for a successful assault on the 200 day moving average.