Energy stock SLB (SLB) started the week today with a big advance of 5.4%, peaking above $60 at its highs of the session. Amid rising oil (CLV26) prices, SLB announced a $4.1 billion deal to bolster its data center offerings: the oilfield services company is acquiring the cooling systems company Kelvion.
I believe that the market is misreading the news. Yes, this acquisition is a different direction for oil services company SLB, and could be a dynamic new revenue stream for this former giant in the oil patch production sector.
But the news story that might actually be causing the pop is the weekend news around Venezuela.
By now nearly buried in the ongoing flow of headlines out of the Middle East, President Trump posted Friday on social media that his administration has “secured majority U.S. control” of 65 billion barrels of crude from the government of interim leader Delcy Rodriguez.
SLB already has "boots on the ground” and the revitalization of Venezuelan oil production will be a huge windfall for them.
Technically speaking, SLB has already made a nice move, but it does look like a "cup & handle" within a larger cup & handle. The round $60 area is currently forming a resistance cup lip, and that level would need to be recaptured to confirm the C&H formation.
Short-term momentum looks strong, though it might be slightly "overbought," suggesting we could see a digestion of the current price appreciation.
The Barchart Opinion has been rising for SLB over the last month, which suggests a continuation of the bullish trend.
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– John Rowland, CMT, is Barchart’s Senior Market Strategist and host of Market on Close.
On the date of publication, Barchart Insights did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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