Freeport-McMoRan Inc (NYSE:FCX) ended the last trading session with a solid gain of 9.08%, well accompanied by a surge in volume of 42 million, double the daily average of 21 million. This stock is directly affected by the movements in oil price and that’s why a rally in oil price produced a rally here too.
There are initial signs of the oil demand rising as well as the domestic crude production slowing down a bit, leading the Brent crude to hit a 2015 high around $63. The week ending on April 10 saw the US oil inventories rising by 1.3 million barrels to 483.7 million barrels, much lower compared to the expected increase of 3.6 million barrels. But now the oil price is falling again, as the Organization of Petroleum exporting Countries (OPEC) reduced the 2015 forecast for non-OPEC oil supply growth. OPEC is expecting a higher than expected demand for oil this year, at 29.3 million barrels per day.
These mixed signals may leave the investors of Freeport-McMoRan Inc (NYSE:FCX) to be a confused lot but the analysts of Citigroup Inc (NYSE:C) have raised the price target for the stock to $23 from the previous $19 and upgraded the rating from “neutral” to “buy”.
Technically, it is difficult to be a long term bull as the stock has been in a long bear market for a long time. In the last 5 years, the series of higher highs and higher lows has remained intact and the only time a higher high was registered, in 2014, it turned out to be a false signal trapping a lot of bulls. The stock can reach $22 levels and above that, even $24 levels in the short term but the existence of the strong supply area there raises doubts over the sustainability of any rally.
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