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Sasol Breaks Up

2 July 2018 By PDSNET

an article about the fact that Sasol, since the collapse of the oil price, had entered a sideways market between resistance at R392 and support at R360. Sasol’s collapse was caused by the sharp fall in the oil price with the widespread exploitation of shale gas, especially in America. At the time about 60% of Sasol’s revenue came from oil so the fall from around $115 per barrel to as little as $28 had a major impact. But Sasol re-grouped, reducing its exposure to oil, and moving more into chemicals. And, of course, the oil price rallied back up to around $80. The stronger oil price is a result of the generally stronger world economy which has increased the demand for oil. So Sasol remained within this sideways market for four long years – from April 2014 until now. The upside breakout is very significant technically, especially after such a lengthy “consolidation”. Theoretically at least, Sasol’s price should now move up strongly. Consider the chart:

Sasol (SOL) December 2012 to June 2018 - Chart by ShareFriend Pro

The ethane cracker plant which Sasol has been working on for the past several years is now becoming productive and at the same time the US economy is booming, creating a strong demand for chemicals. We expect the economic boom in America to continue for some time and to spread to other parts of the world. In fact, we believe that this period of relative prosperity is only just beginning. This means that the demand for oil and chemicals will continue to grow and Sasol is very well positioned to take advantage. The threat to oil represented by renewable energy is still in its infancy and this economic boom is likely to rely far more heavily on oil and oil products. We see Sasol breaking its previous all-time high of R465.10 (made on 13-6-2014) in due course.