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Institutional investors increase AIM oil exposure as black stuff resists wider market sell-off (JOG, TXP)

TXP

Institutional investors have significantly increased their stakes in both Touchstone Exploration (LSE: TXP) and Jersey Oil & Gas (LSE:JOG) as oil prices continue to hold up against a shaky market backdrop.

Industrial investment company North Energy Capital increased its stake in Canada-based upstream oil and gas firm firm Touchstone from 10.1pc to 11.1pc by purchasing shares on the open market.

The transaction is the latest in a series of purchases made by North Energy in Touchstone, and gives the investor a total of 14.3m shares in the business.

Meanwhile, last Thursday saw asset management firm Schroders increase its stake in Jersey Oil & Gas, a North Sea explorer, from 9.1pc to 10.2pc, to give it a total of 2.2m voting rights.

Jersey Oil and Gas shares are currently sitting at 203p, slightly above November’s placing price of 200p, while Touchstone is currently priced at just 11.7pc, below its 20 and 50 day moving average.

With both looking fairly cheap, there is a good argument for making a purchase now as oil prices continue to hold up against the beginning of a possible correction phase in the broader equity market.

Despite slipping below the $70-a-barrel mark today to hit a one month low of $68.22, oil prices still look relatively strong when compared to global indices, which have suffered a sell-off over the last few days of trading.

Markets have been hit by fears that the return of inflation will spell a quick end to a decade of easy monetary policy at central banks across the world.

In the US, the S&P 500 suffered its worst trading day in two years on Friday after strong jobs data and wage growth figures backed up higher inflation forecasts.

This could force the Federal Reserve’s hand when it comes to further increasing interest rates.

Other markets around the world have followed suit today, with Hong Kong’s Hang Seng tumbling by as much as 2.7pc, the Topex falling 2.2pc, and the European Stoxx 600 and FTSE 100 both hitting two-month lows.

Oil prices, on the other hand, are benefitting from worldwide growth and rising inflation expectations as demand for commodities looks set to continue increasing.

Data collected by Bloomberg recently showed that investment flows into broad-based commodity funds have risen by $773m so far this year.

The only sector to see more inflows has been precious metals, which tend to be the major beneficiary when markets switch into ‘risk-off’ mode.

Jersey Oil & Gas has got off to a strong start to the year, rising from 185.5p to 208p, hitting a high of 225p.

It was boosted last week by the news that a follow on to its Verbier discovery well is planned for this Summer.

Touchstone’s shares have been flat so far this year despite the firm revealing it had increased fourth-quarter output in 2017 by 16pc year-on-year while receiving a higher oil price.

DISCLOSURE

The author of this piece does not hold a position in any of the companies covered in this article.

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