Murphy Oil Corporation heads into late May with a sharp tension at its centre: the stock is down nearly 10% on the week, yet short sellers have been aggressively covering and options traders are positioned more bullishly than they have been in months.
The most striking feature of the current setup is how quickly shorts have exited. Short interest has fallen to 5.9% of the free float — down 23% over the past week and down roughly 19% from a month ago. As recently as mid-May, more than 10.8 million shares were short. That figure is now closer to 8.4 million. The unwind coincides almost exactly with the stock's post-earnings drop on May 6-7, when MUR fell more than 8% in a single session and 5% the following day. Shorts appear to have taken profits into that weakness rather than pressing new positions. The ORTEX short score has tracked the retreat — it peaked at 52 on May 18 and has since eased back to 44.5, a middling reading that reflects neither extreme crowding nor conviction on the downside.
The lending market reinforces that picture. Availability is exceptionally loose at nearly 955% — meaning there are roughly nine and a half times as many shares available to borrow as are currently shorted. That compares to a 52-week low of around 135%. Borrowing costs are also low, running at just 0.53% annually, albeit up about 18% from a month ago. The borrow market offers no sign of squeeze pressure from any direction.
Options positioning tells a genuinely different story from the recent sell-off. The put/call ratio is running at 0.33, well below its 20-day average of 0.50 — nearly 1.7 standard deviations to the bullish side. A month ago, the PCR was consistently above 0.59; the shift happened sharply around mid-May. That means options traders moved from defensive positioning into calls precisely when the stock was getting hit hardest, which is an unusual and notable divergence from the price action.
The Street is cautiously constructive. Two analysts raised price targets this week: Mizuho lifted its target to $44 (from $39) while maintaining a Neutral rating, and Barclays moved to $43 (from $36) on the same Equal-Weight stance. The consensus mean target is $43.79, roughly 20% above the current price of $36.48. That gap reflects a market that sees value but hasn't yet seen enough to upgrade. The valuation multiples back that up — the stock trades at a PE of around 10.2x and an EV/EBITDA of 3.5x, both of which have compressed over the past 30 days as the stock sold off. The factor score picture is mixed: EPS momentum over 90 days ranks in the 93rd percentile, and the forward EPS year-on-year increase sits at the 88th percentile. Near-term EPS momentum (30-day) is weak at the 13th percentile. The dividend score ranks at the 96th percentile, though the most recent confirmed dividend data is from 2022, so the current yield implied by that score should be treated cautiously.
Peers sold off sharply alongside MUR this week. CHRD fell 7.8% on the week and MTDR dropped 11.6%, while COP and APA were off 6.4% and 6.6% respectively. MUR's 9.6% weekly decline was broadly in line with the weaker end of its peer group. The sector move looks macro-driven rather than company-specific, which may partly explain the short covering: bears appear to have concluded that the single-name thesis has played out.
The institutional holder list offers one other point of interest. American Century, which held 4.69% of shares as of April 30, added 2.5 million shares in the most recent filing — the largest disclosed position change among the top holders. Invesco similarly added 2 million shares. These are meaningful accumulation moves for an independent E&P of MUR's size, suggesting institutional buyers were stepping in ahead of the volatility.
The next scheduled catalyst is Q2 earnings on August 6. Between now and then, the primary variables to watch are the trajectory of Gulf of Mexico operations — the operational drag that has weighed on production and costs — and whether the bullish options positioning translates into sustained buying interest as the broader energy sector navigates commodity price uncertainty.
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