Chevron’s (CVX) stock has fallen 7% since January 3, 2017. In comparison, peers ExxonMobil (XOM), Royal Dutch Shell (RDS.A), and BP (BP) have fallen 10%, 7%, and 12%, respectively. Crude oil prices have fallen 6% YTD (year-to-date). Let’s look at what led to the fall in Chevron’s stock price.
Usually, integrated energy stocks have a high positive correlation with crude oil prices, which we’ll discuss later in the series. Crude oil prices rose in 2016, recovering from the downfall seen in 2015. They saw weakness in August and September 2016. However, in December 2016, oil prices rose due to OPEC’s (Organization of the Petroleum Exporting Countries) decision to cut production, which was also backed by Russia, a non-OPEC country. For more on crude oil prices, please refer to Crude Oil Makes New 2016 Highs: Following Oil-Weighted Stocks.
Chevron’s stock performance
Chevron’s stock downfall halted in January 2016, at which point the stock started rising due to firming oil prices, crossing over its 200-day moving average. Amid volatility, the stock crossed over and broke below its 50-day moving average intermittently. In 4Q16, Chevron crossed over its 50-day moving average, spurred by the crude oil rally.
In 1Q17, Chevron reported its 4Q16 earnings, which missed estimates. For more on this, read Chevron Missed Its 4Q16 Estimates, Stock Fell 2.4%. Amid volatility, crude oil prices fell. Chevron’s stock recently broke below its 50-day moving average, likely due to lower crude oil prices.
Currently, Chevron’s stock is trading below its 50-day moving average but above its 200-day moving average. If you’re looking for exposure to large US companies, you could consider the SPDR Dow Jones Industrial Average ETF (DIA), which also has ~6% exposure to integrated energy majors ExxonMobil and Chevron. Continue to the next part to learn why most analysts have made positive recommendations for Chevron.