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Despite Oil Slumping, Chevron Outperforms SPY in November

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Dec. 5 2018, Published 8:45 a.m. ET

Chevron stock’s performance this quarter

WTI crude oil prices have slumped 30%. Chevron’s peer, ExxonMobil (XOM), has fallen 5% since October 1, and Royal Dutch Shell (RDS.A) and BP (BP) have fallen 11% and 12%, respectively.

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Chevron stock’s performance in October and November

In the past couple of months, Chevron stock has been volatile—it fell in October, but rose in November. Chevron stock fell 10% in October, primarily driven by oil prices and equity markets declining. WTI crude oil prices fell 13% due to a forecast of lower oil demand creating fear of a global supply glut. Also, equity markets plunged due to global growth being expected to weaken and trade tensions. SPY, the broader market indicator, fell 7% in October.

However, the situation changed for Chevron stock in November. On November 2, the company announced its third-quarter earnings, which exceeded analysts’ estimates. Chevron’s earnings surged and boosted its stock, supported by record upstream production volumes and higher realizations.

Plus, in November, Chevron announced the startup of its deepwater project, Big Foot, in the US Gulf of Mexico. The project holds 200 million barrels of oil equivalent recoverable resources, adding to Chevron’s upstream production. For more on Chevron’s upstream production outlook, read Chevron’s Production Touches Record Highs: Where’s It Headed? This upstream news also boosted the stock.

Chevron stock rose 7% in November and SPY increased by just 1% despite WTI prices falling 20%. Going forward, if supply cuts boost oil prices and easing trade tensions and a better growth outlook strengthen equity markets, Chevron stock could surge.

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