Chevron shares set to fall after Q2 loss and sinking oil prices
The US-based oil and gas major is likely to see its shares close out the week in the red after recording a $8.3 billion loss in its second quarter, while oil prices slide with no sign of global demand improving due to Covid-19.
Chevron is likely to see its shares close out the week in the red after recording a $8.3 billion loss in its second quarter (Q2), as oil prices slide with no sign of global demand improving due to Covid-19.
Brent crude fell as much as 5% to $41.38 on Thursday, with it managing to find stable footing a touch above $43 a barrel on Friday, with investors worried that demand may not return this year as a second surge in new cases emerges in Europe.
Meanwhile, the US West Texas Intermediate (WTI) fell as much as 6% yesterday, with the benchmark dipping below the psychological $40 level briefly. WTI is trading at $40.34 a barrel at the time of publication.
Chevron shares could fall further after poor Q2 performance
Chevron delivered a disappointing set of Q2 results on Friday, with the oil and gas major reporting a multi-billion loss due to asset write-downs as a result of plummeting oil prices, as well as its involuntary exit from Venezuela.
Asset write-downs have become a common theme among oil and gas companies during the Covid-19 pandemic, with demand weak and oil markets wrestling with oversupply.
As a consequence, interest in renewables has surged in recent months, helping to accelerate the energy transition away from fossil fuels, with oil and gas majors like BP and Shell opting to write-off billions in oil and gas assets. In fact, BP and Shell have slashed the value of their assets by a combined total of $39.5 billion.
‘The past few months have presented unique challenges,’ ‘Given the uncertainties associated with economic recovery, and ample oil and gas supplies, we made a downward revision to our commodity price outlook which resulted in asset impairments and other charges,’ Chevron CEO and chairman Michael Wirth said.
‘While demand and commodity prices have shown signs of recovery, they are not back to pre-pandemic levels, and financial results may continue to be depressed into the third quarter 2020,’ he added.
WTI looks to recover from sharp drop
After holding above $40.50 for most of the past two weeks, yesterday the WTI price dove to its lowest level in three weeks, briefly moving below $39, according to Chris Beauchamp, chief market analyst at IG.
‘We have seen a modest rebound, but with the price now below $40.50 and below trendline resistance from last Thursday’s highs bulls will need a recovery back above $41.30 to revive the outlook for higher prices,’ he said.
‘A rally that turns lower from below $41.00 will be a lower high and thus a potential selling opportunity,’ Beauchamp added.
How to trade stocks with IG
Looking to trade the Chevron and other stocks? Open a live or demo account with IG and buy (long) or sell (short) shares using derivatives like CFDs and spread bets in a few easy steps:
- Create an IG trading account or log in to your existing account
- Enter ‘Chevron’ in the search bar and select it
- Choose your position size
- Click on ‘buy’ or ‘sell’ in the deal ticket
- Confirm the trade
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Act on share opportunities today
Go long or short on thousands of international stocks with spread bets and CFDs.
- Get full exposure for a comparatively small deposit
- Trade on spreads from just 0.1%
- Get greater order book visibility with direct market access
See opportunity on a stock?
Try a risk-free trade in your demo account, and see whether you’re on to something.
- Log in to your demo
- Take your position
- See whether your hunch pays off
See opportunity on a stock?
Don’t miss your chance – upgrade to a live account to take advantage.
- Trade a huge range of popular stocks
- Analyse and deal seamlessly on fast, intuitive charts
- See and react to breaking news in-platform
See opportunity on a stock?
Don’t miss your chance. Log in to take advantage while conditions prevail.
Live prices on most popular markets
- Equities
- Indices
- Forex
- Commodities
Prices above are subject to our website terms and agreements. Prices are indicative only. All share prices are delayed by at least 15 minutes.
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.