CVX Preview: At the Mercy of a Crude Consumer

Chevron (CVX), the global integrated oil company, is scheduled to report third-quarter 2009 results before the market opens on Friday and conduct its quarterly conference call later that morning.

The company is expected to earn $1.39 per share on revenue of $48.96 billion. In the year-ago quarter, Chevron earned $3.85 per share on revenue of $78.87 billion.

As with other integrated oil companies, Chevron operates in three business segments:

1. exploration and production (upstream);
2. refining and marketing (downstream);
3. chemicals.

I am expecting Chevron to reiterate what ExxonMobil (XOM) told us today -- specifically, that both the upstream and downstream are struggling while the chemicals business is improving.

I like Olin (OLN) in the chemicals segment as chlor-alkali product pricing and volumes are improving -- plus, it gets a nice kick from the Winchester ammunitions and firearms business.

Now let's get back to Chevron: The company is taking its lead today from the overall market, while ExxonMobil is selling off on its disappointing earnings. At the end of the day, whether it is Chevron, ExxonMobil or ConocoPhillips (COP), these companies are going to be at the mercy of crude oil prices and consumer demand. Crude oil prices are slowly rising but remain well below their peak prices. The consumer is improving but remains well below their peak spending.

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At the time of publication, Rothbort was long CVX stock, XOM stock and OLN stock, and short CVX calls and XOM calls, although positions can change at any time.

Scott Rothbort has over 20 years of experience in the financial services industry. In 2002, Rothbort founded LakeView Asset Management, LLC, a registered investment advisor based in Millburn, N.J., which offers customized individually managed separate accounts, including proprietary long/short strategies to its high net worth clientele. He also is the founder and manager of the social networking educational Web site TheFinanceProfessor.com.

Immediately prior to that, Rothbort worked at Merrill Lynch for 10 years, where he was instrumental in building the global equity derivative business and managed the global equity swap business from its inception. Rothbort previously held international assignments in Tokyo, Hong Kong and London while working for Morgan Stanley and County NatWest Securities.

Rothbort holds an MBA in finance and international business from the Stern School of Business of New York University and a BS in economics and accounting from the Wharton School of Business of the University of Pennsylvania. He is a Term Professor of Finance and the Chief Market Strategist for the Stillman School of Business of Seton Hall University.

For more information about Scott Rothbort and LakeView Asset Management, LLC, visit the company's Web site at www.lakeviewasset.com. Scott appreciates your feedback; click here to send him an email.