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Chevron (CVX) Stock Declines as Crude Prices Face Supply Pressure
Chevron (CVX) shares are falling along with oil prices today as the sector faces negative supply side pressure.
By Tony Owusu
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NEW YORK (TheStreet) -- Shares of Chevron (CVX) - Get Report are down by 1.27% to $88.72 in morning trading on Friday, as falling crude prices take their toll on the oil sector today.
Crude prices are declining after the International Energy Agency said that there are a record 3 billion barrels of crude and oil products stockpiled worldwide.
A stubborn global supply glut is responsible for crude prices more than halving over the past year and a half as OPEC has responded to increased U.S. production by maintaining its own production levels.
In today's report, the IEA said that the oversupply could continue into next year.
"The current forecast is for a mild winter in Europe and the U.S. If it turns out to be true, bulging stock levels will add further pressure and oil market bears may choose not to hibernate," the IEA said, according to Reuters.
Industry standard Brent crude for December delivery is down by 0.91% to $43.66 per barrel while West Texas crude for December delivery is down by 2.80% to $40.58.
Insight from TheStreet's research team:
Chevron was recently the subject of a Daily Swing Trade article by Alan Farley. Here is what Farley had to say about the stock:
Chevron (CVX) hit an all-time high at $135 in July 2014 and entered a steep downtrend that reached a five-year low in August. The subsequent bounce stalled near $90, giving way to a sideways consolidation and buying spike, after the company reported earnings Nov. 2. The rally spent two sessions on top of the declining 200-day EMA, ahead of a reversal that signals rejection at that price level and the 50-week EMA.
Three rally waves off the summer low could mark the end of the upside for now, with the stock dropping into a broad range that could last into 2016. OBV improved during the recovery wave, but not enough to call a lasting bottom. Relative strength cycles are now turning lower, suggesting a consolidation period that could last a long time. At this point, it looks like a better short sale than long position.