Chevron, Energy Stocks Advance As Russian Oil Finds Home In China

Chevron (CVX) streamed higher along with other energy stocks Monday as U.S. oil futures dipped to 15-month lows. Meanwhile, despite European Union and U.S. sanctions, Russia has overtaken Saudi Arabia to become China’s largest oil supplier — just as China’s President Xi Jinping and Russian President Vladimir Putin prepared met in Moscow Monday.

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U.S. crude prices fell early to below $66 a barrel Monday — levels not seen since late 2021. West Texas Intermediate (WTI) has now dropped around 17% since the end of 2022. Brent crude futures also fell to just above $72 a barrel Monday. Both WTI and Brent gained later in the day.

The oil-price retreat comes as the failures of SVB Financial, Signature Bank of New York and Credit Suisse (CS) trigger worries of broader financial instability.

Those worries, in turn, raise concerns for an economic, which translates to less demand for oil.

Russia’s invasion of Ukraine in February 2022 sent oil prices sharply higher. However, prices declined during the second half of the year, trading around 44% below a June high on Monday. The 2022 price spike led to record profits for many energy stocks, including Chevron.

Recent oil demand forecasts from the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) may offer prices some relief. Bloomberg also reported Sunday that a unit of Sinopec, China’s state-owned refining giant, purchased 2 million barrels of Norwegian Johan Sverdrup crude from Europe’s North Sea. IT was the first North Sea shipment to Asia in three months and a sign of increased oil demand in China.

Chevron stock edged up 1.4% to 154.54 during Monday’s stock market trading. Energy stock Exxon Mobil advanced 2.3% to 102.18.

Russian Oil Flows To China

China’s oil imports rose 12% in February compared to last year, official data showed. Meanwhile, Russia overtook Saudi Arabia to become China’s top oil supplier in the first two months of 2023, according to Chinese government data.

Oil from Russia totaled 15.68 million tons to China in January-February, about 1.94 million barrels per day. That’s up about 24% from 1.57 million barrels per day in the same time frame last year.

Crude imports from Saudi Arabia came in at 13.92 million tons, equivalent to 1.72 million barrels per day. Saudi Arabia was China’s top crude supplier in 2022, importing 87.49 million tons throughout the year.

Sanctions and a price cap imposed by the EU and the Group of Seven nations, known as the G-7, on oil products from Russia has led to discounted crude hitting the world market. Analysts long expected Western-country sanctions on Russian crude to result in more oil making its way to India and China.

China President Xi Jinping began his three-day visit to Russia Monday. Xi and President Putin are widely expected to discuss Ukraine, as well as energy strategy, during their Monday meeting.

Chevron, Goldman Sachs and Energy Stocks

Goldman Sachs (GS) on Saturday trimmed its 2023 oil price forecast as banking sector concerns outweighed strong demand in China.

GS analysts expect Brent futures to reach $94 a barrel this year. Goldman Sachs predicts $97 a barrel in the second half of 2024, down from its previous forecast of $100 per barrel.

“Oil prices have plunged despite the China demand boom given banking stress, recession fears, and an exodus of investor flows,” the note said. “Historically, after such scarring events, positioning and prices recover only gradually, especially long-dated prices.”

Along with Chevron stock, other energy stocks edged up Monday.

After sellers tore into oilfield services firms last week, Halliburton (HAL) gained 2.5% and SLB (SLB) jumped 3.5% Monday. Baker Hughes (BKR) eked up 0.1%.

Coterra Energy (CTRA) shot up 1.7% Monday while Marathon Oil (MRO) gained 2.5%. Energy stock APA (APA) jumped 3.6%.

Diamondback Energy (FANG) and Occidental (OXY) advanced 2% and 0.8%, respectively. Devon Energy (DVN) and ConocoPhillips (COP) climbed up around 2%.

Chevron stock ranks sixth in the Oil & Gas-Integrated industry group. CVX shares have an 70 Composite Rating out of 99. The stock has an 44 Relative Strength Rating, an exclusive IBD Stock Checkup gauge for share-price movement. The EPS rating is 76.

Please follow Kit Norton on Twitter @KitNorton for more coverage.

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