Chevron Swings Back To Losses in Q4

Shares in US energy company Chevron have been under pressure over recent weeks with the company’s stock price reversing from 2021 highs in the mid 95s to current lows around mid 86. The failure at the mid 95s is the second time that Chevron shares have been capped at that level.

Q4 Earnings Miss

This week, Chevron shares have started a little higher despite a weaker set of Q4 earnings at the end of last week. The company reported fourth-quarter earnings per share of -$0.33, undershooting estimates for a $0.09 EPS.

The company reported an $11 million Q4 loss. This is as a result of low margins on fuel, as well as higher acquisition costs and the negative impact of FX fluctuations which overtook the company’s drilling performance over the period.

Better Times Ahead

Looking ahead, Chevron, as well as the broader energy sector, is projecting a firm rebound over the year as oil and gas prices recover after the declines seen during the height of the pandemic.

Many firms were looking for a continued recovery into the end of last year following the rebound over Q3. However, the return of social restrictions and lockdowns as a result of the second wave of the virus saw widespread disruptions hitting oil demand once again, sending prices lower.

Quick Response To COVID Crisis

Chevron was among the energy firms quickest to react to the pandemic last year. The company slashed its global workforce by 15%, cut new project expenditure by over a third, and reduced its global production goals.

As a result of the resilience it displayed over the course of the crisis, it was able to build up enough of a cash position to purchases Noble Energy for $4.2 billion, assuming $8 billion in debt.

Commenting on the current situation as well as the company’s outlook, Chevron CFO Pierre Breber said:

“While we’re optimistic about vaccines and getting on a pathway to recovery, we’re not there right now. We still have an economy that’s operating well below capacity. We still have inventory levels that are high.”

Double Top Forming in Chevron

The failure at the second test of the 95.39 level has created an interim double top. Price has since reversed back under the 89.97 level and is now sitting just above the neckline of the pattern.

To the downside, the next support levels to watch are the 82.18 and 76.21 levels. The retest of the broken bearish trend line comes in around the lower level. Bulls will need to see price hold above the 82.18 level to keep the upside in view.

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