OXY Stock Price Surges With Oil — But Is the Rally Built to Last?

The price of OXY’s stock, which is currently trading between $53 and $54, rarely moves quietly. Watching it trade is similar to watching oil itself in that it is susceptible to politics, rumors, and the odd unexpected headline from a distant location.

In Houston, where Occidental Petroleum maintains its headquarters, early mornings provide an insight into the business world that lies behind the ticker symbol. Before the market opens, traders and analysts meet over coffee to check the price of crude oil while downtown office towers reflect the Texas sun. Everyone knows that when oil moves, Occidental tends to move with it, which is why screens are glowing with numbers—WTI crude, Brent futures, refinery spreads.

Recently, that connection resurfaced. Occidental shares surged above $54, momentarily approaching their annual highs as Middle East tensions drove oil prices sharply higher. Investors appear to think that any interruption in the world’s supply could instantly increase the company’s cash flow.

Nevertheless, there is a certain hesitancy in the enthusiasm. The arrival and departure of oil rallies are frequently swift. Traders with years of experience in the industry are aware of how brittle the momentum can be. Crude prices can fluctuate in the opposite direction in response to a single OPEC announcement or a change in global demand.

Occidental has experienced those cycles on numerous occasions. Although the company’s history dates back more than a century, the most recent chapter began in 2019 when it acquired Anadarko Petroleum in a transaction that caused controversy in the sector. Critics questioned whether Occidental had gone too far with the acquisition, which weighed heavily on the company’s debt.

Speaking at energy conferences at the time, discussions regarding the agreement frequently sounded doubtful. Just before the oil market started to decline, some analysts hinted that the company had taken a dangerous gamble.

Then the pandemic struck. For a brief period, oil prices fell below zero. Following a sharp decline in its stock price, Occidental started selling off assets and reducing its debt. For one of the most well-known oil producers in America, it was a humble time.

The company has steadily recovered over the last few years thanks to disciplined spending and rising oil prices. The existence of Berkshire Hathaway, the conglomerate headed by Warren Buffett, which owns a sizable stake in Occidental, is one factor contributing to investors’ continued attention to the company.

In the world of finance, that relationship has become almost mythical. Long-term investors are drawn to Buffett’s investments because they believe the renowned investor sees something that others might overlook. It remains to be seen if this belief is valid, but it has undoubtedly contributed to Occidental’s continued prominence.

The physical nature of the energy industry is evident when one is standing close to oil storage facilities along the Gulf Coast. Like pipelines spanning industrial fields, massive tanks rise above the terrain like metal silos. As technicians check gauges and pressure readings, tanker trucks thunder through the gates. Steel, heat, and logistics are the three main drivers of this industry.

And eventually, Occidental’s profits are boosted by each barrel that is pumped from those fields.

According to recent quarterly results, the company’s finances appear to be stabilizing. Since the Anadarko acquisition, revenue has continued to be high and debt levels have steadily decreased. Even the company’s dividend has increased, indicating a level of confidence that was unclear only a few years ago. However, oil itself continues to be the more significant question.

Today’s energy markets seem particularly vulnerable to geopolitical developments. Crude prices are now more volatile due to Middle East conflicts, shipping hazards in the Strait of Hormuz, and OPEC nations’ changing production tactics. When observing Occidental, investors frequently pay more attention to the global map than to the company’s operations.

This dynamic may be the reason why, despite more cautious movements in broader markets, OXY stock has increased by over 30% this year. When crude prices rise, oil producers usually reap the benefits immediately.

Skepticism, however, persists in the background. According to some analysts, the stock might already be reflecting hopeful forecasts for oil prices. The same leverage that helps Occidental during rallies can also quickly hurt the stock if crude declines.

Additionally, there is mounting pressure on climate policy. By funding initiatives aimed at removing carbon dioxide from the atmosphere, Occidental has attempted to establish itself as a pioneer in carbon capture technology. Investors have expressed interest in the concept, but it’s still unclear how profitable those technologies will turn out.

One gets the impression that Occidental is situated between two eras as you watch this play out.

The conventional oil industry, with its fields, pipelines, and drilling rigs humming across desert landscapes, is on one side. On the other side is a less certain future in which energy firms continue to produce billions of barrels of crude oil while experimenting with cleaner fuels and carbon capture.

As of right now, supply shocks and geopolitical news are causing the OXY stock price to fluctuate along with the oil markets. Beneath the daily swings, however, is a bigger question that investors are constantly returning to. Is Occidental quietly redefining itself for a very different energy world, or is it just riding another oil cycle?

The market hasn’t come to a definitive conclusion yet. And it’s possible that traders keep a close eye on the OXY chart every morning because of that uncertainty.