Critical Thinking


Visit: Finimize

What’s going on?

Chevron posted pretty exceptional quarterly results on Friday, even if the US oil giant still isn’t able to live up to investors’ exacting standards.

What does this mean?

Oil and natural gas prices have regained their mojo over the past year, as demand for the fuels rode the coattails of a recovering economy. In fact, the average price of a barrel of oil almost doubled last quarter from the same time the year before, while natural gas prices in the US more than tripled. That’s given Chevron its va va voom back too: the company reported a $5.1 billion profit last quarter – a sharp turnaround from the near $700 million loss it made the same time in 2020, and all the more surprising considering it produced 5% less oil and gas. Still, with analysts anticipating a profit of around $6 billion from the company, investors – who sent Chevron’s stock to an all-time high last week – felt short-changed: they initially sent Chevron’s shares down 3%.

Why should I care?

For markets: Coffee’s for closers.

Every oil company is at the mercy of high expectations right now, with an index tracking some of the biggest producers having outperformed the US stock market by 24% this year. But since Chevron – the first of the Big Oils to report this earnings season – missed expectations, it doesn’t bode well for its rivals going forward. So steel yourself: we could be in for one disappointing update after another over the next few weeks.

Zooming out: America’s doublethink.

Let’s put this into perspective: US demand for energy is going strong, regardless of whether investors are happy. And there’s no better evidence of that than the wider US economy, with data out late last week showing that it grew by a faster-than-expected 1.7% last quarter versus the one before. That brings last year’s growth to 5.7% – the biggest yearly uptick since 1984.

Originally Posted January 28, 2022 – Critical Thinking

Disclosure: Interactive Brokers

Information posted on IBKR Traders’ Insight that is provided by third-parties and not by Interactive Brokers does NOT constitute a recommendation by Interactive Brokers that you should contract for the services of that third party. Third-party participants who contribute to IBKR Traders’ Insight are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.

This material is from Finimize and is being posted with permission from Finimize. The views expressed in this material are solely those of the author and/or Finimize and IBKR is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

In accordance with EU regulation: The statements in this document shall not be considered as an objective or independent explanation of the matters. Please note that this document (a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and (b) is not subject to any prohibition on dealing ahead of the dissemination or publication of investment research.

Any trading symbols displayed are for illustrative purposes only and are not intended to portray recommendations.

Disclosure: Futures Trading

Futures are not suitable for all investors. The amount you may lose may be greater than your initial investment. Before trading futures, please read the CFTC Risk Disclosure. A copy and additional information are available at