Western Oil Stock Price Rebound! Is Buffet staring at this spot too? （2024.05.08）

Hello, this week's Tech Tracker analyzes a very good looking traditional energy company - Western Oil - Western Oil$Occidental Petroleum(OXY.US)$.

Learning benefits: If you want to interact with professional analysts and cattle friends, click here to joinPrivilege Service Group, SHARE THE LATEST TUTORIALS FIRST TIME!

Hot Spot Events

On Tuesday, May 7, 2024, Western Petroleum released its Q1 report as expected, with a mixed result.

The data showed Western Oil Q1 revenue of $59.75 billion, down 17% year-on-year; earnings per share (EPS) of $0.63, down 42% year-on-year. In comparison, Wall Street analysts expect revenue of $67 billion and EPS of $0.58.

Western Oil's share price fluctuated slightly on the day of the report, closing down slightly by 0.1%. It seems that this is a mid-term result, and the market has almost no waves on this. However, Western oil prices slipped 5% to $64.39 last week, breaking below the 50-day average (MA50) for the first time in two and a half months.

On the other hand, U.S. crude prices also fell past $80 per barrel last week to a 2-month low, as well as uncertainty over Chinese demand and increased U.S. crude inventories, due to the changing political landscape in the Middle East.

It is well known that Western Oil has been a major investment company for Buffett in recent years. According to the latest regulatory documents from the SEC, Buffett's Berkshire Hathaway company has a portfolio of $36 billion, with Western Oil as its sixth largest holding, with a holding value of about $150 billion.

Berkshire has been buying Western Oil stocks since Q1 2022, when Western Oil's share price was as low as $30. And today, Western Oil's share price has exceeded $60. Over the past two years, Berkshire's holdings of Western Oil have only grown steadily.

Also worth noting is that Western Oil and Chevron are the only two energy stocks in the Berkshire portfolio, with a combined market capitalization of 10%. It is not difficult to judge that in the decision-making layer of Berkhill, there must have been a lonely feeling for Western oil, perhaps it was Buffett himself.

Technical analysis

Trend analysis:

On the chart, Western Oil launched a strong rally in early 2022, with its share price surging close to 150% in just five months. Thereafter, the share price has been in a sideways movement for a long time, basically maintaining an up-and-down fluctuation between $55-75.

There is some data worth paying attention to here, namely that in 2023, Berkshire significantly increased Western oil several times, with a target price of the position in the range of $57-61.50.

On the daily chart, Western Oil has been on an upward trend since February 2024, with the share price once breaching $70 to hit a more than two-year high. However, the bulls failed to win the chase, and the share price is currently in a pullback state, retracing nearly 50% of its previous gains. At the same time, the share price is in the middle of a downward channel.

Indicator Interpretation:

• Western oil prices have now fallen below the 50-day average (MA50), hinting that the market may weaken further in the short term.

• The MACD indicator is located below the zero axis and maintains a bearish position, which is also a negative signal.

• The KDJ indicator appears to be about to enter the oversold zone (<20), however, there are no signs of a short line rebound at the moment.

• The 200-day average (MA200) converges with the 61.8% Fibonacci retracement high, suggesting strong support near this point.

Direction of attention:

Currently, Western oil prices are in the downward channel on the daily chart, and recent moves can be seen as a retracement of the previous uptrend, but may also reverse into a downtrend. Investors can focus their attention near $62, where the 200-day average and the 61.8% Fibonacci retracement converge, or could provide potential short line support. On the other hand, if this point fails, the probability of the move continuing down the line increases.

This content discusses technical analysis, and other approaches, including fundamental analysis, may provide different perspectives. The examples provided are for illustrative purposes only and do not reflect the expected results.

All investments involve risk, including the potential loss of principal, which cannot guarantee the success of any investment strategy.