Chevron, the Dollar and the Price of Oil

 As the dollar has gotten stronger and stronger over the last few months the price of commodities have simply fallen. This is no more truer for any commodity than it is for oil. To make matters even worse, the exploration and production oil and gas companies are finding more and more oil putting even greater pressure on the price of oil. 

As can be seen in the chart on the right, the price of oil peaked around $110 per barrel on the spot market in August, 2013, and today stands near $90 per barrel. That's a huge drop by anyone's measurement. Since the inventory (reserves) held by the oil companies is oil, the overall value of the oil companies has declined as the price of oil has declined. This has been disastrous for those holding stock in the oil companies. 

For those who have been patiently waiting on the sidelines, prices today may be at a near term low and it might just be time to start accumulating shares.  

West Texas Intermediate Crude Spot Prices

As can be seen in the charts below, Chevron (CVX) appears to be bottoming out similarly to the bottoming occurring in the price of oil. If the dollar starts to level off or decline in the near future, this could be a tremendous windfall for the oil companies, and Chevron may just be one of those winners. 

Daily Chart

Weekly Chart

I think this may be an opportune time to accumulate shares in Chevron and I intend to do just that in the very near future. While other oil companies may also do well in this environment, I'm particularly partial to Chevron when discussing the major integrated oil companies. Obviously others may feel differently. 

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6 October
Price $118.09
1yr Target $135.76
Analysts 23
1yr Cap Gain 14.96%
Dividend $4.28
Yield 3.62%
1yr Est Tot Return 18.58%

Market Cap $224.24 Bil
Beta 1.14
EPS (ttm) $10.48
Payout Ratio 40.83%
EPS next yr $10.97
P/E 11.27
PEG 1.97
Forward P/E 10.76

Debt/Equity 0.15
ROA 7.90%
ROE 13.40%
ROI 7.90%
Sales $217.23 Bil
Income $20.06 Bil
Profit Margin 9.23%

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