Chevron share price to catch the pessimists off guard with a Q3 win

If we have learned anything since the start of the pandemic earlier this year, it is as much about how corporates have responded to the challenges of the new business environment, as the state of the sector they are in. In many ways it has been the Oil & Gas sector which sentiment wise has suffered as much as the obvious targets for the bears, hospitality and travel. Indeed, part of the problem for the likes of Chevron, temporarily the largest Oil & Gas group this year, and the Chevron share price, is that fixed costs remain even as demand dwindles. Rather like the proverbial oil tanker, it can take months for management to respond. Luckily, for the CVX share price, we have seen a performance which has surprised analysts in how efficient Chevron’s management have been.

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A massive adjusted earnings per share win for Chevron shares

It is usually the case that City analysts are close to reality in terms of what blue chip companies will deliver at the quarterly stage, if only on the basis that so much research tends to be focused at the likes of oil majors such as Chevron. But it will be interesting to see what repercussions there will be on the Chevron share price in coming weeks given the Q3 result of an adjusted 11c per share profit, versus the expectation of a loss of 27c per share. The win for Chevron was all the more impressive given that it is just having to digest the $4.2bn takeover of Noble Corp, although fortunately this deal is likely to feed into the bottom line positively for Q4.  

 

Mixed newsflow in 2020 for Chevron shares

While Q3 has wrong footed the experts in terms of the latest results from Chevron, we have been treated to something of a mixed bag in terms of newsflow in recent months. The big plus point in August was signing deals with the Iraqi Government of up to $8bn. This perhaps allowed the management to be brave enough in terms of cutting expenditure by nearly 50%, and perhaps most difficult of all, production. However, it is as a punch bag for economic sentiment that companies like Chevron are currently best known for and the Chevron share price has suffered accordingly.

 

Initial pandemic rebound for Chevron shares

It may seem like an overreaction now, but a look at the Chevron share price daily chart from March to June shows that the CVX share price briefly doubled from $51 to $103. Since June we have seen a retracement, but arguably not one which has been as bad as the macro-economic situation might dictate. 

 

CVX shares technical outlook

Given the way CVX shares have beaten the market at the Q3 stage, and there is the prospect of the Noble Corp deal to come onstream, technical traders may be looking to be positioned on the bull side for the remainder of 2020. At this stage only cautious traders might wish for the 50 day moving average on the CVX share price daily chart to be broken at $75 before regarding the post June decline to finally be over. The chance would then be for a retest of the $100 summer 2020 resistance to be seen again in early 2021.

 

Daily chart showing Chevron share price daily movements for 2020

 

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