The large oil companies may have been the last "safe haven" stocks. They have magnificent balance sheets; they have posted record earnings for several quarters; and they pay out relatively large and safe dividends.
The market has believed that "big oil" could remain profitable even with energy prices depressed. The money that the companies make on refining is outstanding, because the profits on selling gas, heating oil and petrochemicals are good.
Chevron (NYSE: CVX) burst that bubble by warning on profits. According to The Wall Street Journal, "Chevron said its earnings for the fourth quarter would be "significantly lower" than the previous period."
Over the last year, Chevron and most other large oil companies have done better than the market. During the last twelve months, Chevron's shares declined 20% compared to over 30% for the DJIA. And the firm has a 3.5% yield.
What happens to "big oil" now? For investors, the hope for a rebound in these stocks appears to be tied to whether the price of crude moves up sharply again. In an odd way, OPEC has become the ally of a number of U.S. shareholders.
Douglas A. McIntyre is an editor at 247wallets.com.
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Reader Comments (Page 1 of 1)
1-09-2009 @ 10:01AM
daang7601 said...
Another 524,000 Job Cuts a clear signal to PLUNGE oil-price beyond FURTHER!!! The incalculable surmounting numbers of jobs being lost each day will put the NAIL on the coffin of oil-future!!! PLUNGE!!! PLUNGE oil PLUNGE!!!! YEAH!!!!! 14,000 retailer are on the edge to file bankruptcy, 15,000 job-cut from the largest Aluminum Co. ALCOA, Dell shutting their factory, plants factories, manufacturers, retailers around the globe are dropping DEAD by the hour, and people around the world are ferociously cutting back their fuel use.... Oil future are now living in complete NIGHTMARES and it's investors around the globe are on the prowl looking for the highest skyscrapers to PLUNGE themselves to escape the inescapable hellish nightmare!!! PLUNGE oil PLUNGE!!!!! YEAH!!!!
1-09-2009 @ 12:57PM
arthur lee davis said...
Daang7601,
COMING SOON! THE SECOND GREAT WALK ON WATER.
AND THEN? OH! YOU HAVEN`T HEARD ?
AN IMMEDIATE EVAPORATION OF THIS MESS. A PARTING OF THE SEA, RECAPITULATION OF THE WHALE AND ALL
THEN ENDS WELL. HAPPINESS AND BLISS.