Chevron Is Up By 3%, Here Is Why

Key Insights

• WTI oil rallies as China eases the lockdown in Shanghai. 
• This rally provides support to oil-related stocks and pushes Chevron closer to all-time highs. 
• Analyst estimates keep moving higher, and Chevron has a good chance to test new highs. 

Chevron Stock Rallies As WTI Oil Gets Back Above The $100 Level

Shares of Chevron gained strong upside momentum after WTI oil returned to the $100 level.

The recent pullback in the oil market failed to put any material pressure on Chevron stock as traders prepared for a new world, in which oil prices would stay elevated for many months.

Analyst estimates continue to move higher at a robust pace. In the current year, Chevron is expected to report earnings of $13.44 per share, so the stock is trading at roughly 13 forward P/E.

It should be noted that at the start of this year analysts expected that Chevron would report earnings of less than $10.00 per share, so estimates are changing fast.

What’s Next For Chevron Stock?

China eased the lockdown in Shanghai, while the psychological effect of the release of oil from strategic reserves seems to be over, and traders focus on geopolitical tensions and energy scarcity.

In this environment, oil-related stocks will be in demand. Stocks of oil majors like Chevron are an obvious choice for those who are willing to get exposure to the sector but are not ready to get into the financial details of smaller companies.

Despite the strong rally in 2022, Chevron remains modestly valued, so the recent rise in Treasury yields does not present a threat to the stock. In case WTI oil settles above the $100 level and begins to move towards the $110 – $120 range, Chevron and other major oil stocks like Exxon Mobil will get more support.

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