Shares of energy companies (XLE +2.5%) rose alongside crude oil futures, easily topping Monday’s S&P sector leaderboard, and Occidental Petroleum (OXY +12.9%) was the best performer in the group, posting its highest close in more than two years.
Brent crude (CO1:COM) closed above $100/bbl for the first time since 2014, +2.7% on the day to $100.55, while WTI (CL1:COM) settled +4.5% at $95.72/bbl, as the U.S. and western Europe imposed more sanctions on Russia due to its ongoing invasion of Ukraine.
Analysts at Goldman Sachs raised their one-month Brent price forecast to $115/bbl from $95, saying up to 4M barrels of demand destruction would be needed to offset the loss of Russian exports.
Occidental reported better than expected Q4 earnings last week, and its guidance and new financial framework clarified its intention to reduce debt and reward shareholders at the expense of production growth.
The company’s plan to buy back $2.5B of debt, unveiled earlier on Monday, underscored its focus on cutting debt and eventually regaining its investment-grade status.
Occidental is beginning to execute its Anadarko post-acquisition strategy even if it took longer than expected, and the success of the strategy may finally start to show up in the company’s cash flow, Long Player writes in a bullish analysis posted recently on Seeking Alpha.
Occidental’s price return has totaled 45% over the past year, including a 33% gain YTD.