What happened
Shares of Chevron (CVX +0.79%) were moving higher today as oil prices ticked up. The company also said it sees an opportunity to increase liquid natural gas (LNG) sales in Europe as the war in Ukraine has sent prices of the energy commodity soaring. The oil and gas stock closed up 4.9%.
NYSE: CVX
Key Data Points
So what
Markets swung wildly today after the consumer price index report came in hotter than expected, with September inflation up 0.4% from August and 8.2% over the last year. Stocks initially plunged on the news, which was the expected reaction since high inflation makes it more likely that the Federal Reserve will continue to aggressively raise interest rates.
However, shares quickly rebounded by late morning and were soaring by the afternoon. The reason for the turnaround wasn't clear, though investors may have believed stocks were oversold, with indexes hitting another round of lows in the morning and the S&P 500 at a two-year low.
Oil prices also initially plunged on the news but rallied later in the session and were up 2% in afternoon trading. That lifted the energy sector, including Chevron. As a diversified oil major, the company benefits from higher oil prices in multiple ways.
The other news item that seemed to be driving the stock up was a Reuters report that higher prices for LNG in Europe will attract Chevron's exports this winter. It also said the company's production in the Permian Basin was set to grow 15% this year, showing both higher prices and increased production will help push profits higher.
Now what
The movement in the stock market and oil market today was puzzling, and Chevron, like the rest of the energy sector, is vulnerable to a global recession, which would lead to a pullback in oil prices and a decline in demand.
Still, given elevated prices now and the natural gas supply shock in Europe, Chevron looks set to report another strong quarter later this month. When the company's third-quarter results come out later this month, analysts expect earnings per share to jump from $2.96 to $4.89 on a 46% increase in revenue to $59.1 billion.
