Chevron (CVX) and Exxon Mobil (XOM) veered lower along with other energy stocks Wednesday as concern about the SVB Financial crash has spilled into the oil market. U.S. oil prices dipped to their lowest level since late 2021. CVX shares led Wednesday's early losses among Dow Jones Industrial stocks.
XU.S. oil futures settled down 5.2% at $67.61 per barrel Wednesday, prices not seen since December 2021. West Texas Intermediate (WTI) has now dropped 15.8% since the end of 2022.
The oil-price retreat comes as the failure of SVB Financial late last week and Signature Bank of New York on Sunday triggered worries other financial institutions could crash. However, recent oil demand forecasts from the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) may offer some prices some relief.
Russia's invasion of Ukraine in February 2022 sent oil prices sharply higher. Futures declined in the latter part of the year, trading 43% below a June high on Wednesday.
Chevron stock closed 4.3% Wednesday. Exxon Mobil dumped 4.9%. Sellers also tore into oil field services firms, sending Halliburton (HAL) and SLB (SLB) to losses in the 8%-9% range. Baker Hughes (BKR) shed 5.3%.
Coterra Energy (CTRA) booked a 6.3% loss Wednesday while Marathon Oil (MRO) tumbled 8.5%. Energy stock APA (APA) sank 8%.
OPEC And Oil Forecasts
On Tuesday, OPEC maintained its forecast for 2023 global oil-demand growth. The oil cartel tempered optimism around China's reopening economy with concerns about the U.S. and Europe.
In its monthly market report, OPEC expects oil demand to grow by 2.3 million barrels a day in 2023 to 101.9 million barrels a day. Global oil demand totaled 99.8 million barrels in 2022. OPEC also raised its forecast for oil demand growth in China for 2023.
On the supply side, Saudi Arabia energy minister Prince Abdulaziz bin Salman said OPEC+ would stick to production cuts agreed upon in October until the end of 2023.
Meanwhile, the International Energy Agency echoed a bullish outlook for oil demand, pointing to a massive boost from resumed air travel and China's economic reopening from the pandemic.
Chevron Stock, Other Stocks Respond To Oil Prices
Airlines and shipping stocks often rise when oil prices fall, because declines allow companies to lock in cheaper fuel price hedges. However, on Wednesday, shipping and airline stocks moved broadly lower. Airlines had slumped after a number of air carriers gave mixed guidance updates Tuesday.
Meanwhile, energy stocks showed some early premarket resilience Wednesday, with Chevron, Exxon Mobil and others holding losses to around 2%. Heading into the open, selling picked up and losses deepened.
Chevron stock is now down nearly 3% for March, and heading toward a fourth straight monthly decline. Exxon shows a 6% loss, tacking toward its second monthly drop.
Diamondback Energy (FANG) and Occidental (OXY) dipped around 7.5% and 5.6%, respectively. Devon Energy (DVN) shed 8.3%.
Wednesday afternoon, excluding First Republic Bank (FRC), energy stocks Coterra Energy, Marathon Oil, Halliburton, Devon Energy, APA and SLB became the worst performing stocks on the S&P 500.
ConocoPhillips (COP) carved 6% lower Wednesday. On Monday, the Biden administration approved the Willow oil-drilling project in the Alaskan Arctic.
This gives ConocoPhillips the green light to start construction on its roughly $7 billion project in Alaska's National Petroleum Reserve. COP expects the project to produce about 180,000 barrels of oil a day at its peak — equivalent to about 40% of Alaska's current crude production.
Environmental organizations have criticized Biden for the decision, saying he is backtracking from his climate protection promises.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
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