Occidental Petroleum Outlook - A Mixed Bag of Signals and Strategic Moves

Market Snapshot

Takeaway: Occidental Petroleum (OXY) is in a weak technical position, with bearish indicators dominating and an internal diagnostic score of 3.03 suggesting it's best to avoid for now.

News Highlights

Recent developments across the oil and gas sector have brought both optimism and caution for Occidental Petroleum and the industry at large:

• Colombia E&P investment is set to rise by 8% in 2025 to $4.68 billion, signaling a global trend of increased exploration spending. This may indirectly benefit OXY through broader sector tailwinds.
• Nigeria’s President Tinubu has introduced new executive orders to reduce costs and boost investment in the oil sector. If successful, this could create a more favorable environment for exploration and production companies like OXY.
• OPEC+ is reportedly considering a larger output increase for July than previously anticipated, which could impact global oil prices and, by extension, the stock of OXY and other E&P firms.

Analyst Views & Fundamentals

Analysts remain cautiously neutral on OXY, with a simple average rating of 3.00 and a performance-weighted rating of 2.73. The ratings are consistent, with all three recent analyst ratings being “Neutral.” However, the current price has fallen by -1.95%, indicating that the stock’s price movement does not fully align with the market’s neutral outlook.

On the fundamental side, OXY received a strong overall score of 7.15 in our model, with key metrics including:

• Profit-Market Value (Profit-MV): 66.60% – A healthy indicator of profitability relative to market value.
• Net income to Revenue: -22.49% – A red flag for margin pressure.
• Inventory Turnover Days: 74.08 – Indicates moderate efficiency in inventory management.
• PB (Price-to-Book): 38.06% – A relatively low ratio, suggesting undervaluation based on book value.
• Long-term debt to working capital ratio: 95.93% – Indicates a high degree of leverage, which could pose risks in a downturn.

Money-Flow Trends

Despite the weak technical picture, money-flow data shows a mixed pattern. Large and extra-large investors are showing a negative trend, but smaller retail investors are showing a positive flow. The overall inflow ratio is at 49.62%, which is slightly above the 50% midpoint but still suggests cautious positioning.

The block trend is also negative, indicating that institutional money is likely reducing its exposure. This divergence between retail and large-cap flows suggests market uncertainty and could lead to increased volatility in the near term.

Key Technical Signals

The technical outlook for OXY remains bearish, with 4 bearish indicators and no strong bullish signals:

• RSI Overbought: Internal diagnostic score of 1.39 – A strong bearish signal indicating overbought conditions are deteriorating.
• Bullish Engulfing: Score of 1.44 – Despite the name, this indicator is currently bearish and suggests a reversal is unlikely.
• MACD Death Cross: Score of 3.02 – A neutral-to-bearish signal with a weak win rate.

Recent chart patterns include a mix of WR Overbought and RSI Overbought signals, as well as a recent MACD Death Cross and WR Oversold on September 8. These mixed signals suggest the market is in a volatile and indecisive phase.

Conclusion

While Occidental Petroleum has strong fundamental underpinnings and a decent score of 7.15, the weak technical picture and bearish momentum indicators are cause for caution. The internal diagnostic technical score of 3.03 suggests it's not yet a compelling buy. Investors should consider waiting for a pull-back or clearer signs of trend reversal before entering the stock, especially given the current negative flow from large institutional investors.