Occidental Petroleum Outlook - A Mixed Picture with Caution Advised

Market Snapshot

Takeaway: Occidental Petroleum is under pressure with a recent price drop of -2.20%, and technical indicators suggest caution. Our internal diagnostic score is 1.97 out of 10.

News Highlights

Here are the most relevant news developments for OXY:

• Colombia oil and gas E&P investment could jump 8% in 2025: This development suggests a global increase in energy investment, which could benefit oil majors in the long run.
• Tinubu introduces executive order to boost oil and gas Sector: President Tinubu's incentives aim to reduce project costs and attract investment. This could support OPEC+ members, though the impact on Occidental will depend on global market shifts.
• OPEC+ may discuss oil output hike larger than 411,000 bpd for July: Larger output hikes could pressure oil prices, which may weigh on upstream companies like Occidental.

Analyst Views & Fundamentals

Analyst Consensus: Three analysts have issued ratings in the past 20 days, all with a "Neutral" stance. The simple average rating is 3.00, while the performance-weighted rating is 2.73. This suggests a slightly bearish tilt from the weighted perspective, which is in line with the current price trend.

Our internal diagnostic score for fundamentals is 7.0, indicating solid underlying financials but with some caution areas. Key fundamental factors include:

• Net profit margin: -22.49% (a negative sign for profitability)
• Price-to-book (PB) ratio: 38.06% (suggesting a low valuation relative to book value)
• Inventory turnover ratio: 243.0% (a strong sign of efficient inventory management)
• Long-term debt to working capital ratio: 9,593.22% (a very high ratio that raises concerns about leverage and liquidity)

Money-Flow Trends

Fund flows show a mixed picture. The overall inflow ratio is 49.23%, indicating moderate inflow. However, large and extra-large funds are trending negatively, with inflow ratios at 49.86% and 48.85%, respectively. This suggests that big money is cautious, while retail and small investors are more optimistic. The internal diagnostic score for fund flows is 7.88 out of 10, reflecting a generally positive sentiment but with caution among larger funds.

Key Technical Signals

Technically, OXY has shown bearish signals in the past five days. The top indicators include:

• Williams %R Overbought: internal diagnostic score of 3.08, indicating weak strength
• RSI Overbought: internal diagnostic score of 1.39, suggesting strong bearish pressure
• Bullish Engulfing: internal diagnostic score of 1.44, indicating a failed bullish move

Recent chart patterns over the past five days have included multiple overbought readings and failed bullish formations. Specifically, overbought conditions were noted on August 26, 28, and 29, and on September 2. The overall technical score is 1.97 out of 10, and we recommend investors avoid the stock until the bearish momentum subsides.

Conclusion

Occidental Petroleum faces a challenging outlook with bearish technical signals, mixed analyst sentiment, and caution from large fund flows. While fundamentals show some strength, leverage is a key concern. Consider waiting for a pull-back before entering a position, and monitor upcoming earnings for any shifts in momentum.