Energy stocks are looking bleak these days and Chevron shares are no exception. Price formed lower highs and found support at $14.20, creating a long-term descending triangle pattern.
Chevron shares are lingering around the triangle support, perhaps considering a downside break. If so, this could set off a longer-term drop for the stock, possibly taking it down to the next floor at $12.50.
On the other hand, a bounce off the triangle support could lead to test of the resistance at $14.80-15.00. Stochastic is on the move up, indicating that buyers may be taking control while RSI is also heading higher as well.
However, the 100 SMA is still below the 200 SMA, suggesting that the path of least resistance is to the downside. These moving averages are oscillating for now, also hinting that further consolidation might be seen.
The fall in oil prices for the past year has been very brutal for energy companies, as some oil producers in the US reduced their rigs and drilling operations. Still, investors are hopeful that the talks between OPEC and non-OPEC officials might bear fruit and ease the supply glut.
Iran has confirmed that they had been able to boost output levels by 500,000 barrels per day, staying true to their pledge to make a strong return to the crude oil export market now that the Western sanctions on their nuclear program had been lifted. Other OPEC nations seem hesitant to put a cap on production unless other oil producers also cooperate.
More talks on these oil production levels could continue to impact Chevron shares in the coming days, but if the negotiations fall through, a downside break could be seen. On the other hand, strong odds of a compromise could keep shares afloat.
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