Chevron stock price likely to plunge on Monday after being forced to shut production ahead of storms

By: Michael Harris
Michael Harris
Specialising in economics by academia, with a passion for financial trading, Michael Harris has been a regular contributor to… read more.
on Aug 23, 2020
  • Chevron to shut production at its four facilities in the US Gulf of Mexico ahead of tropical storms
  • Shell, BP, and Equinor announced similar moves ahead of Tropical Storm Laura and Tropical Depression 14
  • Chevron stock price lost almost 6% last week to erase gains from previous two weeks

Shares of Chevron Corporation (NYSE: CVX) are likely to join other oil stocks in tumbling on Monday after the company has been forced to shut production and commence evacuation of its crews from the US Gulf of Mexico ahead of tropical storms. 

Fundamental analysis: Another issue for oil producers

Chevron joined Shell, BP, and Equinor in announcing it will shut production at its four facilities in the US Gulf of Mexico ahead of the announced tropical storms. 

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“In preparation for the tropical weather, we have begun evacuating all personnel at our … operated Big Foot, Genesis, Jack / St. Malo and Tahiti platforms and are initiating our shut-in procedures at the four facilities,” Chevron said in a statement.

Similarly, BP announced a similar move as it has started moving towards shutting the production from its four operated US Gulf platforms — Thunder Horse, Mad Dog, Atlantis and Na Kika. Royal Dutch Shell and Norway’s Equinor took similar steps. 

As of Saturday morning, major oil producers halted 240,785 barrels per day of oil production, according to the regulator U.S. Bureau of Safety and Environmental Enforcement.

Tropical storm “Laura” is projected to head towards eastern Louisiana/Mississippi and areas further east. Additionally, “Tropical Depression 14” is moving ahead to strike southeast Texas or western Louisiana. 

Both storms are scheduled to arrive in the Gulf of Mexico early next week, with Laura expected to become a Category One hurricane.

“We don’t see the intensity and strengthening risk,” said Matt Rogers, president of Commodity Weather Group

Technical analysis: Struggle to gain momentum 

Chevron stock price is struggling to facilitate a more meaningful recovery most likely due to the inability of crude oil prices to move above $42. Shares of Chevron closed the week nearly 6% lower and therefore erasing gains from the last two weeks

Chevron stock daily chart (TradingView)

Chevron share price plunged nearly 60% from the beginning of the year to March when the demand for oil collapsed amid the pandemic. Shares have modestly recovered in the meantime, now trading around 30% lower since the start of the year.

Summary

Shares of Chevron Corporation are set to open lower on Monday after the oil giant has been forced to temporarily shut production and commence evacuation of its crews from the US Gulf of Mexico ahead of the announced tropical storms. 

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