Occidental Petroleum Stock Forecast: OXY continues June slide despite Warren Buffett buys

Occidental Petroleum (OXY) shed another 3.6% on Wednesday. Despite news surfacing that Warren Buffett's Berkshire Hathaway had purchased 9.6 million shares in the past week. President Biden's continued talk of a raft of new proposals to reduce the price of gasoline has many saying it will not work but also a general tenor that the government may do what it takes to reduce oil prices. Additionally, the American Petroleum Instititute (API) released its weekly crude inventory figures on Wednesday, which surprised the market with a large rise in crude.

Also read: Walmart deep dive analysis & price target

Occidental Stock News: Inventory build overshadows Buffett

API's data on Wednesday showed a nationwide build of 5.6 million barrels. This was way off expectations for a decrease in inventory of more than 1.4 million barrels. In fact, analysts were off for the second week in a row. The prior week saw a build of some 736,000 barrels as analysts predicted a drop of 1.2 million barrels. Gasoline inventories also rose by 1.2 million barrels on the week. Gasoline refining has been one of the most important bottlenecks causing high prices at the pump.

The news came on the heels of President Biden sending a bill to Congress that would temporarily waive the federal gas tax to help reduce prices for consumers. A member of the opposition, John Thune, said the bill was "dead on arrival," but the more significant policy of the Biden administration has been releasing barrels from the US Strategic Petroleum Reserve (SPI). Just last week the government released 6.8 million more barrels. The President is intent on reducing the price of gasoline ahead of midterm elections in November.

Meanwhile, Occidental has gotten a lot of focus as news appeared last night that Berkshire Hathaway had purchased another 9.6 million shares of the independent major. The gigantic holding company, revered for its stock picks, spent approximately $529 million on the shares, which boosted its overall stake in OXY to 16.3%. This one is looking more and more like a long-term hold for Buffett rather than a strategic play. Berkshire now owns more than $8.5 billion of equity in the company, even though shares are down by a fifth since the peak in May.

Occidental Stock Forecast: OXY heading down at least to $52.

Simply put, OXY stock is offering a bad time to get in. OXY is nowhere near support, which sits all the way down at $48 or $42.34. On the other hand, since seeing its price collapse this month, OXY share price is now below two major sources of resistance. These are $58.75, which was quite significant back in March, and $63.56, which has been a touchstone in April and May. Additionally, the Moving Average Convergence Divergence (MACD) is showing a crossover in the wrong direction below the zero bound.

The FXStreet take is that this one will drift down to $52 before descending to $42.34 in the next few months. Recessions tend to have heavy effect on oil prices.

OXY daily chart

---