Why Is Occidental Petroleum (OXY) Stock Up Today?

As a new week unfolds, oil and gasoline stocks continue to skyrocket. Both large and small cap stocks have been pushed into the green by rising oil prices, which recently hit $123 per barrel. One of last week’s winners is showing no signs of slowing down. Indeed, Occidental Petroleum (NYSE:OXY) surged by 40% last week. This week, the company has received more good news that is sending OXY stock shooting up even further.

A magnifying glass zooms in on the Occidental Petroleum (OXY) website.
Source: Pavel Kapysh / Shutterstock.com

What’s Happening With OXY Stock

In a recent letter to Berkshire Hathaway (NYSE:BRK-A) shareholders, Warren Buffett didn’t seem excited about about any market developments. However, this week brought a report that the firm had taken a $5 billion stake in Occidental, as per a U.S. Securities and Exchange Commission (SEC) filing. Clearly either Buffett or someone who works closely with him is quite excited about OXY stock, which has been trading well since.

The momentum has carried into this week. OXY stock rose 2% in premarket trading today. When markets opened, it shot up 0.47% within the first hour of trading. As of this writing, it is up 1.95% for the day and continues to rise quickly.

Why It Matters

“As Occidental was rallying, Berkshire was buying,” CNBC reports of last week’s events. That was certainly the case. The final three days of last week saw the company purchase over 61 million shares of OXY stock. Through that period, share prices ranged between $47.07 and $56.45, down from where they currently sit at $57.54. Additionally, the firm was already holding 29 million shares previously.

This type of investment is a pretty good endorsement for Occidental. Buffett is considered the most respected name in investing, and his firm has taken a long position in this company. This should be reassuring for investors who were having any doubts about the future of OXY stock.

Not that they have much reason to be skeptical right now. Oil prices hit a 13-year high recently, and although they’ve since come down, the boom is undeniable. Many experts are predicting that these growth trends will continue throughout the months to come. Occidental has been riding the wave since it began. As InvestorPlace contributor Chris MacDonald reported last week, the rising oil prices have helped the company start paying off large debt loads. More recently, Occidental received an outlook upgrade from Moody’s.

What It Means for OXY Stock

The last week has brought a steady stream of catalysts for OXY stock, perfectly positioning it to start rising and stay in the green. While the stock’s growth hinges on the price of oil, it’s clear that they will stay elevated at least for now. Buffett wouldn’t have increased a position in a stock that he thought was about to start falling.

An examination of the industry and geopolitical landscapes supports the argument that OXY stock is destined to keep rising. Surging oil prices are creating tremendous market momentum, and less powerful companies than Occidental are surging to impressive heights. A company that has established itself as a proven winner of the energy sector was already well positioned to stay in the green. The endorsement from Buffett will only help build investor confidence.

On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.


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