Chevron And XLE: $40 Oil Could Be A 2023 Black Swan

Summary:

  • Human nature loves confirmatory evidence, but investing is all about looking for counterarguments proactively.
  • As Charles Munger advised, we should comment on a topic until we are able to argue against ourselves better than folks on the opposite side.
  • I have been a long-term bull for the energy sector since 2021 and am still bullish.
  • In this article, I will argue against myself and analyze the impact of a potential 2023 black swan: $40 dollar oil price.
  • I will evaluate the impacts on both the sector represented by the Energy Select Sector SPDR Fund and a sector leader, Chevron.

Black swan event (finance and money)

by Martin Nancekievill

Thesis

Eric Robertsen, the lead strategist at Standard Chartered Bank, outlined a few possible black swan events for 2023 in December 2022. And one of the top possible surprises in his mind is oil price plummeting to the $40

oil price

Source: Author based on Yahoo! data

SPR

Source: EIA.gov

oil stocks

Source: YCharts data

oil imports

Source: EIA.gov

sectors

Source: Author based on Seeking Alpha data

XLE

Source: Seeking Alpha data

XLE vs CVX

Source: Author based on Yahoo! and Seeking Alpha data

XLE vs CVX

Source: Portfoliovisualizer.com


Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.


As you can tell, our core style is to provide actionable and unambiguous ideas from our independent research. If your share this investment style, check out Envision Early Retirement. It provides at least 1x in-depth articles per week on such ideas.

We have helped our members not only to beat S&P 500 but also avoid heavy drawdowns despite the extreme volatilities in BOTH the equity AND bond market.

Join for a 100% Risk-Free trial and see if our proven method can help you too.

Leave a Reply

Your email address will not be published. Required fields are marked *