Did Warren Buffett Whiff On Occidental Petroleum? Maybe Not As OXY Flashes Signs Of Technical Strength

Occidental Petroleum (OXY) is showing signs of a rebound, with the stock up nearly 9% over the past month and exhibiting bullish technical indicators, despite remaining below its 200-day simple moving average; positive MACD and RSI signals suggest building momentum. Beyond technicals, Occidental anticipates generating $1.5 billion in incremental annual free cash flow by 2027, even without factoring in oil price movements, supporting Warren Buffett's long-term investment thesis.

Analysis

Occidental Petroleum (OXY) is exhibiting signs of a technical rebound after a challenging year where its shares declined 27%, trading below Warren Buffett's average cost basis of $54.20. Over the past month, OXY has recovered nearly 9%, with its current price of $45.49 surpassing its eight-day ($45.26), 20-day ($43.14), and 50-day ($41.53) simple moving averages, indicating a shift towards a strongly bullish short-term trend. However, the stock remains below its long-term 200-day SMA of $47.67. Technical indicators support this emerging momentum, with a Moving Average Convergence Divergence (MACD) at 1.06 and a Relative Strength Index (RSI) of 61.52, suggesting building strength with further room before becoming overbought, albeit with some mild selling pressure present. Fundamentally, Occidental's long-term outlook, which likely underpins Buffett's $12 billion investment, is supported by projections of $1.5 billion in incremental annual free cash flow by 2027, irrespective of oil price fluctuations, further bolstered by its carbon capture and storage (CCS) initiatives.

Key Decisions for Investors

• Investors should acknowledge the positive shift in OXY's technical posture, evidenced by the break above key short-to-medium term moving averages and supportive MACD and RSI readings, while noting it still trades below the critical 200-day SMA.
• Consider the potential for further appreciation if the current technical momentum aligns with the company's fundamental projection of $1.5 billion in incremental annual free cash flow by 2027 and progress in its CCS projects.
• Monitor for a decisive break above the 200-day SMA ($47.67) as a confirmation of a stronger uptrend, but remain cognizant of existing mild selling pressure and potential for volatility inherent in such recovery plays.