Crude Oil Dropping: Will It Return to $70 This Time?

Crude oil prices are back in the spotlight as market forces continue to push and pull. After reaching $79 per barrel last week, WTI crude oil has experienced three consecutive days of price declines. This volatility raises a key question: Will oil prices drop back to $70 per barrel, or is this a temporary setback?

Market Dynamics and Trump's Executive Order

The oil market is closely watching political developments. President Trump’s recent executive order addressing an energy emergency has stirred speculation that the U.S. may halt oil imports from Venezuela. This potential policy shift could have far-reaching effects on global oil supply dynamics. As oil import reductions loom, the U.S. could see a push to increase domestic production, impacting market prices and energy security.

My Investment in Occidental Petroleum (OXY)

Despite the market's short-term fluctuations, I am holding onto my Occidental Petroleum (OXY) shares because I have strong confidence in its long-term potential.

Occidental (OXY)

Here's why:

1. Finite Natural Resources: Oil is a finite natural resource, and while renewable energy sources are gaining traction, the demand for oil remains resilient across industries. I believe this positions OXY well for sustained relevance in the energy sector.

2. Berkshire Hathaway’s Confidence in OXY: Warren Buffett’s Berkshire Hathaway holds a significant position in Occidental Petroleum. Knowing that Buffett has confidence in OXY reassures me about my own investment. It suggests that the company has a solid foundation and long-term growth prospects.

3. Strong Financial Performance: OXY has consistently demonstrated strong financial performance. Its positive net income and solid earnings per share (EPS) over recent years reflect sound management and profitability, which further solidifies my trust in the company.

4. Stable Dividends: OXY provides stable dividends, which is an attractive feature for long-term investors like me. These dividends act as a buffer during market downturns and reinforce my decision to stay invested.

5. Future Growth Potential: Occidental has been proactive in positioning itself for the future, particularly through its investments in carbon capture and enhanced oil recovery technologies. These initiatives could become critical as the world moves toward balancing traditional energy needs with sustainability goals.

6. Geopolitical Trends Favoring Domestic Oil Production: Geopolitical developments often impact the oil industry. If U.S. policies increasingly favor domestic production to reduce reliance on foreign imports, companies like OXY stand to benefit significantly.

Oil Price Forecasts: Short-Term vs. Long-Term Perspectives

Although crude oil prices could potentially dip back to $70 per barrel due to short-term factors like fluctuating supply-demand balances or geopolitical events, I remain focused on the long-term outlook. OXY’s diversified operations and financial resilience mean it is well-equipped to weather temporary volatility.

Why I’m Staying the Course?

My decision to hold onto OXY shares reflects my long-term investment strategy. I believe that short-term oil price fluctuations are inevitable, but they don’t undermine the fundamental strength of the company.

With Berkshire Hathaway’s vote of confidence, a strong financial track record, and stable dividends, I’m confident that OXY remains a solid addition to my portfolio. As the world navigates the energy transition and continues to depend on oil in various sectors, I see OXY as well-positioned to thrive in the years ahead.

In summary, while crude oil prices may face short-term downward pressure, my investment in Occidental Petroleum is built on a foundation of confidence in the company’s long-term potential, regardless of the current market noise.