While things haven’t been looking great for the petroleum industry right now, oil stock Occidental Petroleum (NYSE:OXY) is on the upswing. That’s partly connected to a recent major buy from Warren Buffett’s conglomerate, Berkshire Hathaway (NYSE:BRK.B), which sent shares up over 2% in Tuesday afternoon’s trading.
Berkshire Hathaway stepped in to pick up another 4.3 million shares of Occidental, which had a combined market value of around $246 million at the time of purchase. Interestingly, Berkshire bought in right about the same time that share prices declined somewhat, down 1.2% against this time last year. But some investors are treating this as a buying opportunity, and that seems to be the case with Berkshire. In fact, right now, Berkshire holds a combined total of around 248 million shares of Occidental stock, valued at about $14 billion.
Really Good Timing?
Buying in on Occidental may have been a really good play, after all. Just yesterday, Occidental’s CEO, Vicki Hollub, came out and noted that the market would face a supply shortage of crude oil. That’s actually quite interesting because back in both October and November, we were hearing stories about a demand slump in crude that was pushing prices down. Now, Hollub believes that there will be a supply shortage because crude reserves aren’t being replaced fast enough. Hollub also notes that around 97% of the oil that’s being produced today was discovered over 25 years ago.
Is Occidental Petroleum a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on OXY stock based on seven Buys and 10 Holds assigned in the past three months, as indicated by the graphic below. After a 9.02% loss in its share price over the past year, the average OXY price target of $68.40 per share implies 17.81% upside potential.
