Warren Buffett, the stock god, has made another move!
On February 14th local time, the latest data released by Berkshire Hathaway showed that Buffett increased his holdings of nearly 16 million Chevron shares in the fourth quarter of 2023. In addition, in early February this year, Buffett also increased his holdings in Western Oil for three consecutive trading days, purchasing a total of 4.3 million shares of the company's common stock.
Why does Buffett frequently increase his holdings in energy stocks? What will happen in the future of international oil prices?
Buffett has once again increased his holdings in energy stocks
On Wednesday, February 14th local time, Berkshire Hathaway, a subsidiary of Warren Buffett, submitted its 2023 Q4 13F report to the US Securities and Exchange Commission (SEC).
The latest data shows that Buffett increased his holdings of nearly 16 million Chevron stocks in the fourth quarter of 2023, reversing a series of reductions in the energy giant's stock holdings in previous quarters. As of the end of the fourth quarter of 2023, the top ten major holdings of Berkshire Hathaway were Apple, Bank of America, American Express, Coca Cola, Chevron, Western Oil, Kraft Heinz, Moody's, Davita Health, and Citigroup.
In addition to Chevron, Buffett also extended an olive branch to his old friend Western Oil this year.
Previously, on February 5th local time, Berkshire Hathaway submitted documents to the SEC showing that Berkshire Hathaway had increased its holdings in Western Petroleum for three consecutive trading days on February 1st, February 2nd, and February 5th, purchasing a total of 4.3023 million shares of Western Petroleum common stock for approximately $245.9 million, with an average price per share of $57.15. After adding positions, Berkshire Hathaway holds a total of approximately 248 million shares of Western Petroleum common stock, valued at approximately $14.1 billion.
As of the close on February 14th, Chevron's stock price rose slightly by 0.27% to $151.01; Western Oil's stock price fell slightly by 0.54% to $57.30.
In the industry's view, the continuously rising oil prices since the second quarter of 2020, as well as the expectation that the oil market will continue to face supply shortages in the future, are important reasons why the stock gods favor energy stocks.
What is the future of international oil prices?
However, with the latest data released by the US Energy Information Agency (EIA), international oil prices have recently fallen.
On February 14th local time, the US Energy Information Agency (EIA) released the latest data, stating that US crude oil inventories increased by 12.018 million barrels last week, setting a new record for inventory growth since the week of November 3rd last year. In addition, the latest announcement of API crude oil inventories in the United States for the week ending February 9 increased by 8.52 million barrels, far exceeding the expected 2.6 million barrels and a surge from the previous value of 674000 barrels, marking the largest increase since the week of November 17, 2023.
After the data was released, international oil prices fell in response. As of the close, WTI crude oil and Brent oil both fell more than 1%, falling below the $77/barrel and $82/barrel levels, respectively. Prior to this, international oil prices entered a phased upward cycle since December last year, with WTI crude oil rebounding from around $67 per barrel to around $77 per barrel, and Brent oil prices rising from around $72 per barrel to around $82.
Looking ahead to the future, will crude oil prices fall or continue to rise after a brief pullback?
According to Xiao Yu, an analyst at Dongwu Futures, after multiple rounds of production cuts, the current crude oil production in OPEC countries has decreased by 2.3 million barrels per day compared to its peak in 2022 (excluding the impact of Angola's withdrawal from the group). The United States has started to stabilize its reserves, and it is only a matter of time before the Federal Reserve and the European Central Bank cut interest rates. Macro level pressure on demand will gradually dissipate. Driven by many favorable factors and accompanied by a series of short-term sudden bullish factors, Brent oil prices only rose by $10 per barrel. To break the current situation and move upwards, oil prices require a global improvement, not just marginal or expected positive factors that can solve the problem. Of course, OPEC+countries are still insisting on reducing production and geopolitical risks in the Middle East region, which also make it difficult for oil prices to fall significantly. It is expected that the current position of oil prices will likely continue to fluctuate in the range.
But from a longer-term perspective, the industry believes that there will be a supply shortage in the crude oil market. Vicki Hollub, CEO of Western Oil Company, stated in a media interview on the day Buffett announced his increase in holdings of Western Oil that the oil market will face supply shortages by the end of 2025, and in a few years, oil supply will be very scarce. The reason why the oil market will face supply shortages is that the global crude oil reserve renewal speed is not fast enough.
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