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This Warren Buffett stock just tumbled to 1-month low

This Warren Buffett stock just tumbled to 1-month low

As revealed by Q3 2023 securities filings, legendary investor Warren Buffett increased his holdings in Occidental Petroleum (NYSE: OXY), further solidifying Berkshire Hathaway‘s commitment to the energy giant. 

With consistent purchases in recent years, Buffett’s conglomerate now commands an impressive stake, nearing 28% of Occidental. 

Today, on January 8, the company’s shares experienced a notable decline at the market opening, reaching their lowest point in almost a month. 

What caused OXY’s drop?

At the time of writing, shares of OXY fell more than 2.5% at the opening bell on Monday to $57.43, the lowest since December 14. 

OXY 1-day price chart. Source: Finbold

The stock is now hovering above a near-term support around the $57.1 mark. Dropping below this level would pave the way for further declines toward $55.9, where the next support is located.

The dip was likely caused by a sharp decline in oil prices after Saudi Arabia, the world’s biggest oil producer, cut the February selling price of Arab Light crude to Asia, sending it to a 27-month low. 

Crude oil prices were already under pressure after a recent research survey found that OPEC oil output rose in December as increases in Angola, Iraq, and Nigeria offset continuing cuts by Saudi Arabia and other members of the OPEC+ alliance.  

Oil stocks were down across the board after the market opened, with ExxonMobil (NYSE: XOM), Chevron (NYSE: CVX), and BP (NYSE: BP) dropping 3.5%, 2.4%, and 2.5%, respectively.

Hedge funds bearish on oil 

The decline in oil prices is, in part, also linked to a significant sell-off in petroleum futures and options by hedge funds, especially those tied to crude oil. This trend is driven by concerns about the anticipated growth in oil consumption for 2024.

Hedge funds and other portfolio managers offloaded the equivalent of 66 million barrels in the six most important petroleum futures and options contracts in the week that ended on January 2. 

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