Sankey Research Lead Analyst Paul Sankey joins Yahoo Finance Live to discuss oil prices, investor sentiment, the expectations for Chevron’s earnings, and the outlook for the oil space.

Video Transcript

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BRAD SMITH: One story that we're also focusing on to begin the week, energy markets wavering in the start of the year over concerns about lowering demand. This is as the market considers shocks, like China's snap post-COVID reopening, and as fears of an energy crunch in Europe diminish. Stocks like Chevron and Warren Buffett favorite Occidental Petroleum watching for more free cash flow on the back of higher oil prices. For more on the outlook for oil, let's get to Sankey Research's Oil, Gas Equity Research Analyst Paul Sankey.

Paul, great to speak with you here this morning. First and foremost, when we think about Chevron here and the analyst day that's ready to take place-- the investor day ready to take place-- ahead of this event, there are a lot of people that are going to be looking back to 2022 returns and saying, "Hey, we moved higher by more than 100% this year, net lower." So what do you expect the company to signal in terms of the tone and what the market environment is like?

PAUL SANKEY: I think it's going to be about buyback. You know, the company has said that they've increased the authorization to $75 billion, which obviously is a huge amount of money. Now, that's over several years. But my expectation going into the meeting tomorrow is that they'll probably increase the buyback for this year to $20 billion, which really is how you drive these low-growth companies higher and get cash back to shareholders as good returns.

BRAD SMITH: Certainly. And within the broader energy space here, I mean, we're coming off of it. We'd be remiss if we didn't mention, of course, Occidental Petroleum, one of their new favorite fans and Warren Buffett. And we're coming off of a big weekend for Buffett and the shareholder letter that really rocked some elements of the larger market when it comes to buybacks that you were talking about a moment ago here. So for Occidental, for the larger energy space here, can they expect the same type of fanfare that we had seen from Buffett in 2022 to remain persistent, or even move forward and elevate even more from the levels we had seen last year?