Oil prices are pulling back, so XOM may find it harder to rise this week
Oil prices are heading lower again, and I think XOM is more likely to fluctuate and pull back this week too. Expectations for oil-selling profits have lost some support, and OPEC+ maintaining its production plan cannot be treated as fresh bullish news from a production cut. This is about ExxonMobil stock listed on the NYSE.
Between 19:58 and 19:59 Beijing time, NYMEX Brent crude futures were around $97.84 a barrel, down about 2.5% from the previous session’s close. WTI was around $87.23, with a similar decline. At 20:05, XOM was quoted at $162.80 in premarket trading, about 0.7% below yesterday’s close. That premarket drop is nothing major, and certainly doesn’t mean the stock has already fallen by the close tonight.
On October 4, seven OPEC+ countries decided to maintain November production at the level called for in September. Not increasing production doesn’t mean they’ve made another cut, and this arrangement doesn’t prove that actual exports have fallen. Reuters reported today that Middle East exports remain resilient and supply concerns have eased somewhat. I’m more focused on the fact that oil prices are already falling; maintaining production alone isn’t enough to make me bullish on XOM.
In its latest second-quarter results, XOM reported adjusted total earnings of $14.680 billion, with $9.189 billion coming from upstream operations—about 60%. Drilling for and selling oil remain its main sources of profit. If oil prices keep falling, then, with production, costs, and other conditions broadly unchanged, the amount earned per barrel will decline, and market expectations for future profits are more likely to be revised downward. That’s the main reason I expect the stock to pull back this week. There’s no way to calculate how much the share price should fall just from a 2.5% drop in oil prices.
The refining business can provide a cushion, but cheaper crude doesn’t necessarily mean refining will become more profitable. It also depends on whether gasoline and diesel prices fall along with crude, and how much of a spread remains over raw material costs. We can’t assume that all the upstream earnings lost will be made up elsewhere.
Supply risks remain the biggest variable. Reuters quoted Tim Waterer, an analyst at KCM Trade, as saying that oil prices will remain supported without a diplomatic breakthrough or further improvements in export efficiency. I agree that this is a valid counterargument. If renewed export disruptions are confirmed and oil prices recover the losses of the past two days, I’ll turn bullish on XOM again.
Second-quarter earnings were indeed impressive, but that money has already been earned. Oil prices are falling now, so we shouldn’t rely on the last earnings report to expect the stock to keep rising this week.
#XOM #美股 #CrudeOil
Oil prices are heading lower again, and I think XOM is more likely to fluctuate and pull back this week too. Expectations for oil-selling profits have lost some support, and OPEC+ maintaining its production plan cannot be treated as fresh bullish news from a production cut. This is about ExxonMobil stock listed on the NYSE.
Between 19:58 and 19:59 Beijing time, NYMEX Brent crude futures were around $97.84 a barrel, down about 2.5% from the previous session’s close. WTI was around $87.23, with a similar decline. At 20:05, XOM was quoted at $162.80 in premarket trading, about 0.7% below yesterday’s close. That premarket drop is nothing major, and certainly doesn’t mean the stock has already fallen by the close tonight.
On October 4, seven OPEC+ countries decided to maintain November production at the level called for in September. Not increasing production doesn’t mean they’ve made another cut, and this arrangement doesn’t prove that actual exports have fallen. Reuters reported today that Middle East exports remain resilient and supply concerns have eased somewhat. I’m more focused on the fact that oil prices are already falling; maintaining production alone isn’t enough to make me bullish on XOM.
In its latest second-quarter results, XOM reported adjusted total earnings of $14.680 billion, with $9.189 billion coming from upstream operations—about 60%. Drilling for and selling oil remain its main sources of profit. If oil prices keep falling, then, with production, costs, and other conditions broadly unchanged, the amount earned per barrel will decline, and market expectations for future profits are more likely to be revised downward. That’s the main reason I expect the stock to pull back this week. There’s no way to calculate how much the share price should fall just from a 2.5% drop in oil prices.
The refining business can provide a cushion, but cheaper crude doesn’t necessarily mean refining will become more profitable. It also depends on whether gasoline and diesel prices fall along with crude, and how much of a spread remains over raw material costs. We can’t assume that all the upstream earnings lost will be made up elsewhere.
Supply risks remain the biggest variable. Reuters quoted Tim Waterer, an analyst at KCM Trade, as saying that oil prices will remain supported without a diplomatic breakthrough or further improvements in export efficiency. I agree that this is a valid counterargument. If renewed export disruptions are confirmed and oil prices recover the losses of the past two days, I’ll turn bullish on XOM again.
Second-quarter earnings were indeed impressive, but that money has already been earned. Oil prices are falling now, so we shouldn’t rely on the last earnings report to expect the stock to keep rising this week.
#XOM #美股 #CrudeOil
