Exxon Mobil (XOM) retreats after Wednesday surge on OPEC+ cuts uncertainty
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UNLOCK OFFER- XOM stock rallied 4% on OPEC+ supply cut.
- OPEC+ agreed to cut production by 2 million barrels per day.
- There is confusion about how the oil barrel production cuts will be implemented.
- Exxon Mobil stock is nearing a multi-month high.
Exxon Mobil (XOM) shares added 4% to close at $99.12 on Wednesday after OPEC+ agreed to cut production by 2 million barrels a day. XOM stock has given up 0.9% in Thursday's premarket though as critics wonder whether the cuts will really be carried out.
Exxon Mobil stock news
When the news was announced on Wednesday morning, Brent crude shot up from $90.44 to above $93. Bulls could not push the price to $94, however, and oil sold off below $93 later in the day. The US government was unhappy with the cuts and, according to The Wall Street Journal, is considering easing sanctions on Venezuela to allow for more oil exports. These exports would heavily favor Chevron (CVX) though, not Exxon. Additionally, the Biden administration may sell more oil from its strategic petroleum reserve or SPR.
The critics have begun all but ignoring the headline figure, however. They say that OPEC+ has already been underproducing its target for months and that the actual physical cut will not likely amount to much. An executive from Velandera Energy Partners was vocal about this way of thinking, specifying that his company thinks only 1 million barrels will even be cut. Goldman Sachs was even more defensive, saying the cuts would not top half a million.
In August, the oil cartel missed its target by as much as 3 million barrels a day. However, Goldman has been bullish on commodities for months and said it expects Brent to rebound to $110 this quarter. JPMorgan has a price target of $100 on oil. Both prices would buoy the Exxon Mobile share price.
The cuts are scheduled to go into effect in November, and both Saudi Arabia and Russia are expected to cut 526,000 barrels a day from their current target of just over 11 million barrels a day. Saudi only produced 10.9 million barrels in August, however, so some of these cuts are just accounting changes regardless.
"Other OPEC producers, such as Angola, Congo, Equatorial Guinea, and Nigeria, are already producing below their reduced November quotas, and as such, will not be required to cut production further," according to a report from OilPrice.com.
Exxon Mobil stock forecast
Two things stick out from the 1-day chart below for XOM stock. First, traders will note the Moving Average Convergence Divergence has crossed over and turned bullish. The second thing to notice is that XOM is already at or near resistance. On Wednesday, Exxon stock gave up right at the $100 level. It would be easy to say that this was just a psychological boundary, but XOM also faced difficulty here back between August 25 and 29. On the last day of that streak, it made it up to $101.56 but was pushed down before the close. Wednesday's close was also right in line with the high from September 12.
The high at $105.57 back on June 8 was a decade-long high. It beat out the high from the summer of 2014 at $104.76, but again XOM could not hold this level for long. A likely pattern would see XOM drop back to support at just above $86 from August or $84 from late September before making a run at the June high.
XOM daily chart
- XOM stock rallied 4% on OPEC+ supply cut.
- OPEC+ agreed to cut production by 2 million barrels per day.
- There is confusion about how the oil barrel production cuts will be implemented.
- Exxon Mobil stock is nearing a multi-month high.
Exxon Mobil (XOM) shares added 4% to close at $99.12 on Wednesday after OPEC+ agreed to cut production by 2 million barrels a day. XOM stock has given up 0.9% in Thursday's premarket though as critics wonder whether the cuts will really be carried out.
Exxon Mobil stock news
When the news was announced on Wednesday morning, Brent crude shot up from $90.44 to above $93. Bulls could not push the price to $94, however, and oil sold off below $93 later in the day. The US government was unhappy with the cuts and, according to The Wall Street Journal, is considering easing sanctions on Venezuela to allow for more oil exports. These exports would heavily favor Chevron (CVX) though, not Exxon. Additionally, the Biden administration may sell more oil from its strategic petroleum reserve or SPR.
The critics have begun all but ignoring the headline figure, however. They say that OPEC+ has already been underproducing its target for months and that the actual physical cut will not likely amount to much. An executive from Velandera Energy Partners was vocal about this way of thinking, specifying that his company thinks only 1 million barrels will even be cut. Goldman Sachs was even more defensive, saying the cuts would not top half a million.
In August, the oil cartel missed its target by as much as 3 million barrels a day. However, Goldman has been bullish on commodities for months and said it expects Brent to rebound to $110 this quarter. JPMorgan has a price target of $100 on oil. Both prices would buoy the Exxon Mobile share price.
The cuts are scheduled to go into effect in November, and both Saudi Arabia and Russia are expected to cut 526,000 barrels a day from their current target of just over 11 million barrels a day. Saudi only produced 10.9 million barrels in August, however, so some of these cuts are just accounting changes regardless.
"Other OPEC producers, such as Angola, Congo, Equatorial Guinea, and Nigeria, are already producing below their reduced November quotas, and as such, will not be required to cut production further," according to a report from OilPrice.com.
Exxon Mobil stock forecast
Two things stick out from the 1-day chart below for XOM stock. First, traders will note the Moving Average Convergence Divergence has crossed over and turned bullish. The second thing to notice is that XOM is already at or near resistance. On Wednesday, Exxon stock gave up right at the $100 level. It would be easy to say that this was just a psychological boundary, but XOM also faced difficulty here back between August 25 and 29. On the last day of that streak, it made it up to $101.56 but was pushed down before the close. Wednesday's close was also right in line with the high from September 12.
The high at $105.57 back on June 8 was a decade-long high. It beat out the high from the summer of 2014 at $104.76, but again XOM could not hold this level for long. A likely pattern would see XOM drop back to support at just above $86 from August or $84 from late September before making a run at the June high.
XOM daily chart
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