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Inside ExxonMobil’s Stock ahead of Its 3Q17 Earnings

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Dec. 4 2020, Updated 10:53 a.m. ET

XOM’s stock returns

ExxonMobil (XOM) stock has just recovered switching from negative to positive returns since July 3. Normally, integrated energy stocks show large positive correlations with crude oil prices, and so the overall rise in WTI (West Texas Intermediate) prices since July 3 has likely led ExxonMobil stock to deliver a positive return.

In the to-date period since July 3, WTI prices have been considerably influenced by Hurricane Harvey. The Hurricane, which hit Texas at the end of August, led to a surplus of crude oil inventories in the US market because ~30% of refining capacity in the US were impacted, leading to shutdowns or reduction in operating levels. This resulted in a drop in crude oil demand from the American refineries leading to an inventory build-up.

However, most of the refineries have now resumed operations with an aim to process crude oil at pre-hurricane levels. Now, the surplus inventories in the market have started diminishing, leading to a rise in oil prices.

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XOM stock recovers

At the end of July, XOM posted its 2Q17 earnings, which missed estimates, which led to a decline in the stock. ExxonMobil’s Beaumont and Baytown refineries experienced shutdowns due to Hurricane Harvey, and this could impact the Downstream refining volumes for XOM in its 3Q17 results. Due to lower-than-expected 2Q17 earnings and Hurricane Harvey, ExxonMobil stock fell until the end of August, but the stock has since recovered.

Compared with the SPDR S&P 500 ETF (SPY) 5.1% rise since July 3, ExxonMobil stock has returned 0.4% during the same period, underperforming the broader market. Total (TOT), Statoil (STO), and Petrobras (PBR) have risen 8.3%, 20.7%, and 29.4%, respectively, during the same period.

In the next part, we’ll discuss ExxonMobil’s moving averages.

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