ExxonMobil’s stock returns
Previously, we examined ExxonMobil’s (XOM) segment-wise outlook for 4Q17. In this part, we’ll review ExxonMobil’s stock performance before its 4Q17 results. Since October 2, 2017, ExxonMobil stock has recovered, switching from negative to positive returns.
WTI price trends
Normally, integrated energy stocks correlate positively with crude oil prices. Since October 2, WTI (West Texas Intermediate) prices have risen 25%, likely due to production cuts and strong demand. US oil inventories have fallen 33% from their peak, and high production cut compliance is further denting the global oil supply. For more oil price analysis, read What Could Reverse the Trend in Crude Oil Prices in 2018?
ExxonMobil stock returns
WTI’s price rise since October 2 has likely supported ExxonMobil stock. Also, as we discussed in the first part of this series, XOM posted better-than-expected 3Q17 earnings in 4Q17. Furthermore, tax reform could result in savings for ExxonMobil, which could affect its financial position. A tax reform bill signed in December 2017 cut the corporate tax rate to 21%.
However, ExxonMobil stock, with a 6.8% return, has underperformed the SPDR S&P 500 ETF (SPY). SPY has risen 11.1% since October 2, and Total (TOT), Statoil (STO), and Petrobras (PBR) have risen 8.5%, 15.7%, and 20.8%, respectively. In the next part, we’ll look at how ExxonMobil’s moving averages are trending.