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What’s the Stock Price Forecast for XOM, CVX, RDS.A, and BP?

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Feb. 13 2019, Updated 4:05 p.m. ET

Implied volatilities in integrated energy stocks

Implied volatilities in integrated energy stocks have declined in the first quarter. The fall in implied volatility in ExxonMobil (XOM) is the highest compared to peers BP (BP), Chevron (CVX), and Royal Dutch Shell (RDS.A).

Implied volatilities in ExxonMobil and Chevron have fallen by 11.9 percentage points and 9.3 percentage points, respectively, from January 1, 2019, to the current levels of 16.9% and 19.3%, respectively. The changes in implied volatilities are lower in the other two stocks. Implied volatilities in Shell and BP have fallen by 7.2 percentage points and 8.1 percentage points, respectively, in the same period. Implied volatilities in Shell and BP currently stand at 17.4% and 17.9%, respectively. Furthermore, Chevron is the highest compared to Shell, ExxonMobil, and BP, considering the absolute implied volatility levels.

If we consider their stock prices in the stated period, then BP stock has risen by 9.4%, the highest among peers. Also, Shell, ExxonMobil, and Chevron have increased by 5.3%, 6.3%, and 5.7%, respectively, since January 1.

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Forecasted price range for integrated energy stocks for the first quarter

Considering integrated energy stocks’ current implied volatilities and assuming a normal distribution of prices (bell curve model) and a standard deviation of one (with a probability of 68.2%), integrated energy stocks’ price could end within their upper and lower price limits in the first quarter ending on March 29, 2019.

As the above chart suggests, Chevron stock, which has the highest implied volatility, could have the most significant percentage gain or loss by the end of the first quarter. Chevron could close between $125.0 and $108.9 per share. In contrast, ExxonMobil could have the smallest gain or loss. ExxonMobil could close between $78.6 and $69.6 per share. BP could close between $44.9 per share and $39.5 per share, and Shell could close between $66.3 per share and $58.6 per share.

In the next part, we’ll review the dividend yields of integrated energy stocks.

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