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Are Lower Oil Prices Weighing on ExxonMobil Stock?

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Jun. 19 2019, Updated 3:32 p.m. ET

ExxonMobil stock falls

ExxonMobil (XOM) stock has fallen 7.1% in the second quarter so far. Let’s review ExxonMobil’s stock performance in comparison to oil price changes and equity market movements in the quarter.

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Oil prices and equity markets

In the current quarter, prices of WTI crude oil have fallen 13.7% driven by the expectation of a demand-supply mismatch. The International Energy Agency has reduced its oil demand growth estimates for 2019. Oil inventories in the US have also been rising. Thus, the possibility of a supply glut in 2019 is affecting oil prices.

However, the US equity market, which was weaker earlier in the quarter, is now recovering. The market fell in May led by US-China trade tensions and issues between the US and Mexico. However, in June, sentiments improved on the expectation of an interest rate cut by the Federal Reserve. The US-Mexico trade issues also subsided, further strengthening the market. The SPDR S&P 500 ETF (SPY) has risen 2.4% in the second quarter so far.

ExxonMobil’s first-quarter earnings

ExxonMobil’s first-quarter earnings were weak and missed Wall Street’s earnings estimates, affecting its stock. For more information, read ExxonMobil’s Upstream and Downstream Earnings Fell in Q1.

In short, ExxonMobil stock has fallen due to the fall in oil prices and its lower-than-expected first-quarter earnings results partially offset by the rise in the equity market.

Peers’ performances

BP (BP), Total (TOT), and Chevron (CVX) have fallen 7.5%, 5.4%, and 1.5%, respectively, in the current quarter. Suncor Energy (SU) and Eni (E) have fallen 4.2% and 12.1%, respectively, in the second quarter so far.

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