Exxon Mobil Corporation #XOM Exxon explores for and produces crude oil and natural gas. As of December 31, 2018, it had approximately 24,696 net operated wells with proved reserves of 24.3 billion oil-equivalent barrels.
With Light Crude Oil and Brent dropping like a rock, many oil related stocks like Exxon Mobil Corporation have been showing a bearish directional bias with long term shorts and new monthly supply imbalances being created and respected for months as can be seen in the monthly timeframe supply and demand technical analysis below.
New monthly supply level is in the making at #1, not confirmed yet. Shorts are not possible right now, we need a bigger retracement and only if that monthly bearish impulse is able to hold and have price staying far away from it for some time. If price returns very fast to the origin of the move without doing that, shorts are not a good idea. We need the picture similar to prior monthly supply at #2.
We read about “buy” recommendations not long ago, that was crazy! Those recommendations were probably focused on the price of oil as the reason the share price is down, with an assumption that it will go back up. Cray stuff if you lean purely on fundamentals and earnings, everything is pointing down and downtrending, why buy this stock? Think about it! It is all about the XOM price (cheap in the eyes of those urging “buy”) and an assumption that the price of oil is almost the only relevant determinant of future success of XOM.
Two major negatives for Exxon Mobil Corporation currently are competition from renewables and new focus on the climate emergency. Investors might think hard before they assume that the new 10-year low for Exxon Mobile XOM share price is where the slide stops.
Using a supply and demand strategy and applying the core concepts on Exxon Mobile yields another outcome. Monthly is downtrending, new supply level being created on the monthly timeframe around $68 per share as a continuation of a monthly downtrend and created also as a continuation of prior monthly supply imbalance from $80 per share.
The price of crude oil and Brent may recover (or it may not) but decarbonization of energy and transport is happening and this means less oil and gas. XOM is faced with not one, but two dramatic and game-changing events that are rapidly unfolding. The first one is that Oil and gas are becoming uncompetitive, and the second one is that there is a climate emergency and need to decarbonize.
Who cares about those two? It’s sad to say but that has nothing to do with market structure, monthly is in a downtrend, new monthly supply imbalances are being created, only shorts are allowed. No need to pay attention to any fundamental analysis or predictions.
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