With Light Crude Oil and Brent Oil 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 and weekly supply imbalances being created and respected for months as can be seen in the attached weekly timeframe supply and demand technical analysis underneath.
Another strong weekly supply imbalance has been created around $59 per share, there is a clear long term short bias right now, no signs of a retracement or a correction yet. Sometimes the strength of the new impulses and imbalances is so strong that it takes some time for price to correct. That’s just how trading works, you must patiently wait for the Exxon Mobil textbook opportunities in your trading plan to happen and trade them blindly if the conditions still apply when price tests those new imbalances.
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.
As supply and demand traders, we should not care much if Oil plunges after fails to reach a deal, or the existing oil wars and fights existing between Opec, Russia, Arab countries and the US. Oil is trading lower after Saudi Arabia slashed crude oil prices, but if we take a look at British Petroleum weekly timeframe we will see that it was the most likely direction the oil related stock could move since we had weekly supply in control and a clear downtrend and bearish bias.
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