Exxon Mobil Stock Under Pressure Following Crude Price Decline
Exxon Mobil is bracing for a challenging fourth quarter as falling crude oil prices could significantly impact its earnings. In a recent regulatory filing ahead of its Q4 earnings release on January 30, the company projected that dropping crude prices may slash upstream profit by $800 million to $1.2 billion. Investors are closely watching these projections as they could signal similar struggles for other energy stocks during the upcoming earnings season.
Crude Prices Mark Steep Declines
For 2024, crude oil prices suffered their steepest annual drop since 2020. Brent crude fell by 19%, while West Texas Intermediate (WTI) dropped nearly 20%. This marked the third consecutive year of losses, a record-breaking streak driven by oversupply fears and tariff pressures.
Despite these challenges, downstream operations may offer some relief. Exxon anticipates that refining margins could improve Q4 earnings by $300 million to $700 million, partially offsetting upstream losses. However, natural gas price volatility adds an additional layer of uncertainty, with projections ranging from a $300 million loss to a $100 million gain in upstream profits.
Restructuring Costs Create Additional Headwinds
Compounding the pressure, Exxon has announced restructuring initiatives aimed at enhancing long-term profitability. While these moves reflect the company’s strategy to weather oil price fluctuations, they are expected to incur ~$200 million in expenses for the quarter, further impacting the bottom line.
What Wall Street Expects
Wall Street analysts anticipate adjusted Q4 earnings of $1.66 per share. Exxon’s Q4 results will serve as a key indicator of its ability to navigate recent challenges, with implications for the broader energy market.
Investment Insight
With Exxon Mobil’s stock receiving a Moderate Buy rating from analysts and an average price target of $132.76, representing a potential 12.05% upside, this could be an opportunity for investors willing to weather short-term uncertainties for long-term gains. The company’s January 30 earnings report will provide critical insights into its performance amid one of crude oil’s toughest years in recent history.
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