) hit a 52-week low of $86.60 on Dec 12. The fall came after West
Texas Intermediate (WTI) crude dipped further when oil fell to
levels of around $57 per barrel, the lowest since Jul 16, 2009.
What Led to the Share Price Decline?
It has been an over-supplied oil market especially in the face
of lackluster global demand. Plentiful supply of shale oil owing to
shale revolution in the U.S has been dragging the WTI crude prices
since August this year. On top of that, the international cartel of
oil producers' - Organization of the Petroleum Exporting Countries
(OPEC) - decision against an oil production cut made the price fall
to around $40 per barrel and added fuel to the persistent slide on
Moreover, Morgan Stanley - a U.S. investment bank - recently
declared in a report that oil price may fall further in 2015.
These dealt a blow to ExxonMobil which has extensive upstream
operations. The exploration and production activities especially in
the weak crude pricing scenario are not profitable. Hence,
investors reacted negatively and the share price of the company
The weak crude pricing environment during July to September this
year also affected ExxonMobil's third-quarter results. The
company's Upstream operations reported quarterly earnings of $6.4
billion, down $297 million year over year. The decrease stemmed
from lower realizations, partly compensated by a favorable volume
mix. Production averaged 3.831 million barrels of oil-equivalent
per day (MMBOE/d), down 4.7% year over year. Liquid production
decreased 6.1% year over year to 2.065 million barrels per day.
ExxonMobil currently has a Zacks Rank #3 (Hold). Better-ranked
players in the energy sector include Sandridge Mississippian Trust
), Seadrill Partners LLC (
) and InterOil Corp. (
). Each of these stocks sports a Zacks Rank #1 (Strong Buy).
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