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NY Crude Oil Futures »» Weekly Summary Analysis
By: Marty Armstrong | August 3, 2024
NY Crude Oil Futures closed today at 7352 and is trading up about 2.60% for the year from last year's settlement of 7165. Caution is required for this market is starting to suggest it could now decline on the MONTHLY level. Factually, this market has been rising for this month going into August reflecting that this has been only still, a bullish reactionary trend. As we stand right now, this market has made a new low breaking beneath the previous month's low reaching thus far 7297 while it's even trading beneath last month's low of 7459.
Up to now, we still have only a 1 month reaction rally from the low established during June. We must exceed the 3 month mark in order to imply that a trend is developing.
ECONOMIC CONFIDENCE MODEL CORRELATION
Here in NY Crude Oil Futures, we do find that this particular market has correlated with our Economic Confidence Model in the past. The Last turning point on the ECM cycle low to line up with this market was 2020 and 2009 and 2001 and 1998 and 1994. The Last turning point on the ECM cycle high to line up with this market was 2022 and 2018 and 2011 and 2000.
MARKET OVERVIEW
NEAR-TERM OUTLOOK
The historical broader tone of the NY Crude Oil Futures has been a bearish consolidation following the high established back in 2008. Since then, this market has created 2 reaction highs which have been unable to break this overall protracted bearish consolidating trend. Still, the major low was made in 2023 and the market has bounced back for the last year. The last Yearly Reversal to be elected was a Bullish at the close of 2023.
This market remains in a positive position on the weekly to yearly levels of our indicating models. Nevertheless, it closed last year on the weak side down from 2022. Pay attention to the Monthly level for any serious change in long-term trend ahead.
The perspective using the indicating ranges on the Daily level in the NY Crude Oil Futures, this market remains in a bearish position at this time with the overhead resistance beginning at 7459.
On the weekly level, the last important high was established the week of July 1st at 8452, which was up 4 weeks from the low made back during the week of June 3rd. We have seen the market drop sharply for the past week penetrating the previous week's low and it closed beneath that low which was 7604. This was a very bearish technical indicator warning that we have a shift in the immediate trend. We are trading below the Weekly Momentum Indicators warning that the decline is very significant and we need to pay attention to the timing and reversals. When we look deeply into the underlying tone of this immediate market, we see it is currently still in a semi neutral posture despite declining from the previous high at 8452 made 4 weeks ago. Still, this market is within our trading envelope which spans between 6563 and 9177.
Looking at this from a broader perspective, this last rally into the week of July 1st reaching 8452 failed to exceed the previous high of 8767 made back during the week of April 8th. That rally amounted to only twelve weeks. Right now, the market is below momentum on our weekly models casting a bearish cloud over the price action. Looking at this from a wider perspective, this market has been trading up for the past 8 weeks overall.
INTERMEDIATE-TERM OUTLOOK
YEARLY MOMENTUM MODEL INDICATOR
Our Momentum Models are declining at this time with the previous high made 2021 while the last low formed on 2023. However, this market has declined in price with the last cyclical low formed on 2023 warning that this market remains weak at this time on a correlation perspective declining in both price and Momentum.
Looking at the longer-term monthly level, we did see that the market made a high in April at 8767. After a four month rally from the previous low of 8070, it made last high in April. Since this last high, the market has corrected for four months. However, this market has held important support last month. So far here in August, this market has held above last month's low of 7459 reaching 7459.
Some caution is necessary since the last high 8767 was important given we did obtain two sell signals from that event established during April. That high was still lower than the previous high established at 9503 back during September 2023. Critical support still underlies this market at 6760 and a break of that level on a monthly closing basis would warn of a further decline ahead becomes possible. Nevertheless, at this time, the market is still weak trading beneath last month's low.
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4 weeks ago
2 Oil Stocks to Watch Amid Presidential Race, Earnings
By: Schaeffer's Investment Research | July 29, 2024
• Chevron and Exxon Mobil will report earnings on Friday, Aug. 2
• Wall Street is weighing how a new president will impact the energy sector
The presidential race is heating up, with Vice President Kamala Harris now the likely Democratic nominee against former President Donald Trump. Investors have been weighing the implications either leadership may have on the energy sector, especially as both Chevron Corp (NYSE:CVX) and Exxon Mobil Corp (NYSE:XOM) prepare to report second-quarter earnings before the open on Friday, Aug. 2.
Chevron stock was last seen down 1.7% to trade at $155.25. Shares ran into resistance at the $164 level earlier this month, while the 80-day moving average also emerged as a level of pressure in the subsequent pullback. CVX is today looking snap a three-day win streak, but still sports a slim year-to-date lead.
Exxon Mobil stock is struggling as well, down 1.1% to trade at $116.03 at last check. While the $120 level has capped rallies since April, the 40-day moving average helped shares bounce. XOM appears to be finding new resistance at $118, but is still up 15.9% this year.
CVX has a solid history of post-earnings reactions, but it could go either way for XOM. The former finished five of the last eight next-day sessions higher, while the latter was lower in the last four.
Regardless of direction, Chevron and Exxon Mobil shares averaged 3.3% and 2.2% moves in the past two years, respectively. This time, the options pits are pricing in a bigger-than-usual swings of 3.8% for CVX, and 3.5% for XOM.
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1 month ago
Why Exxon Is the Top Holding in an Energy Transition Fund
By: Barron's | July 10, 2024
Beauty is in the eye of the beholder. So too, at times, is sustainability.
Big energy companies have long been seen as antithetical to the transition away from fossil fuels toward more green energy solutions. That's a justifiable position, given these players for years actively worked against climate change action and suppressed information about the issue, prioritizing their own carbon-emitting business model over science and popular support for renewable energy.
However, even if aggressive action were taken to move the world toward more options, like wind and solar, some oil and natural gas would remain in use; in addition, making the switch is a costly one. In that regard, some investors may see big oil as a necessary partner, even if they remain wary of "green-washing" campaigns to try to rehabilitate its image.
That backdrop makes it easier to understand why Exxon Mobil is the largest position in the Hennessy Energy Transition Fund, which also counts ConocoPhillips and Chevron among its top 10 holdings.
Barron's recently spoke with one of its portfolio managers, Ben Cook, to discuss how companies like Exxon fit with the fund's mandate, and he notes that Exxon "is pursuing practical pathways to transition."
That includes things like carbon capture and storage and lithium extraction for batteries. Cook notes that the company's priorities have remained firmer than others: "Unlike some of its peers that are now reversing course on some renewable endeavors, Exxon is taking a reasonable approach that remains shareholder-focused and should continue providing solid returns during the move to more climate-friendly fuels."
Exxon's balance between shareholder interest and its renewable initiatives speaks to how the fund seeks to identify companies that can handle both, given that some companies that may lead the energy transition and be truly revolutionary aren't always the best bet from an investor standpoint.
Likewise, the Exxon's deep pockets mean that its renewable projects aren't beholden to the political situation, be that tariffs or tax credits, which can often hamper smaller operators.
Cook highlights the company's ongoing, long-term commitment to lithium, which management has spoken publicly about, even in the face of lithium price weakness — a headwind to pure play companies in the arena, like Albemarle. "Exxon's integrated business model provides stability during times of price volatility as financial results of varying/different business units tend to offset one another, ultimately providing for consistency in financial results through the cycle."
He argues that the shares, which change hands for about 12 times forward earnings, are attractive, and that the company has the wherewithal to continue pursuing renewables from multiple angles (rather than focusing on just solar, for example, as some smaller companies do). "Exxon's total capital expenditures in 2023 were around $23 billion," he says, so committing a sum like $100 million to a green energy project is like "a rounding error" for the company.
ESG, which stands for environmental, social, and governance, has grown in popularity in the investing community, but there aren't any hard and fast criteria for what makes a company fall into this category. For example, one ESG-focused fund may include a company like Philip Morris International, given that it's a leader in reduced-risk tobacco products, while another may exclude it because it still sells traditional cigarettes.
Given the latitude with which investors and funds can judge ESG, it's easier to see how Exxon could be considered under this umbrella.
Cook says that focus on ESG could help motivate Exxon to continue to fund greener products, as the company clearly "has an incentive to broaden the company's appeal with investors that place emphasis on clean energy initiatives. While selling pressure associated with mandates to shed fossil fuel exposure seem to have reached a peak, attracting new investor capital obviously remains a key focus for any integrated oil company and Exxon's pursuit of low carbon solutions can certainly be a means to that end."
Of course, others disagree; blood may be boiling along with temperatures as much of the country struggles with historic heat, which scientists attribute to climate change. Still, baby steps may be better than no steps at all.
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2 months ago
Where Fundamentals Meet Technicals: Exxon Mobil (XOM)
By: Lyn Alden Schwartzer | June 28, 2024
This issue of Where Fundamentals Meet Technicals re-iterates my bullish view on energy names.
As I sit here typing this piece in Cairo, I can unfortunately report that Egypt faces daily rolling power outages, which are caused primarily by natural gas shortages. The grid operators spare my neighborhood from them, but most neighborhoods throughout Egypt are facing recurring scheduled power outages as the limited power generators can only power so many of them at once.
Egypt produces lots of gas domestically and also imports gas from Israel, but the total amount is increasingly insufficient for Egypt in the summer months when air conditioning demand is at its highest. They are turning to LNG imports, but there is limited capacity for that in the near term.
This anecdote is one of many, since it’s a common occurrence throughout the developing world. But it underscores how important energy is. There is vast demand for energy throughout emerging markets, and in the long run I expect that their total usage will go up considerably.
In particular, when the dollar index puts in more of a local top, and the Fed begins a rate-cutting cycle, it should alleviate the USD-denominated debt burdens of a number of emerging and frontier markets, and lighten up their liquidity situation enough to active more energy demand.
Exxon Mobil (XOM) and other large integrated energy majors have been my preferred way to play the energy sector. They are inexpensive, they are very profitable at current oil prices, and they have strong balance sheets.
I view the 2014-2020 period as a major bottom for the oil market. Zero interest rates and the subsequent willingness of investors to fund unprofitable companies helped accelerate the shale revolution, and all of that new oil disrupted global supply/demand balances for oil. But now companies need to be more profitable and self-financing, and the global supply/demand situation for oil incorporates this new shale oil.
Going forward, I expect oil to be flat-to-up, and I expect to see a lot of profitability from the oil sector. In other words, I think there’s a pretty strong floor under oil companies. With their ability to spin off reliable dividends from free cash flows and fortress balance sheets, at these valuations I view them to be like volatile bonds with built-in inflation protection and an option for much higher potential.
Zac sees a potential move from $115 to $165 over the next year. I don’t have any firm view on that, but the way I see the risk/reward situation is that I think the bear case is rather stagnant and rangebound, and the bull case includes some rather large price appreciations of this scale.
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3 months ago
ExxonMobil (XOM), Petronas Strike Major Find Offshore Suriname
By: Zacks Investment Research | May 21, 2024
ExxonMobil Corporation XOM and Production Suriname, an affiliate of ExxonMobil, alongside Petronas Suriname E&P, a subsidiary of Malaysia’s Petronas, have announced a significant hydrocarbon discovery in Block 52 offshore Suriname. This marks the third significant find in the block since 2020, further solidifying the potential of the Suriname-Guyana basin for substantial oil and gas reserves.
Details of the Discovery
The Fusaea-1 exploration well, located approximately 170 kilometers offshore and 9 kilometers east of the Roystonea-1 discovery, was drilled to a depth of 5,227 meters by the Noble Voyager drillship. The well encountered multiple oil and gas-bearing sandstone reservoirs from the Campanian age. Remarkably, the drilling operation achieved this milestone with zero Lost Time Incidents.
Petronas and ExxonMobil are conducting further evaluations to determine the full extent of the discovery and its potential integration with previous finds, Roystonea-1 and Sloanea-1.
Statements from Petronas Leadership
Datuk Adif Zulkifli, Petronas’ executive vice president and CEO of Upstream, emphasized the importance of the Fusaea-1 results, stating that they solidified Petronas’ position in Suriname's hydrocarbon resources, building on previous discoveries in the region.
Petronas’ vice president of Exploration, Mohd Redhani Abdul Rahman, noted that the success of Fusaea-1 reflects advancements in their understanding of the area, further enhancing the potential for oil and gas development in Block 52.
Operational and Strategic Developments
Covering an area of 4,749 square kilometers, Block 52 is situated north of Paramaribo, Suriname’s capital. Petronas operates the block with a 50% participating interest, while ExxonMobil holds the remaining stake. This partnership underscores the strategic importance of the Suriname-Guyana basin for future energy development.
In July 2023, Petronas awarded a drilling contract to Noble Corporation's Noble Discoverer rig, initially slated to commence in August 2023. However, the drilling responsibilities were later transferred to the Noble Voyager rig in January 2024. Petronas has since exercised an extension option to continue drilling another well in Block 52 at a daily rate of $470,000.
Beyond Block 52, Petronas operates Block 48 and Block 63 with a 100% interest and holds a 30% non-operating interest in Block 64. The company remains committed to its exploration and production activities in the region while pursuing new energy projects globally.
Broader Implications
This discovery is part of a broader strategy by both ExxonMobil and Petronas to expand their hydrocarbon portfolios in key regions. Petronas recently signed a new production-sharing contract and extended an existing one off the coast of Indonesia, aiming to increase its hydrocarbon output. In 2023, Petronas and its partners achieved 19 exploration discoveries and two appraisal successes in Malaysia, highlighting its robust exploration capabilities.
The continued success in Suriname’s Block 52 not only boosts Petronas’ and ExxonMobil’s resource base but also reinforces the Suriname-Guyana basin's status as a major emerging hydrocarbon province. The ongoing exploration and development efforts in this region are expected to contribute significantly to the global energy supply, meeting increasing demands and supporting energy security.
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3 months ago
Oil & Gas Stock Exxon Mobil (XOM) for Options Bulls
By: Schaeffer's Investment Research | May 17, 2024
• XOM has seen a cup & handle pullback to support
• There is plenty of pessimism surrounding the stock
Energy giant Exxon Mobil Corp (NYSE:XOM) has seen a cup and handle pattern pullback to the 50-day moving average, into 2023 zone highs and is currently pushing back above its September peak. The 115 call level will be cut by 50% in the May standard expiration series, potentially releasing price action to move higher.
At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security’s 50-day put/call volume ratio comes in the 95th annual percentile, leaving ample room for bears to unwind and push shares higher. Analysts have ample room for upgrades too, with seven in coverage sporting a tepid "hold" recommendation.
Options are looking affordable, too, per the stock’s Schaeffer’s Volatility Index (SVI) of 15%, which ranks in the lowest percentile in the last 12 months. Our recommended call option has a leverage ratio of 14.04, and will double on a 6.83 rise in the underlying security.
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4 months ago
Exxon Mobil's stock falls after profit and production drop below forecasts
By: MarketWatch | April 26, 2024
Earnings took a hit from falling refining margins and natural-gas prices and as costs rose while revenue declined
Shares of Exxon Mobil Corp. dropped Friday, after the oil and gas giant reported first-quarter profit and production that fell below forecasts, even as revenue beat expectations by a wide margin.
Also weighing on the bottom-line, overall costs and other deductions increased, while revenue declined.
The stock (XOM) slumped 1.2% in premarket trading, putting it on track to snap a five-day win streak.
Net income dropped to $8.22 billion, or $2.06 a share, from $11.43 billion, or $2.79 a share, in the same period a year ago, as industry refining margins declined and natural-gas realizations sank 32%.
Revenue fell 4% to $83.08 billion, above the FactSet consensus of $79.69 billion.
Meanwhile, total costs and other deductions rose 1.4% to $70.71 billion, as crude oil and product purchases rose 3.5% to $47.6 billion and depreciation and depletion increased 13.4% to $4.81 billion, while production and manufacturing expenses fell 3.7% to $9.09 billion.
Within upstream volumes, production fell 1.2% to 3,784 thousand oil-equivalent barrels per day (koebd) to miss the FactSet consensus of 3,810 koebd.
Net production of crude oil, natural gas liquids, bitumen and synthetic oil rose 2.5% to 2,557 thousand barrels of oil per day while net natural gas production available for sale declined 8.2% to 7,362 million cubic feet per day.
The stock has run up 21.4% year to date through Thursday, while the Energy Select Sector SPDR ETF (XLE) has climbed 15.3% and the S&P 500 has gained 5.8%.
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