ExxonMobil (XOM) was nearly flat Wednesday after it fell sharply on Tuesday. Can ExxonMobil stock reclaim the throne of the energy industry?

Shares retreated after breaking out of a cup base and reaching a record high Monday.

The stock then fell 2.7% Tuesday along with the drop in oil prices. Crude oil worries included global demand, especially in China, and the possibility that Hurricane Milton could affect U.S. oil supplies.

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Exxon Fights For Oil Fields In Guyana

The company continues its fight for an oil-rich field in Guyana owned by Hess (HES). Hess shareholders approved the acquisition of the company by Chevron (CVX) on May 28.

The $53 billion stock deal includes the 30% stake that Hess owns in the prime Guyana oil fields. Exxon and China National Offshore Oil Corporation claim they have a right to provide a counteroffer to Hess for the Guyana offshore oil operation project.

The potential counteroffer prompted Chevron to alert investors that it may not go through with the acquisition of Hess “within the time frame the company anticipates or at all.”

Crude Oil Prices Influence ExxonMobil Stock

Energy companies made up less than 4% of the S&P 500 as of July 2024. And Chevron continues to battle ExxonMobil for leadership of the energy industry, as do foreign oil giants such as Shell (SHEL) and BP (BP).

Crude oil prices have been climbing off September lows. The average price of gasoline across the U.S. on Wednesday was $3.21 per gallon vs. $3.70 one year ago, according to AAA data. West Texas Intermediate oil prices dipped to $73.47 a barrel on Wednesday.

Natural gas prices soared after the Russia-Ukraine war erupted then plunged to a low in April. Prices rallied to a recent high in early October but have reversed and are on a downtrend.

Earnings Turnaround Looks To Be Over

Exxon reported higher-than-expected adjusted second-quarter earnings and higher sales than views on Aug. 2.

Adjusted earnings rose 10% from the prior year to $2.14 per share, after four straight quarters of declining earnings growth. Meanwhile sales increased 12% to $93.1 billion following five consecutive quarters of falling sales.

The oil giant had been one of one of America’s most profitable companies but Exxon lost its edge when its earnings and sales started dropping. It reported a total of six straight quarters of slowing or declining profits before the current turnaround.

FactSet estimates, however, show the improvement will be short-lived: Analysts recently lowered forecasts and now expect third-quarter profit to drop 15% and 25% in the fourth quarter.

Sales are projected to increase 5% in the third quarter followed by 6% and 3% growth in the following two periods. Analysts lowered their 2024 EPS expectations to $8.05, or a 15% drop, with a rise to $8.34 in 2025, according to MarketSurge.

ExxonMobil stock’s Composite Rating improved to 75 while its EPS Rating is 82 out of 99.

The stock holds an Accumulation/Distribution Rating of B up from D- a month ago, indicating moderate institutional buying over the last 13 weeks. The stock’s annualized dividend yield is around 3.1%.

ExxonMobile Stock Technical Analysis

ExxonMobil stock climbed for seven straight sessions where it broke out of an early-stage cup base with a 120.50 buy point Friday. Shares are in the buy zone up to 126.53.

The stock retook its 50-day moving average during the climb. Shares reached a record high Monday before reversing sharply lower Tuesday.

Shares powered through a prior level of resistance at 120, which they faced multiple times going back to November 2022. Its weekly MarketSurge chart shows several breakouts that have stalled or failed near that level. A test will be to see if the stock can hold above the 120 level or if fades below it, once again.

Its relative strength line has been on a jagged downtrend since November — a drawback for the current base.

ExxonMobil Follows Oil Prices

As with other oil stocks, Exxon will rise and fall with crude oil prices. So even when Exxon looks good based on fundamentals, crude oil prices may suddenly plunge, taking ExxonMobil stock down, too. On the other hand, a rise in oil prices may help lift the stock.

Investors could choose to buy an energy exchange traded fund as a way to play sector moves while avoiding stock-specific risk. Energy Select Sector SPDR Fund (XLE) and the iShares U.S. Energy (IYE) exchange traded fund are two energy-related ETFs. But those ETFs are still exposed to crude oil price swings.

ExxonMobil and Chevron are major weights in XLE.

Is ExxonMobil Stock A Buy?

The bottom line: ExxonMobil stock is in a buy zone of a cup base so it is a currently a buy. But investors should monitor the stock for further deterioration and another visit below the 120 level. As always, have your risk management strategy in place and be ready to sell if the stock goes 7% below your buy point.

Investors can check out IBD Stock Lists and other IBD content to find dozens of the best stocks in addition to ExxonMobil. 

Follow Kimberley Koenig for more stock market news on X, the platform formerly known as Twitter, @IBD_KKoenig.

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