Oil stocks are in retreat as U.S. President Donald Trump’s promise to let energy companies “drill, baby, drill” has raised concerns about market oversupply.
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Leading U.S. oil companies Exxon Mobil Corp. (XOM) and Occidental Petroleum (OXY) have each seen their share prices decline 3% in recent days. Stocks of other energy companies, such as Shell (SHEL), are also in the red or flat since Trump’s inauguration on Jan. 20.
The drop in oil stocks mirrors crude prices, with Brent crude oil, the international benchmark, trading at $79.34 per barrel, and West Texas Intermediate (WTI) crude oil, the U.S. standard, at $75.95 a barrel. Both crude oil prices were at or near $80 a barrel prior to Trump’s inauguration.
Trump’s Energy Policies
Since returning to the White House, Trump has declared a U.S. energy emergency that allows for faster permitting, and said that the U.S. will likely stop buying crude oil from Venezuela. Trump also quickly rolled back environmental protections and withdrew the U.S. from the Paris Climate Accord.
Consequently, oil stocks are pulling back. Analysts say Trump’s goal of making America the world’s largest energy producer could swamp the global market with crude oil, depressing prices. At the same time, crude oil prices have retreated on news that Israel and Hamas have reached a ceasefire agreement, ratcheting down tensions in the Middle East.
XOM stock has gained 18% in the last 12 months.
Is XOM Stock a Buy?
The stock of Exxon Mobil has a consensus Moderate Buy rating among 18 Wall Street analysts. That rating is based on 13 Buy and five Hold recommendations issued in the last three months. The average XOM price target of $133.35 implies 20% upside from current levels.
