Exxon Mobil Corp. (NYSE: XOM) caught the market’s attention after Brent crude hit $93 per barrel, the highest price so far this year. With supply cuts from Saudi Arabia and Russia, analysts expect further tightening of the oil market in the upcoming months, and oil giants are expected to benefit from it. The stock of Exxon Mobil ended Friday’s trading session at $116.70, down $1.82 or 1.54% from the prior close.
Oil gained momentum last week, with Brent crude breaching $93 a barrel for the first time this year, as forecasts of a tighter supply outlook for the remaining part of 2023 eclipsed worries over sluggish economic growth and US inventory buildup.
The decision by Russia and Saudi Arabia to extend their reductions in crude oil production, as reported by the International Energy Agency, is expected to contribute to a potential shortage in the oil market during the fourth quarter. Notably, a bearish report on US inventories led to a minor reversal in crude oil prices on Thursday.
Nevertheless, Tamas Varga, an oil broker at PVM, pointed out that even the genuinely bearish inventories report was unable to spark a major selloff, which underscores the bullish view of the market towards crude oil. Varga further opined that a decrease in crude inventories will fuel crude prices for the remaining part of this year.
In a similar tone, ANZ Research analysts highlighted the potential of the oil market remaining tight for the forthcoming three quarters, driven by ongoing production curbs and robust demand.
On Friday, oil prices reached their highest point in a span of ten months. This rally has come against the backdrop of China’s decision to slash cash reserve requirements for banks, intended to fuel its economic recuperation. Furthermore, market sentiment was lifted by the anticipation that interest rate hikes by the top central banks were nearing their end.
Brent crude ended Friday’s trading at $93.93 after hitting a high of $94.57. Likewise, the US West Texas Intermediate crude (WTI) rose by 0.68% to end the trading session at $90.77, representing a near 10-month high.
As per Priyanka Sachdeva, a senior market analyst at Phillip Nova, worries over the supply squeeze are fueling crude prices as producers stubbornly adhere to curbing production.
Significantly, one day before the release of the IEA report, the Organization of the Petroleum Exporting Countries (OPEC) released an updated projection indicating robust demand for crude oil and stressed the likelihood of a supply deficit in 2023 should production curbs persist.
The supply squeeze and robust demand for crude oil are expected to keep the Spring, Texas-based Exxon range-bound in the short term.
The historical price chart indicates that the stock of Exxon is ascending after breaking the ascending triangle. The base of the ascending triangle is expected to act as support. Additionally, the stock is trading above its 50-day moving average, while the Chaikin money flow indicator is showing a positive reading. Therefore, we anticipate Exxon to remain in an uptrend for the next few trading sessions.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
