Shares of ExxonMobil (NYSE: XOM) fell this morning, down 3.1% through 11:50 a.m. ET Tuesday, erasing all of their gains and some of the previous day’s. While oil and gas stocks typically mirror movements in crude prices, there’s another reason ExxonMobil fell today.
Oil price volatility hurts investor sentiment
Crude oil prices fell Tuesday morning after OPEC lowered its global oil demand forecast for 2024 to around 2 million barrels per day (bpd), or about 80,000 bpd lower than its previous forecast. OPEC also revised its oil demand forecast for 2025. Brent crude, the global benchmark for oil prices, fell more than 3% this morning, dropping below the $70 mark to a low it hasn’t seen in more than a year. As one of the world’s largest oil producers, ExxonMobil’s profits and cash flows will undoubtedly take a hit if oil prices fall.
Meanwhile, ExxonMobil has pulled out of a race to buy a stake in a promising oil discovery in Namibia, according to Reuters. ExxonMobil is one of several global oil and gas giants eyeing a piece of Gallp Energy‘s holdings. Galp owns an 80% interest in an oil field in the Orange Basin, a region where several large oil discoveries have been reported in recent years.
What should you do with ExxonMobil stock now?
On the one hand, OPEC’s demand for oil is declining. On the other hand, there is a lot of speculation that OPEC+ producers will probably increase production in the coming months. The two factors together could continue to put pressure on oil prices and therefore also on ExxonMobil shares.
But the last thing you should be doing right now is panic-selling ExxonMobil stock. ExxonMobil has weathered some of the worst oil storms in its 135-year history and has built a fortress of a balance sheet. The oil giant has raised its dividend for 41 years in a row and should be able to offer you a bigger dividend this year and beyond, even if oil prices continue to fall. In fact, ExxonMobil is a rock-solid dividend stock to buy on any dip.
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Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Why ExxonMobil Stock Is Falling Today was originally published by The Motley Fool
