Being one of the largest companies in the world and operating in a politically incorrect industry has made Exxon Mobil (NYSE:XOM) a target of many special interest groups and ambitious politicians, hoping to raise money for their cause or secure the next term in office.
Add to that the challenge of an unprecedented low-price oil and gas environment, and it definitely testing the foundations of the company as it takes a number of hits from different sources, while at the same time attempting to keep the company moving forward.
The upstream business of the company has obvious headwinds from the low prices, but recent developments in the refining side of the business, which has offset some of the upstream weakness, is starting to show a few cracks of its own.
It was recently reaffirmed concerning its credit rating, but that could change in a couple of years because of one credit agency saying it could downgrade the company if things continue on as they are.
more on outlook for ExxonMobil
Saturday, January 23, 2016
Effect of Iran's Oil Exports on Price of Oil
Now that the price of oil has plummeted to under $31 per barrel as I write, it's worth taking a look at whether or not it's getting close to consider seriously investing in the commodity, or continue to wait on the sidelines; including whether to initiate a position or add to a position.
Most of the decision should be based on whether or not investors believe it's at least close to a bottom, or at minimum, a price range that reflects being near to a low.
Since I'm not a believer in timing the market, looking at a price range is the best way to analyze where the price of oil is at. The challenge is we're in uncharted territory. Not because we haven't seen significant price fluctuations in oil before, but because we have never seen it after the emergence of shale oil as a significant supplier.
For that reason we don't know how low the price of oil will go, but more importantly, how long it'll remain in the range it has been trading in recently. There are no signs anyone is willing to cut back on production levels outside of U.S. shale producers.
I'm looking for a sustainable price over $40 per barrel to be the trigger for some shale oil producers. Under these conditions and minus an unexpected geopolitical event, there is no catalyst I see that will cause oil to rebound to that level in 2016.
more on Iran and Oil Exports
Most of the decision should be based on whether or not investors believe it's at least close to a bottom, or at minimum, a price range that reflects being near to a low.
Since I'm not a believer in timing the market, looking at a price range is the best way to analyze where the price of oil is at. The challenge is we're in uncharted territory. Not because we haven't seen significant price fluctuations in oil before, but because we have never seen it after the emergence of shale oil as a significant supplier.
For that reason we don't know how low the price of oil will go, but more importantly, how long it'll remain in the range it has been trading in recently. There are no signs anyone is willing to cut back on production levels outside of U.S. shale producers.
I'm looking for a sustainable price over $40 per barrel to be the trigger for some shale oil producers. Under these conditions and minus an unexpected geopolitical event, there is no catalyst I see that will cause oil to rebound to that level in 2016.
more on Iran and Oil Exports
Would Saudi Aramco IPO Make Sense?
A number of variables would determine its attraction to investors, including the stock exchange or exchanges it would be listed on. That this confirms about the oil market and the price of oil.
In a recent interview with 'The Economist,' Saudi Arabian deputy crown prince Muhammad bin Salman said one of the things he's taking into consideration as a way to relieve the financial burden on the government from an expected prolonged period of low oil prices, is to go the IPO route with state-owned oil giant Saudi Aramco.
Not only is it the most valuable oil or energy company in the world, it's probably the valuable company in the world too. We'll look at the implications of this to investors if it does go this route. Meanwhile, it's worth mentioning it confirms my thesis that Saudi Arabia knows the price of oil will remain subdued for a prolonged period. With the emergence of shale oil competitors, it will inevitably come to the place it will lose global market share.
One thing to keep in mind is the demand for oil, over time, should increase, which means the size of the market will grow with it. That will shrink the market share of Saudi Aramco on that basis, assuming it doesn't have a lot more supply it can release.
more on whether or not Saudi Aramco IPO would make sense
In a recent interview with 'The Economist,' Saudi Arabian deputy crown prince Muhammad bin Salman said one of the things he's taking into consideration as a way to relieve the financial burden on the government from an expected prolonged period of low oil prices, is to go the IPO route with state-owned oil giant Saudi Aramco.
Not only is it the most valuable oil or energy company in the world, it's probably the valuable company in the world too. We'll look at the implications of this to investors if it does go this route. Meanwhile, it's worth mentioning it confirms my thesis that Saudi Arabia knows the price of oil will remain subdued for a prolonged period. With the emergence of shale oil competitors, it will inevitably come to the place it will lose global market share.
One thing to keep in mind is the demand for oil, over time, should increase, which means the size of the market will grow with it. That will shrink the market share of Saudi Aramco on that basis, assuming it doesn't have a lot more supply it can release.
more on whether or not Saudi Aramco IPO would make sense
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