Exxon Mobil Corporation (NYSE: XOM) experienced a nearly 4% decline this week, mirroring the downturn in the oil market, fuelled by cautious demand sentiments amid unexpectedly high gasoline inventories. Wednesday’s EIA report revealed a substantial gasoline stocks change of 5.421M, well beyond the 1.027M consensus. In contrast, crude oil stocks showed a noteworthy 4.632M barrel decrease, surpassing the -1.354M barrel consensus. The forthcoming NFP report on Friday is poised to sway the oil market sentiment.
Regarding corporate developments, Exxon has unveiled an updated corporate plan, expressing confidence in its cost-cutting endeavours. The company aims to slash $6 billion in structural costs by 2027 while steadfastly committing to production increases. This strategic approach is anticipated to generate a substantial $14 billion boost in cash flow and earnings over the next four years. Following its $60 billion acquisition of Pioneer Natural Resources earlier this year, Exxon plans to allocate an additional $25 billion in 2024, with subsequent years earmarked for expenditures ranging from $22 billion to $27 billion. These investments are targeted at projects expected to yield average returns of around 30%.
Moreover, as part of its strategic vision, Exxon has allocated $20 billion to reduce carbon emissions through 2027, offering a clear roadmap for the company’s direction as it progresses forward.
Technical
On the 1D chart, a falling wedge pattern has emerged, with the dynamic support underpinning the price ahead of the NFP release. The 100-SMA (orange line) has crossed above the 50-SMA, confirming the bearish momentum. However, the falling wedge could experience a breakout if the NFP report is favourable.
Resistance at $101.56 is the first hurdle for the buyers to cross to enforce a breakout, which will likely meet the 25-SMA at $103.92. To confirm the sustainability of the breakout, the 25-SMA may need clearance, bringing the share price toward $109.59, the Fibonacci midpoint. If the momentum takes the price above this level, the 61.8% Fibonacci golden ratio could prove a challenging hurdle at $112.24.
Conversely, failure to exceed the $101.56 mark could see the wedge pattern holding. Support at $98.16 could be the determining level to gauge whether the price will continue trickling toward neckline support at $96.58 or the market will have another go at the wedge breakout.
Summary
Exxon Mobil has had a challenging week, tracking oil prices lower ahead of crucial labour market data from the US. Resistance at $101.56 could be the key level to watch in the upcoming sessions, as a breakout could see the falling wedge playing out toward $105.36.
Sources: Koyfin, Tradingview, Reuters
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
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