Thread: Oil Bounce Could Lead To A Quick Pop For Producers

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  1. #1

    Default Oil Bounce Could Lead To A Quick Pop For Producers

    It showed front-month oil future rebounding in a solid uptrend, but heading for a ceiling.

    I warned that oil producers could see a short-term pop, but that it would be temporary.
  2. #2


    I also said that higher oil prices would positively affect quarterly earnings reports. I was mostly right... Take a look.

    This first snapshot is of Exxon Mobil's (NYSE: XOM) quarterly income:

  3. #3


    Both showed substantial growth in gross profits quarter over quarter. Year over year, XOM's revenues grew 18.45% in the quarter ending June 30, while COP revenues grew 11.17%.

    COP released earnings on July 28 and XOM released earnings three days later. Since the earnings release, stock prices have climbed about 4.6% and 2.3% respectively, with some volatility. But I wasn't entirely right in my article...
  4. #4


    This chart shows the same trendlines from the ones I included in my chart back in early June. I've marked when my article hit the airwaves with a blue circle.

    In that article, I said:

    I've marked the shelf in red and extended the line to the current uptrend. The green lines mark the overall uptrend from the January lows. These trendlines converge to create a diamond that can "trap" movements, as price bounces back and forth like a pinball.
  5. #5


    So although oil companies like XOM and COP did get a temporary pop in share prices as we predicted, that pop started from depressed prices from the slump in oil.

    To be fair, I talked about a pop in prices after quarterly earnings, which we certainly got. But for investors making their moves based on this pop, oil prices are going to remain the main driver of share prices.

    Oil prices have climbed about 6% over the past week or so, which is on trend with share price movements. And the big drop in oil prices since early June highs (oil has fallen 18.7% even including the recent pop higher), could have made more room for oil prices to tick up.
  6. #6


    As we head towards Labor Day, this may happen and further push oil company share prices higher.

    I still maintain that oil prices have created a ceiling at around $53 a barrel. This is just below the purported $55 a barrel that many U.S. producers use as a threshold to start ramping up production again.

    But we could get a bit of an oil price surge over the next month...

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