Exxon Adds $45 Billion to Market Cap

Exxon Mobil Corp. (NYSE: XOM) closed 2015 with a share price of $77.97, down from a closing price of $92.45 at the end of 2014. The company’s market cap dropped from around $383.67 billion to $328.58 billion, more than $55 billion. At Friday’s close, the company’s market cap had tacked back on about $45 billion.

There’s no mystery here. Crude oil prices began falling in August of 2014, and didn’t begin any sort of sustained comeback until late February of this year. Crude prices roared back and the share prices of oil producers roared right along with them. From a low of around $27 a barrel prices topped $52 last week.

Well, briefly, topped $52 a barrel. But at least a couple of things are working against a rapid rise higher. First, onshore rig counts have risen for three consecutive weeks now. At around $50 a barrel, some (but not all) shale plays in the United States once again become profitable. If a producer can control well costs and get a decent initial production flow, profits can be made at a WTI price below $50 a barrel.

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Second, Exxon is the nation’s largest producer of natural gas, and natural gas prices have been rising recently as producers have cut back on production and injections into storage have been smaller than expected due primarily to rapidly rising summer-like temperatures in many parts of the country. The smaller storage injections are a signal to traders that natural gas could be more expensive during the winter heating season when demand is typically higher.

Exxon stock traded at a new 52-week high earlier Monday at $91.59. The stock’s 52-week low is $66.55 and the consensus price target on the stock is $86.16. Analysts clearly don’t think that the higher prices will last.

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