Oil price set to trade sideways, symbolic Dow Jones exit for Exxon
Brent crude continues to trade in and around $45 a barrel, with the dim oil price outlook prompting the symbolic exit for Exxon from the Dow Jones Industrial Average index.
Oil prices were trading at around $61 a barrel at the start of the year, only for them to crash in March as lockdowns eroded energy demand and markets panicked to make sense of the coronavirus pandemic, with futures contracts closing at -$37 a barrel in April amid the turmoil.
According to the US Energy Information Administration (EIA), global oil prices are expected to average at $43 a barrel throughout the second half of this year, with that figure expected to rise to $50 in 2021.
Brent crude once again broke above the $45 a barrel this week, where it will likely hover around at for the remainder of the year, while the US West Texas Intermediate (WTI) rallied through $43 on Wednesday.
However, it remains unclear if oil price forecasts will be realised or if they will fall short of expectations considering the myriad of headwinds battering financial markets face over the next 14 months?
Oil market turmoil leads to symbolic Dow Jones exit for Exxon
A shake-up in the Dow Jones Industrial Average index offered insight into how the negative price outlook for crude is impacting companies operating in the oil and gas industry.
Exxon Mobil was once the world’s most valuable stocks and has been a member of the Dow Jones since 1928. But next Monday, the oil and gas major will no longer feature on the index due to its share price falling more than 40% this year amid low crude prices.
However, the oil and gas major could return to the index if demand recovers, but that outcome relies on a stabilising of the coronavirus crisis which continues to hinder global economic activity.
Rivals like BP and Royal Dutch Shell have suffered similar slumps in their respective share prices due to the challenging market conditions. But both have opted to write-off billions in oil and gas assets in order to focus their attention on transitioning to renewables due to the dim price outlook for crude.
‘Energy markets are fundamentally changing, shifting towards low carbon, driven by societal expectations, technology and changes in consumer preferences,’ BP chairman Helge Lund said in a statement. ‘And in these transforming markets, bp can compete and create value, based on our skills, experience and relationships.’
‘We are confident that the decisions we have taken and the strategy we are setting out today are right for BP, for our shareholders, and for wider society,’ he added.
Without Exxon, the Dow Jones only remaining oil and gas company is Chevron.
WTI: technical analysis
Oil has finally found the strength to move higher, rallying through $43. Above $43.66, the price will have made a new higher high in the current uptrend, reinforcing the bullish view, according to Chris Beauchamp, chief market analyst at IG.
‘Alternately, a reversal below $41.50 is the catalyst that bears will be looking for,’ he added.
How to trade stocks with IG
Looking to trade Exxon Mobil and other stocks? Open a live or demo account with IG and buy (long) or sell (short) shares using derivatives like CFDs and spread bets in a few easy steps:
- Create an IG trading account or log in to your existing account
- Enter ‘Exxon Mobil’ in the search bar and select it
- Choose your position size
- Click on ‘buy’ or ‘sell’ in the deal ticket
- Confirm the trade
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
React to volatility on commodity markets
Trade commodity futures, as well as 27 commodity markets with no fixed expiries.1
- Wide range of popular and niche metals, energies and softs
- Spreads from 0.3 pts on Spot Gold, 2 pts on Spot Silver and 2.8 pts on Oil
- View continuous charting, backdated for up to five years
1In the case of all DFBs, there is a fixed expiry at some point in the future.
See opportunity on a commodity?
Try a risk-free trade in your demo account, and see whether you’re onto something.
- Log in to your demo
- Try a risk-free trade
- See whether your hunch pays off
See opportunity on a commodity?
Don’t miss your chance. Upgrade to a live account to take advantage.
- Analyse and deal seamlessly on fast, intuitive charts
- Get spreads from just 0.3 points on Spot Gold
- See and react to breaking news in-platform
See opportunity on a commodity?
Don’t miss your chance. Log in to take your position.
Live prices on most popular markets
- Equities
- Indices
- Forex
- Commodities
Prices above are subject to our website terms and agreements. Prices are indicative only. All share prices are delayed by at least 15 minutes.
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
